Taiwan Semiconductor Manufacturing Co. Ltd. ADR

Company Overview

Business Model: Taiwan Semiconductor Manufacturing Company Limited operates as a dedicated foundry, manufacturing semiconductors for customers based on their proprietary integrated circuit designs. Its core value proposition encompasses comprehensive services including wafer fabrication (CMOS logic, mixed-signal, radio frequency, embedded memory, BiCMOS mixed-signal), design, mask making, TSMC 3DFabric advanced silicon stacking and packaging technologies, and testing. In 2024, the company produced 34% of the "Foundry 2.0" industry, which is defined as all logic wafer manufacturing, packaging, testing, mask-making, and other related services.

Market Position: Taiwan Semiconductor Manufacturing Company Limited is a technology leader among dedicated foundries, particularly for 7-nanometer and below advanced semiconductors, and also maintains a leadership position in mainstream and specialty technologies. Its 3-nanometer technology entered volume production in 2022, and 2-nanometer technology development is on track for volume production in 2025. The company's scale and capacity, especially for advanced technologies, are significant competitive advantages. Key customers include Advanced Micro Devices, Inc., Amazon Web Services, Inc., Broadcom Inc., Intel Corporation, MediaTek Inc., NVIDIA Corporation, NXP Semiconductors N.V., Qualcomm Inc., Renesas Electronics Corporation, and Sony Semiconductor Solutions Corporation.

Recent Strategic Developments: Taiwan Semiconductor Manufacturing Company Limited is actively pursuing global expansion, with new fabs under construction or planned in the United States, Japan, and Germany. In November 2024, TSMC Arizona Corporation entered agreements with the U.S. Department of Commerce for up to US$6.6 billion in direct funding and up to US$5 billion in proposed loans under the U.S. CHIPS Act. In December 2024, ESMC, a subsidiary in Germany, secured an agreement with the Federal Republic of Germany for up to EUR5 billion in state aid under the European Chips Act. In March 2025, the company announced plans for three additional semiconductor manufacturing facilities, two advanced packaging facilities, and an R&D center in the United States. Technologically, it introduced HPC-focused N4X and N3X technologies and migrated its N3AE program to N3A in 2024. The company also executed a share repurchase program in Q2 2024, buying back and cancelling 3,249,000 common shares for approximately NT$3,089 million (US$94 million). Leadership changes in June 2024 saw Dr. C.C. Wei elected Chairman, succeeding Dr. Mark Liu, and in February 2024, Dr. Y.J. Mii and Mr. Y.P. Chyn were appointed Executive Vice Presidents and Co-Chief Operating Officers.

Geographic Footprint: The company's corporate headquarters and nine fabs are located in Hsinchu Science Park, Taiwan. Additional operational facilities in Taiwan include two fabs in Central Taiwan Science Park, five fabs in Southern Taiwan Science Park, and Fab 22 in Kaohsiung Nanzih Technology Industrial Park. Internationally, Taiwan Semiconductor Manufacturing Company Limited operates TSMC Washington, LLC (Fab 11) in Washington State, U.S.; TSMC China Company Limited (Fab 10) in Shanghai, China; TSMC Nanjing Company Limited (Fab 16) in Nanjing, China; TSMC Arizona (Fab 21) in Arizona, U.S.; JASM (Fab 23) in Kumamoto Prefecture, Japan; and ESMC (Fab 24, future facilities) in Dresden, Germany. Worldwide customer support is provided from Hsinchu and subsidiaries in the United States, Canada, Japan, China, Germany, the Netherlands, and South Korea.

Cross-Border Operations: Taiwan Semiconductor Manufacturing Company Limited manages a complex international structure, including wholly-owned subsidiaries like TSMC Washington, LLC (U.S.), TSMC China Company Limited (China), TSMC Nanjing Company Limited (China), TSMC Arizona Corporation (U.S.), and TSMC Global Ltd. (B.V.I.). It also engages in strategic joint ventures such as JASM (Japan, approx. 72.6% owned), ESMC (Germany, 70.0% owned), Vanguard International Semiconductor Corporation (Taiwan, approx. 27.6% owned), Systems on Silicon Manufacturing Company Pte. Ltd. (Singapore, approx. 38.8% owned), Global Unichip Corporation (Taiwan, approx. 34.8% owned), VisEra Technologies Company, Ltd. (Taiwan, approx. 67.3% owned), and Xintec, Inc. (Taiwan, approx. 41.0% owned). Licensing agreements include Systems on Silicon Manufacturing Company Pte. Ltd. paying for technical knowledge and IP licenses. The company navigates a multi-jurisdictional regulatory landscape, including U.S. export controls (e.g., October Rules, new January 2025 rules on 16-nanometer and below processes), China's blocking statute, and compliance with various national and regional laws. It obtained a Validated End-User (VEU) authorization for its fab in Nanjing, China, and in October 2024, notified U.S. and Taiwan authorities about the potential diversion of a customer’s chip to a restricted entity.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 56.1% (up from 54.4% in 2023)
• Operating Margin: 45.7% (up from 42.6% in 2023)
• Net Margin: 40.0% (up from 39.4% in 2023)

Investment in Growth:

• R&D Expenditure: NT$204,182 million (US$6,227 million), representing 7.1% of net revenue in 2024. This reflects a 12.0% increase from 2023, primarily due to higher research activities for 14-angstrom, 16-angstrom, and 2-nanometer process technologies.
• Capital Expenditures: NT$956,007 million (US$29,755 million) in 2024. Capital expenditures for 2025 are projected to be between US$38 billion and US$42 billion, focusing on expanding capacity for 2-nanometer, 3-nanometer, and 5-nanometer nodes, specialty technologies, advanced packaging, and R&D for new process technologies.
• Strategic Investments: Includes significant government funding agreements for overseas fabs, such as up to US$6.6 billion in direct funding and US$5 billion in proposed loans for TSMC Arizona Corporation under the U.S. CHIPS Act, and up to EUR5 billion in state aid for ESMC under the European Chips Act.

Currency Impact Analysis:

• Foreign exchange impact on revenue and earnings: The NT dollar depreciation in 2024 had a favorable effect on revenue. A 1% depreciation of the U.S. dollar against the NT dollar would result in an approximately 0.4 percentage point decrease in operating margin based on 2024 results. A hypothetical 10% adverse foreign currency exchange rate change would have decreased net income by NT$1,906 million (US$58 million) in 2024, after hedges.
• Hedging strategies and effectiveness: Taiwan Semiconductor Manufacturing Company Limited uses foreign currency derivatives (currency forwards, currency swaps) and non-derivative financial instruments (foreign currency denominated debts) to partially hedge currency exchange rate risk on non-NT dollar assets/liabilities and forecasted transactions.
• Functional currency considerations: Financial statements are published in New Taiwan dollars. Substantially all sales are denominated in U.S. dollars, while over half of capital expenditures are in non-NT dollar currencies, including U.S. dollars, Euros, and Japanese yen.

Business Platform Analysis

Taiwan Semiconductor Manufacturing Company Limited operates as a single foundry segment. The following analysis details performance by its principal technology platforms.

High Performance Computing

Financial Performance:

• Revenue: NT$1,476,891 million (+58.0% YoY) in 2024, representing 51% of total net revenue.
• Operating Margin: Not disclosed at the segment level.
• Key Growth Drivers: Driven by the explosion of data and advancements in AI, fueling demand for AI accelerators (GPUs, ASICs), PC CPUs, consumer GPUs, FPGAs, server processors, and high-speed networking chips for 5G/6G, AI, Cloud, and enterprise data centers.

Product Portfolio:

• Major product lines: Offers leading-edge logic process technologies including 2-nanometer Nanosheet Transistor (“N2”), 3-nanometer Fin Field-Effect Transistor (“FinFET”), 4-nanometer FinFET, 5-nanometer FinFET, 6-nanometer FinFET, and 7-nanometer FinFET.
• New product launches or major updates: Introduced HPC-focused N4X and N3X technologies. Provides TSMC 3DFabric advanced silicon stacking and packaging technologies (TSMC-SoIC, InFO, CoWoS).

Market Dynamics:

• Competitive positioning within segment: Maintains technology leadership in advanced nodes crucial for HPC applications.
• Key customer types and regional market trends: Strong demand from customers developing AI and data center solutions globally.
• Regulatory environment by jurisdiction: Subject to general semiconductor industry regulations and export controls.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Smartphone

Financial Performance:

• Revenue: NT$1,005,130 million (+23.3% YoY) in 2024, representing 35% of total net revenue.
• Operating Margin: Not disclosed at the segment level.
• Key Growth Drivers: Demand for both premium and mainstream smartphone products.

Product Portfolio:

• Major product lines: For premium products, offers logic process technologies such as 2-nanometer Nanosheet plus (“N2P”), 3-nanometer FinFET enhanced (“N3E”), 3-nanometer FinFET, 4-nanometer FinFET plus (“N4P”), 4-nanometer FinFET, 5-nanometer FinFET plus (“N5P”), and 5-nanometer FinFET. For mainstream products, technologies include 4-nanometer FinFET compact (“N4C”), 6-nanometer FinFET, 7-nanometer FinFET plus (“N7+”), 7-nanometer FinFET, 12-nanometer FinFET compact plus (“12FFC+”), 12-nanometer FinFET compact (“12FFC”), 16-nanometer FinFET compact plus (“16FFC+”), 16-nanometer FinFET compact (“16FFC”), 28-nanometer high performance compact plus (“28HPC+”), 28-nanometer high performance compact (“28HPC”), and 22-nanometer ultra-low power (“22ULP”).
• New product launches or major updates: Also offers specialty companion chips (RF, RF front-end, embedded non-volatile memory, PMICs, sensors, display chips) and InFO technology.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Internet of Things

Financial Performance:

• Revenue: NT$165,516 million (+2.2% YoY) in 2024, representing 6% of total net revenue.
• Operating Margin: Not disclosed at the segment level.
• Key Growth Drivers: Growth in the AIoT market.

Product Portfolio:

• Major product lines: Provides logic technologies (5-nanometer, 6-nanometer, 7-nanometer, 12-nanometer, 16-nanometer, and 28-nanometer) and an ultra-low power (“ULP”) technology platform for AIoT. ULP technologies include N6e and N12e (FinFET-based), and planar transistor-based 22-nanometer ultra-low leakage (“ULL”), 28-nanometer ULP, 40-nanometer ULP, and 55-nanometer ULP.
• New product launches or major updates: Offers specialty technologies (RF, enhanced analog devices, embedded non-volatile memory, sensors, display devices, and PMICs).

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Automotive

Financial Performance:

• Revenue: NT$139,323 million (+4.2% YoY) in 2024, representing 5% of total net revenue.
• Operating Margin: Not disclosed at the segment level.
• Key Growth Drivers: Demand for "Safer, Smarter and Greener" vehicles, including ADAS, IVI, and zonal controllers.

Product Portfolio:

• Major product lines: Provides a robust automotive IP ecosystem (5-nanometer FinFET, 7-nanometer FinFET, and 16-nanometer FinFET).
• New product launches or major updates: Introduced N3AE program in 2023, which migrated to N3A with V0.9 PDK released in 2024. Offers automotive-grade specialty technologies (28-nanometer embedded flash memory, 28-, 22- and 16-nanometer millimeter wave (“mmWave”) RF, HDR, high sensitivity CMOS image sensor (“CIS”)/LiDAR sensors, and PMICs). MRAM demonstrated automotive Grade-1 capability on 22-nanometer and passed on 16-nanometer in 2023.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Digital Consumer Electronics

Financial Performance:

• Revenue: NT$47,961 million (+2.0% YoY) in 2024, representing 1% of total net revenue.
• Operating Margin: Not disclosed at the segment level.
• Key Growth Drivers: Demand for AI-enabled smart devices.

Product Portfolio:

• Major product lines: Provides leading 6-nanometer FinFET, 7-nanometer FinFET, 16FFC/12FFC, 22ULP/22ULL, and 28HPC+ technologies.
• Applications: Used in 8K/4K DTVs, STBs, 4K SMDs/OTT, DSLR cameras.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

International Operations & Geographic Analysis

Revenue by Geography (Customer Headquarters): | Region/Country | Revenue (NT$ millions) 2024 | % of Total 2024 | Growth Rate (YoY) | Key Drivers | |--------------------------------|-----------------------------|-----------------|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ to be integrated into an investment research platform and must maintain professional standards with consistent formatting.

Core Analysis Principles

Information Integrity:

• Extract only verifiable facts explicitly stated in the filing
• Rephrase technical or legal language into clear business insights
• Never speculate, infer, or supplement with external knowledge
• Omit sections and talking points entirely when relevant data is unavailable
• Use professional narrative with strategic use of tables and bullet points

Company Name Standards:

• Format all entities as they are mentioned in the filing without ticker or exchange symbols
• Apply consistently across all mentions of business entities

Content Standards:

• Focus on material business information relevant to investment decisions
• Prioritize quantitative data with context
• Emphasize strategic initiatives and competitive positioning
• Highlight operational metrics and performance drivers
• Account for international business complexities and multi-jurisdictional operations

Company Overview

Business Model: Taiwan Semiconductor Manufacturing Company Limited operates as a dedicated foundry, manufacturing semiconductors for customers based on their proprietary integrated circuit designs. The company's core value proposition includes comprehensive services such as wafer fabrication (CMOS logic, mixed-signal, radio frequency, embedded memory, BiCMOS mixed-signal), design, mask making, TSMC 3DFabric advanced silicon stacking and packaging technologies, and testing. In 2024, Taiwan Semiconductor Manufacturing Company Limited accounted for 34% of the "Foundry 2.0" industry, which encompasses all logic wafer manufacturing, packaging, testing, mask-making, and other related services.

Market Position: Taiwan Semiconductor Manufacturing Company Limited is a technology leader among dedicated foundries, particularly in 7-nanometer and below advanced semiconductors, and also holds a leading position in mainstream and specialty technologies. Its 3-nanometer technology entered volume production in 2022, with 2-nanometer technology development on track for volume production in 2025. The company's significant scale and capacity, especially for advanced technologies, represent key competitive advantages. Notable customers include Advanced Micro Devices, Inc., Amazon Web Services, Inc., Broadcom Inc., Intel Corporation, MediaTek Inc., NVIDIA Corporation, NXP Semiconductors N.V., Qualcomm Inc., Renesas Electronics Corporation, and Sony Semiconductor Solutions Corporation.

Recent Strategic Developments: Taiwan Semiconductor Manufacturing Company Limited is actively pursuing global expansion, with new fabrication facilities under construction or planned in the United States, Japan, and Germany. In November 2024, TSMC Arizona Corporation secured agreements with the U.S. Department of Commerce for up to US$6.6 billion in direct funding and up to US$5 billion in proposed loans under the U.S. CHIPS Act. In December 2024, ESMC, a subsidiary in Germany, entered an agreement with the Federal Republic of Germany for up to EUR5 billion in state aid under the European Chips Act. Further expansion plans announced in March 2025 include three additional semiconductor manufacturing facilities, two advanced packaging facilities, and an R&D center in the United States. Technologically, the company introduced HPC-focused N4X and N3X technologies and migrated its N3AE program to N3A in 2024. In Q2 2024, Taiwan Semiconductor Manufacturing Company Limited executed a share repurchase program, buying back and cancelling 3,249,000 common shares for approximately NT$3,089 million (US$94 million). Leadership changes include Dr. C.C. Wei's election as Chairman in June 2024, succeeding Dr. Mark Liu, and the appointment of Dr. Y.J. Mii and Mr. Y.P. Chyn as Executive Vice Presidents and Co-Chief Operating Officers in February 2024.

Geographic Footprint: The company's corporate headquarters and nine fabrication facilities are located in Hsinchu Science Park, Taiwan. Additional operational facilities in Taiwan include two fabs in Central Taiwan Science Park, five fabs in Southern Taiwan Science Park, and Fab 22 in Kaohsiung Nanzih Technology Industrial Park. Internationally, Taiwan Semiconductor Manufacturing Company Limited operates TSMC Washington, LLC (Fab 11) in Washington State, U.S.; TSMC China Company Limited (Fab 10) in Shanghai, China; TSMC Nanjing Company Limited (Fab 16) in Nanjing, China; TSMC Arizona (Fab 21) in Arizona, U.S.; JASM (Fab 23) in Kumamoto Prefecture, Japan; and ESMC (Fab 24, future facilities) in Dresden, Germany. Global customer support is provided from Hsinchu and through subsidiaries in the United States, Canada, Japan, China, Germany, the Netherlands, and South Korea.

Cross-Border Operations: Taiwan Semiconductor Manufacturing Company Limited manages a complex international operational structure. This includes wholly-owned subsidiaries such as TSMC Washington, LLC (U.S.), TSMC China Company Limited (China), TSMC Nanjing Company Limited (China), TSMC Arizona Corporation (U.S.), and TSMC Global Ltd. (B.V.I.). The company also engages in strategic joint ventures, including JASM (Japan, approximately 72.6% owned), ESMC (Germany, 70.0% owned), Vanguard International Semiconductor Corporation (Taiwan, approximately 27.6% owned), Systems on Silicon Manufacturing Company Pte. Ltd. (Singapore, approximately 38.8% owned), Global Unichip Corporation (Taiwan, approximately 34.8% owned), VisEra Technologies Company, Ltd. (Taiwan, approximately 67.3% owned), and Xintec, Inc. (Taiwan, approximately 41.0% owned). Licensing agreements are in place, such as Systems on Silicon Manufacturing Company Pte. Ltd. paying Taiwan Semiconductor Manufacturing Company Limited for technical knowledge and IP licenses. The company operates within a multi-jurisdictional regulatory landscape, including U.S. export controls (e.g., October Rules and new January 2025 rules on 16-nanometer and below processes), China's blocking statute, and various national and regional compliance requirements. Taiwan Semiconductor Manufacturing Company Limited holds a Validated End-User (VEU) authorization for its fab in Nanjing, China, and in October 2024, notified U.S. and Taiwan authorities regarding the potential diversion of a customer’s chip to a restricted entity.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 56.1% (up from 54.4% in 2023)
• Operating Margin: 45.7% (up from 42.6% in 2023)
• Net Margin: 40.0% (up from 39.4% in 2023)

Investment in Growth:

• R&D Expenditure: NT$204,182 million (US$6,227 million), representing 7.1% of net revenue in 2024. This reflects a 12.0% increase from 2023, primarily driven by higher research activities for 14-angstrom, 16-angstrom, and 2-nanometer process technologies.
• Capital Expenditures: NT$956,007 million (US$29,755 million) in 2024. Capital expenditures for 2025 are projected to be between US$38 billion and US$42 billion, with a focus on expanding capacity for 2-nanometer, 3-nanometer, and 5-nanometer nodes, specialty technologies, advanced packaging, and R&D for new process technologies.
• Strategic Investments: Major investment initiatives include securing up to US$6.6 billion in direct funding and US$5 billion in proposed loans for TSMC Arizona Corporation under the U.S. CHIPS Act, and up to EUR5 billion in state aid for ESMC under the European Chips Act.

Currency Impact Analysis:

• Foreign exchange impact on revenue and earnings: The NT dollar depreciation in 2024 had a favorable effect on revenue. Based on 2024 results, a 1% depreciation of the U.S. dollar against the NT dollar would result in an approximately 0.4 percentage point decrease in operating margin. A hypothetical 10% adverse foreign currency exchange rate change would have decreased net income by NT$1,906 million (US$58 million) in 2024, after hedges.
• Hedging strategies and effectiveness: Taiwan Semiconductor Manufacturing Company Limited utilizes foreign currency derivatives, such as currency forwards and currency swaps, and non-derivative financial instruments, including foreign currency denominated debts, to partially hedge currency exchange rate risk on non-NT dollar assets/liabilities and forecasted transactions.
• Functional currency considerations: Financial statements are presented in New Taiwan dollars. Substantially all sales are denominated in U.S. dollars, while over half of capital expenditures are in non-NT dollar currencies, including U.S. dollars, Euros, and Japanese yen.

Business Platform Analysis

Taiwan Semiconductor Manufacturing Company Limited operates as a single foundry segment. The following analysis details performance by its principal technology platforms.

High Performance Computing

Financial Performance:

• Revenue: NT$1,476,891 million (+58.0% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Significant growth driven by the data explosion and advancements in AI, fueling demand for AI accelerators (GPUs, ASICs), PC CPUs, consumer GPUs, FPGAs, server processors, and high-speed networking chips for 5G/6G, AI, Cloud, and enterprise data centers.

Product Portfolio:

• Major product lines and services within platform: Offers leading-edge logic process technologies including 2-nanometer Nanosheet Transistor (“N2”), 3-nanometer Fin Field-Effect Transistor (“FinFET”), 4-nanometer FinFET, 5-nanometer FinFET, 6-nanometer FinFET, and 7-nanometer FinFET.
• New product launches or major updates: Introduced HPC-focused N4X and N3X technologies. Provides TSMC 3DFabric advanced silicon stacking and packaging technologies (TSMC-SoIC, InFO, CoWoS).

Market Dynamics:

• Competitive positioning within platform: Maintains technology leadership in advanced nodes crucial for HPC applications.
• Key customer types and regional market trends: Strong demand from customers developing AI and data center solutions globally.
• Regulatory environment by jurisdiction: Subject to general semiconductor industry regulations and export controls.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Smartphone

Financial Performance:

• Revenue: NT$1,005,130 million (+23.3% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Growth driven by demand for both premium and mainstream smartphone products.

Product Portfolio:

• Major product lines and services within platform: For premium products, offers logic process technologies such as 2-nanometer Nanosheet plus (“N2P”), 3-nanometer FinFET enhanced (“N3E”), 3-nanometer FinFET, 4-nanometer FinFET plus (“N4P”), 4-nanometer FinFET, 5-nanometer FinFET plus (“N5P”), and 5-nanometer FinFET. For mainstream products, technologies include 4-nanometer FinFET compact (“N4C”), 6-nanometer FinFET, 7-nanometer FinFET plus (“N7+”), 7-nanometer FinFET, 12-nanometer FinFET compact plus (“12FFC+”), 12-nanometer FinFET compact (“12FFC”), 16-nanometer FinFET compact plus (“16FFC+”), 16-nanometer FinFET compact (“16FFC”), 28-nanometer high performance compact plus (“28HPC+”), 28-nanometer high performance compact (“28HPC”), and 22-nanometer ultra-low power (“22ULP”).
• New product launches or major updates: Also offers specialty companion chips (RF, RF front-end, embedded non-volatile memory, PMICs, sensors, display chips) and InFO technology.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Internet of Things

Financial Performance:

• Revenue: NT$165,516 million (+2.2% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Growth in the AIoT market.

Product Portfolio:

• Major product lines and services within platform: Provides logic technologies (5-nanometer, 6-nanometer, 7-nanometer, 12-nanometer, 16-nanometer, and 28-nanometer) and an ultra-low power (“ULP”) technology platform for AIoT. ULP technologies include N6e and N12e (FinFET-based), and planar transistor-based 22-nanometer ultra-low leakage (“ULL”), 28-nanometer ULP, 40-nanometer ULP, and 55-nanometer ULP.
• New product launches or major updates: Offers specialty technologies (RF, enhanced analog devices, embedded non-volatile memory, sensors, display devices, and PMICs).

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Automotive

Financial Performance:

• Revenue: NT$139,323 million (+4.2% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Demand for "Safer, Smarter and Greener" vehicles, including ADAS, IVI, and zonal controllers.

Product Portfolio:

• Major product lines and services within platform: Provides a robust automotive IP ecosystem (5-nanometer FinFET, 7-nanometer FinFET, and 16-nanometer FinFET).
• New product launches or major updates: Introduced N3AE program in 2023, which migrated to N3A with V0.9 PDK released in 2024. Offers automotive-grade specialty technologies (28-nanometer embedded flash memory, 28-, 22- and 16-nanometer millimeter wave (“mmWave”) RF, HDR, high sensitivity CMOS image sensor (“CIS”)/LiDAR sensors, and PMICs). MRAM demonstrated automotive Grade-1 capability on 22-nanometer and passed on 16-nanometer in 2023.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Digital Consumer Electronics

Financial Performance:

• Revenue: NT$47,961 million (+2.0% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Demand for AI-enabled smart devices.

Product Portfolio:

• Major product lines and services within platform: Provides leading 6-nanometer FinFET, 7-nanometer FinFET, 16FFC/12FFC, 22ULP/22ULL, and 28HPC+ technologies.
• Applications: Used in 8K/4K DTVs, STBs, 4K SMDs/OTT, DSLR cameras.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

International Operations & Geographic Analysis

Revenue by Geography (Customer Headquarters):

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Gross Margin: 56.1% (up from 54.4% in 2023)
• Operating Margin: 45.7% (up from 42.6% in 2023)
• Net Margin: 40.0% (up from 39.4% in 2023)

Investment in Growth:

• R&D Expenditure: NT$204,182 million (US$6,227 million), representing 7.1% of net revenue in 2024. This reflects a 12.0% increase from 2023, primarily driven by higher research activities for 14-angstrom, 16-angstrom, and 2-nanometer process technologies.
• Capital Expenditures: NT$956,007 million (US$29,755 million) in 2024. Capital expenditures for 2025 are projected to be between US$38 billion and US$42 billion, with a focus on expanding capacity for 2-nanometer, 3-nanometer, and 5-nanometer nodes, specialty technologies, advanced packaging, and R&D for new process technologies.
• Strategic Investments: Major investment initiatives include securing up to US$6.6 billion in direct funding and US$5 billion in proposed loans for TSMC Arizona Corporation under the U.S. CHIPS Act, and up to EUR5 billion in state aid for ESMC under the European Chips Act.

Currency Impact Analysis:

• Foreign exchange impact on revenue and earnings: The NT dollar depreciation in 2024 had a favorable effect on revenue. Based on 2024 results, a 1% depreciation of the U.S. dollar against the NT dollar would result in an approximately 0.4 percentage point decrease in operating margin. A hypothetical 10% adverse foreign currency exchange rate change would have decreased net income by NT$1,906 million (US$58 million) in 2024, after hedges.
• Hedging strategies and effectiveness: Taiwan Semiconductor Manufacturing Company Limited utilizes foreign currency derivatives, such as currency forwards and currency swaps, and non-derivative financial instruments, including foreign currency denominated debts, to partially hedge currency exchange rate risk on non-NT dollar assets/liabilities and forecasted transactions.
• Functional currency considerations: Financial statements are presented in New Taiwan dollars. Substantially all sales are denominated in U.S. dollars, while over half of capital expenditures are in non-NT dollar currencies, including U.S. dollars, Euros, and Japanese yen.

Business Platform Analysis

Taiwan Semiconductor Manufacturing Company Limited operates as a single foundry segment. The following analysis details performance by its principal technology platforms.

High Performance Computing

Financial Performance:

• Revenue: NT$1,476,891 million (+58.0% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Significant growth driven by the data explosion and advancements in AI, fueling demand for AI accelerators (GPUs, ASICs), PC CPUs, consumer GPUs, FPGAs, server processors, and high-speed networking chips for 5G/6G, AI, Cloud, and enterprise data centers.

Product Portfolio:

• Major product lines and services within platform: Offers leading-edge logic process technologies including 2-nanometer Nanosheet Transistor (“N2”), 3-nanometer Fin Field-Effect Transistor (“FinFET”), 4-nanometer FinFET, 5-nanometer FinFET, 6-nanometer FinFET, and 7-nanometer FinFET.
• New product launches or major updates: Introduced HPC-focused N4X and N3X technologies. Provides TSMC 3DFabric advanced silicon stacking and packaging technologies (TSMC-SoIC, InFO, CoWoS).

Market Dynamics:

• Competitive positioning within platform: Maintains technology leadership in advanced nodes crucial for HPC applications.
• Key customer types and regional market trends: Strong demand from customers developing AI and data center solutions globally.
• Regulatory environment by jurisdiction: Subject to general semiconductor industry regulations and export controls.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Smartphone

Financial Performance:

• Revenue: NT$1,005,130 million (+23.3% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Growth driven by demand for both premium and mainstream smartphone products.

Product Portfolio:

• Major product lines and services within platform: For premium products, offers logic process technologies such as 2-nanometer Nanosheet plus (“N2P”), 3-nanometer FinFET enhanced (“N3E”), 3-nanometer FinFET, 4-nanometer FinFET plus (“N4P”), 4-nanometer FinFET, 5-nanometer FinFET plus (“N5P”), and 5-nanometer FinFET. For mainstream products, technologies include 4-nanometer FinFET compact (“N4C”), 6-nanometer FinFET, 7-nanometer FinFET plus (“N7+”), 7-nanometer FinFET, 12-nanometer FinFET compact plus (“12FFC+”), 12-nanometer FinFET compact (“12FFC”), 16-nanometer FinFET compact plus (“16FFC+”), 16-nanometer FinFET compact (“16FFC”), 28-nanometer high performance compact plus (“28HPC+”), 28-nanometer high performance compact (“28HPC”), and 22-nanometer ultra-low power (“22ULP”).
• New product launches or major updates: Also offers specialty companion chips (RF, RF front-end, embedded non-volatile memory, PMICs, sensors, display chips) and InFO technology.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Internet of Things

Financial Performance:

• Revenue: NT$165,516 million (+2.2% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Growth in the AIoT market.

Product Portfolio:

• Major product lines and services within platform: Provides logic technologies (5-nanometer, 6-nanometer, 7-nanometer, 12-nanometer, 16-nanometer, and 28-nanometer) and an ultra-low power (“ULP”) technology platform for AIoT. ULP technologies include N6e and N12e (FinFET-based), and planar transistor-based 22-nanometer ultra-low leakage (“ULL”), 28-nanometer ULP, 40-nanometer ULP, and 55-nanometer ULP.
• New product launches or major updates: Offers specialty technologies (RF, enhanced analog devices, embedded non-volatile memory, sensors, display devices, and PMICs).

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Automotive

Financial Performance:

• Revenue: NT$139,323 million (+4.2% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Demand for "Safer, Smarter and Greener" vehicles, including ADAS, IVI, and zonal controllers.

Product Portfolio:

• Major product lines and services within platform: Provides a robust automotive IP ecosystem (5-nanometer FinFET, 7-nanometer FinFET, and 16-nanometer FinFET).
• New product launches or major updates: Introduced N3AE program in 2023, which migrated to N3A with V0.9 PDK released in 2024. Offers automotive-grade specialty technologies (28-nanometer embedded flash memory, 28-, 22- and 16-nanometer millimeter wave (“mmWave”) RF, HDR, high sensitivity CMOS image sensor (“CIS”)/LiDAR sensors, and PMICs). MRAM demonstrated automotive Grade-1 capability on 22-nanometer and passed on 16-nanometer in 2023.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

Digital Consumer Electronics

Financial Performance:

• Revenue: NT$47,961 million (+2.0% YoY) in 2024.
• Operating Margin: Not disclosed at the platform level.
• Key Growth Drivers: Demand for AI-enabled smart devices.

Product Portfolio:

• Major product lines and services within platform: Provides leading 6-nanometer FinFET, 7-nanometer FinFET, 16FFC/12FFC, 22ULP/22ULL, and 28HPC+ technologies.
• Applications: Used in 8K/4K DTVs, STBs, 4K SMDs/OTT, DSLR cameras.

Market Dynamics: Not disclosed for this specific platform.

Geographic Revenue Distribution: Not disclosed for this specific platform.

International Operations & Geographic Analysis

Revenue by Geography (Customer Headquarters):

• Subsidiaries:
  • TSMC Washington, LLC (U.S.) - Wholly-owned.
  • TSMC China Company Limited (China) - Wholly-owned.
  • TSMC Nanjing Company Limited (China) - Wholly-owned.
  • TSMC Arizona Corporation (U.S.) - Wholly-owned, for advanced semiconductor manufacturing.
  • JASM (Japan) - Approximately 72.6% owned, with Sony Semiconductor Solution Corporation, DENSO Corporation, and Toyota Motor Corporation as minority investors.
  • ESMC (Germany) - 70.0% owned, with Robert Bosch GmbH, Infineon Technologies AG, and NXP Semiconductors Germany GmbH as minority investors.
  • TSMC Global Ltd. (B.V.I.) - Wholly-owned, for corporate treasury investment.
• Joint Ventures:
  • Vanguard International Semiconductor Corporation (Taiwan) - Approximately 27.6% owned.
  • Systems on Silicon Manufacturing Company Pte. Ltd. (Singapore) - Approximately 38.8% owned. * Global Unichip Corporation (Taiwan) - Approximately 34.8% owned.
  • VisEra Technologies Company, Ltd. (Taiwan) - Approximately 67.3% owned.
  • Xintec, Inc. (Taiwan) - Approximately 41.0% owned.
• Licensing Agreements: Systems on Silicon Manufacturing Company Pte. Ltd. pays Taiwan Semiconductor Manufacturing Company Limited a fixed percentage of net selling price for technical knowledge and IP licenses.

Cross-Border Trade:

• Export Markets: Substantially all sales are denominated in U.S. dollars, indicating a significant international export market for the company's semiconductor products.
• Import Dependencies: Over half of capital expenditures are made in non-NT dollar currencies, including U.S. dollars, Euros, and Japanese yen. Key raw materials such as silicon wafers, chemicals, gases, and photoresist are sourced from suppliers in Taiwan, Japan, Germany, and Singapore, with some materials being sole-sourced.
• Transfer Pricing: While not explicitly detailed in the provided text, transfer pricing is identified as a potential tax risk, implying inter-company transactions across jurisdictions.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In Q2 2024, Taiwan Semiconductor Manufacturing Company Limited repurchased and cancelled 3,249,000 common shares for approximately NT$3,089 million (US$94 million), at an average price of approximately NT$951 per share.
• Dividend Payments: The Board of Directors is authorized to approve quarterly cash dividends.
  • First quarter of 2024: NT$103,734.5 million (NT$4.00013820 per share)
  • Second quarter of 2024: NT$103,721.5 million (NT$3.99963706 per share)
  • Third quarter of 2024: NT$116,697.3 million (NT$4.50002042 per share)
  • Fourth quarter of 2024: NT$116,697.3 million (NT$4.50 per share)
• Dividend Yield: Not explicitly stated in the filing.
• Future Capital Return Commitments: The company's dividend policy prioritizes cash dividends, with stock dividends not exceeding 50% of the total distribution.

Balance Sheet Position (as of December 31, 2024):

• Cash and Equivalents: NT$2,422,019 million (US$73,864 million), which includes cash, cash equivalents, and current marketable securities.
• Total Debt: Aggregate long-term debts were NT$1,018,286 million (US$31,055 million), with NT$59,858 million (US$1,825 million) classified as current. This includes bonds payable and long-term bank loans.
• Net Cash Position: Approximately NT$1,403,733 million (US$42,810 million), calculated as Cash and Equivalents minus Total Long-Term Debt.
• Credit Rating: AA- from Standard & Poor’s and Aa3 from Moody’s, consistent with December 31, 2023.
• Debt Maturity Profile: Total contractual long-term debt obligations (undiscounted) were NT$1,232,100 million. Maturities for corporate bonds range from less than one year to 36 years, with fixed interest rates from 0.36% to 4.63%.

Cash Flow Generation (2024):

• Operating Cash Flow: NT$1,826,177 million (US$55,693 million), an increase of NT$584,210 million from 2023. This was primarily driven by income before income tax and non-cash depreciation and amortization expenses.
• Free Cash Flow: Approximately NT$870,170 million (US$26,539 million), calculated as operating cash flow less capital expenditures (NT$1,826,177 million - NT$956,007 million).
• Cash Conversion Metrics: Not explicitly stated in the filing.

Currency Management:

• Cash holdings by major currencies: Not explicitly detailed, but the company's substantial cash and equivalents are likely held across major currencies given its global operations.
• Natural hedging through operational diversification: The company's global operations and capital expenditures in multiple currencies (U.S. dollars, Euros, Japanese yen) provide some natural hedging against currency fluctuations.
• Financial hedging instruments and strategies: Taiwan Semiconductor Manufacturing Company Limited uses foreign currency derivatives (currency forwards, currency swaps) and non-derivative financial instruments (foreign currency denominated debts) to partially hedge currency exchange rate risk on non-NT dollar assets/liabilities and forecasted transactions.

Operational Excellence

Production & Service Model: Taiwan Semiconductor Manufacturing Company Limited operates as a dedicated foundry, manufacturing semiconductors for customers based on their proprietary integrated circuit designs. Its operational philosophy centers on providing comprehensive services, including wafer fabrication (CMOS logic, mixed-signal, radio frequency, embedded memory, BiCMOS mixed-signal), design, mask making, TSMC 3DFabric advanced silicon stacking and packaging technologies, and testing. The company's "Foundry 2.0" approach integrates logic wafer manufacturing with packaging, testing, and mask-making services.

Global Supply Chain Architecture: Key Suppliers & Partners:

• Raw Materials: Key raw materials include silicon wafers, chemicals, gases, and photoresist. While most are available from multiple suppliers, some are sole-sourced. Major wafer suppliers are located in Taiwan, Japan, Germany, and Singapore, with whom Taiwan Semiconductor Manufacturing Company Limited maintains long-term agreements.
• Equipment: Principal equipment, including scanners, etchers, CVD equipment, and testers, is owned by Taiwan Semiconductor Manufacturing Company Limited, except for certain leased equipment in testing areas.
• Technology Partners: The company collaborates with major suppliers to enhance cybersecurity and is involved with the Semiconductor Equipment and Materials Institute (SEMI) to promote SEMI E187 standards and has joined the Semiconductor Manufacturing Cybersecurity Consortium (SMCC).

Facility Network:

• Manufacturing: Taiwan Semiconductor Manufacturing Company Limited operates one 150mm wafer fab, six 200mm wafer fabs, nine 300mm wafer fabs, and five advanced backend fabs. These facilities are primarily located in Taiwan (Hsinchu, Central Taiwan, Southern Taiwan Science Parks, and Kaohsiung Nanzih Technology Industrial Park). International manufacturing facilities include TSMC Washington, LLC (U.S.), TSMC China Company Limited (Shanghai, China), TSMC Nanjing Company Limited (Nanjing, China), TSMC Arizona (U.S.), JASM (Kumamoto, Japan), and ESMC (Dresden, Germany, future facilities). Annual capacity reached approximately 17 million 12-inch equivalent wafers in 2024, up from 16 million in 2023, driven by expansion in 3-nanometer and 5-nanometer advanced technologies.
• Research & Development: R&D activities are centralized for new logic, SoC, derivatives, package/SIP technologies, and 3D wafer level system integration solutions (InFO, CoWoS, TSMC-SoIC). Fab-conducted R&D focuses on improving and upgrading manufacturing process technologies. The company plans for an R&D center in the United States.
• Distribution: Worldwide customer support is provided from Hsinchu and through subsidiaries in the United States, Canada, Japan, China, Germany, the Netherlands, and South Korea, indicating a robust global logistics and support infrastructure.

Operational Metrics:

• Capacity utilization: The increase in gross margin in 2024 was partly attributed to higher capacity utilization and productivity gains.
• Wafer shipments: Total wafer shipments (12-inch equivalent) were 12,910 thousand in 2024, up from 12,002 thousand in 2023.
• Advanced technology adoption: Advanced technologies (7-nanometer and below) accounted for 69% of total wafer revenue in 2024, an increase from 58% in 2023.
• Quality indicators: The company experienced approximately NT$3 billion in losses (net of insurance claims) from an earthquake in April 2024 and NT$5.3 billion in losses (net of insurance claims) from earthquakes in January 2025, impacting plant facilities, machinery, equipment, and inventories.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Taiwan Semiconductor Manufacturing Company Limited primarily employs a direct sales model for its dedicated foundry services, engaging directly with customers for their proprietary integrated circuit designs.
• Channel Partners: While not explicitly detailed as channel partners, the company's global network of customer support offices and subsidiaries in the United States, Canada, Japan, China, Germany, the Netherlands, and South Korea facilitates market access and customer relationships.
• Digital Platforms: The Open Innovation Platform (OIP) initiative, unveiled in 2008, provides design and technology platforms. The Multi-project Wafer Program (“CyberShuttle”) offers shared-cost prototyping and verification services for various process technologies.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: The company serves a broad portfolio of major enterprise clients, including Advanced Micro Devices, Inc., Amazon Web Services, Inc., Broadcom Inc., Intel Corporation, MediaTek Inc., NVIDIA Corporation, NXP Semiconductors N.V., Qualcomm Inc., Renesas Electronics Corporation, and Sony Semiconductor Solutions Corporation.
• Strategic Partnerships: Strategic partnerships are evident through minority investments in its international subsidiaries, such as Sony Semiconductor Solution Corporation, DENSO Corporation, and Toyota Motor Corporation in JASM (Japan), and Robert Bosch GmbH, Infineon Technologies AG, and NXP Semiconductors Germany GmbH in ESMC (Germany).
• Customer Concentration: The ten largest customers accounted for 76% of net revenue in 2024 (up from 70% in 2023). The largest customer represented 22% of net revenue in 2024 (down from 25% in 2023), while the second largest customer accounted for 12% of net revenue in 2024 (up from 11% in 2023). Customer concentration is also reflected in accounts receivable, with the ten largest customers accounting for 93% of accounts receivable at December 31, 2024.

Regional Market Penetration:

• North America: Generated NT$2,031,326 million in revenue in 2024, representing 70% of total revenue, with a significant growth rate of +38% year-over-year.
• China: Contributed NT$331,673 million in revenue in 2024, accounting for 11% of total revenue, with a growth rate of +24.1% year-over-year.
• Asia Pacific (ex-China/Japan): Generated NT$284,308 million in revenue in 2024, representing 10% of total revenue, and experienced substantial growth of +63% year-over-year.
• Japan: Contributed NT$144,240 million in revenue in 2024, accounting for 5% of total revenue, with a growth rate of +9.2% year-over-year.
• EMEA: Generated NT$102,761 million in revenue in 2024, representing 4% of total revenue, but experienced a decline of -12.5% year-over-year.
• Taiwan (customer headquarters): Contributed NT$270,413.5 million in revenue in 2024, representing 9.3% of total revenue, with a growth rate of +80.5% year-over-year.
• Growth Markets: Strategic investments in new fabs in the U.S. (TSMC Arizona), Japan (JASM), and Germany (ESMC) underscore the company's focus on expanding its manufacturing presence and market penetration in key global regions, often supported by local government incentives.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The semiconductor industry is characterized by its cyclical nature, experiencing fluctuations in product demand and periods of downturns and overcapacity. Manufacturing facilities involve substantial fixed costs. The industry's growth is driven by demand for products containing semiconductors across various platforms, including High Performance Computing (HPC), smartphones, Internet of Things (IoT), automotive, and digital consumer electronics. A key market dynamic is the rapid development of AI. Governments in the U.S., China, Europe, South Korea, and Japan are actively providing incentives and subsidies (e.g., U.S. CHIPS Act, European Chips Act) to promote and localize their domestic semiconductor industries.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Taiwan Semiconductor Manufacturing Company Limited competes with other dedicated foundry service providers and integrated device manufacturers (IDMs).

• Company Name: The filing indicates that some competitors may possess more advanced technologies or greater financial resources, often bolstered by government subsidies.

Regional Competitive Dynamics: The competitive landscape varies by major geographic markets. Global competition is intense across process technologies, manufacturing excellence, customer trust, and service quality. Government incentives in regions like the U.S., Europe, and Japan, aimed at fostering domestic semiconductor industries, are intensifying regional competition and influencing investment decisions and supply chain localization strategies.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics:

• Global Systemic Risks: Exposure to global systemic political, economic, and financial crises, political and trade tensions (e.g., U.S. tariffs, non-tariff trade barriers, sanctions, export controls), and military conflicts (e.g., Ukraine).
• Technology Disruption: Risk of failing to maintain technological leadership, respond effectively to market dynamics (such as AI development), or uphold product quality and yield, which could reduce competitiveness.
• Customer Concentration: High customer concentration poses a risk, with the ten largest customers accounting for 76% of net revenue in 2024. The largest customer represented 22% of net revenue, and the second largest accounted for 12% in 2024.
• Industry Cyclicality: The semiconductor industry is cyclical, with inherent fluctuations in product demand and periods of downturns and overcapacity.
• Decreased Demand/ASP: Potential adverse effects on revenue and earnings from decreases in demand and average selling prices (ASP) for products containing semiconductors across HPC, smartphones, IoT, automotive, and digital consumer electronics platforms.

Operational & Execution Risks

Global Supply Chain Vulnerabilities:

• Supplier Dependency: Inability to obtain necessary equipment and supplies in a timely manner and at a reasonable cost from a limited number of suppliers. Some raw materials are sole-sourced, increasing dependency risk.
• Regional Disruptions: Operations are susceptible to natural disasters (earthquakes, flooding, typhoons, droughts, tsunamis, sandstorms, wildfires, volcanic eruptions), man-made disasters (fire, gas/chemical leakage/spill, pandemic, cyberattacks, geopolitical tensions, sabotage), and failures of critical facilities/equipment or utility disruptions. Earthquakes in April 2024 and January 2025 resulted in approximately NT$3 billion and NT$5.3 billion in losses, respectively, net of insurance claims.
• Trade Restrictions: Exposure to U.S. export control measures (e.g., against Huawei Technology Co. Ltd., the October Rules, and new January 2025 rules potentially requiring export licenses for products using 16-nanometer or below processes to any global destination). China's adoption of a blocking statute in January 2021 also presents a risk.
• Capacity Management: Inability to effectively manage capacity and production facilities, including accurate long-term market demand forecasts and timely capacity expansion plans, could weaken competitiveness.
• Global Expansion Challenges: Global expansion projects, including new fabs worldwide, face challenges such as higher construction costs, establishing overseas supply chains, recruiting and retaining talent, labor shortages, construction delays, scarcity of industrial-use land, compliance with foreign laws, managing IT infrastructure, adverse changes in government grants, creating inclusive workplaces, and limited intellectual property protection in certain jurisdictions.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: Adverse fluctuations in exchange rates could decrease operating margin and/or revenue, as substantially all sales are in U.S. dollars and over half of capital expenditures are in non-NT dollar currencies (U.S. dollars, Euros, Japanese yen). A 1% depreciation of the U.S. dollar against the NT dollar would result in an approximately 0.4 percentage point decrease in operating margin based on 2024 results.
• Interest Rate Risk: Exposure to interest rate risks on its investment portfolio and outstanding debt.
• Credit & Liquidity: Risks related to access to global capital markets.
• Inflation Risk: Subject to inflation through increased costs of raw materials, equipment, wages, employee benefits, electricity, and fab construction. Electricity tariff rates in Taiwan increased by 25% in April 2024 and by another 14% in October 2024.
• Impairment Charges: Impairment charges on tangible assets, right-of-use assets, and intangible assets may materially affect net income.

Regulatory & Compliance Risks:

• Multi-Jurisdictional Compliance: Exposure to changes in laws (IP, labor, antitrust, export control, import restrictions, trade barriers) across the R.O.C., U.S., P.R.C., Japan, and Europe.
• Trade Regulations: Risks associated with export controls, sanctions compliance, and the costs of adhering to complex trade regulations. In October 2024, Taiwan Semiconductor Manufacturing Company Limited notified U.S. and Taiwan authorities about the potential diversion of a customer’s chip to a restricted entity.
• Tax Regulations: Amendments to existing tax regulations or new tax laws in the R.O.C., U.S., or other jurisdictions (e.g., OECD BEPS project) may adversely affect net income. This includes R.O.C. Controlled Foreign Company (CFC) rules, the Statute for Industrial Innovation, and the Alternative Minimum Tax (AMT). The expiration of tax holidays for parts of Fab 15 and Fab 14 at the end of 2022 also impacts tax benefits.
• Antitrust Proceedings: Potential adverse results from antitrust proceedings, such as the investigation by the European Commission in 2017 (closed in 2020).
• Environmental & Climate Related Laws: Compliance with environmental and climate-related laws, including the R.O.C. Climate Change Response Act, which established a carbon fee system starting from 2025.
• IP Litigation: Inability to obtain, preserve, enforce, defend, and protect technologies, intellectual property rights, and third-party licenses. In February 2025, Longitude Licensing Ltd. and Marlin Semiconductor Limited filed complaints with the U.S. International Trade Commission (“ITC”) and the U.S. District Court for the Eastern District of Texas alleging patent infringement.

Geopolitical & External Risks

Country-Specific Risks:

• Political Risk: Deterioration in political, economic, financial, or social conditions, military conflicts, terrorism, security risks, social unrest, health conditions, and transportation disruptions could adversely impact business, particularly given that the majority of principal executive officers and production facilities are located in the R.O.C.
• Economic Risk: Risks include currency devaluation and economic instability in various operating jurisdictions.
• Regulatory Changes: Changes in local laws affecting operations in different countries.
• Restrictions on Personnel Transfer: Restrictions on transferring personnel among R.O.C., U.S., P.R.C., Japan, and Europe operations may reduce competitive advantages.

Innovation & Technology Leadership

Research & Development Focus: Global R&D Network:

• R&D Centers: Taiwan Semiconductor Manufacturing Company Limited maintains a robust R&D network with centralized R&D focusing on new logic, SoC, derivatives, package/SIP technologies, and 3D wafer level system integration solutions such as InFO, CoWoS, and TSMC-SoIC. Additionally, R&D activities are conducted at the fab level to improve and upgrade manufacturing process technologies. The company has announced plans for an R&D center in the United States.
• Innovation Pipeline:
  • 3-nanometer technology entered volume production in 2022.
  • 2-nanometer technology development is on track, with volume production expected in 2025.
  • Significant investment in R&D is planned for 2025 to maintain leadership in advanced process technologies (2-nanometer and below).
  • HPC-focused N4X and N3X technologies have been introduced.
  • The N3AE program, initiated in 2023, migrated to N3A with V0.9 PDK released in 2024.
  • In 2024, the company announced EDA and IP readiness for 2-nanometer and 3-nanometer technologies, along with the openness of the 3Dblox Standard and availability of 3DIC reference flows for TSMC 3DFabric technologies.
• R&D Expenditure: R&D expenses totaled NT$204,182 million (US$6,227 million) in 2024, representing 7.1% of net revenue, an increase of 12.0% from 2023.

Intellectual Property Portfolio:

• Patent Strategy: Taiwan Semiconductor Manufacturing Company Limited holds a substantial number of patents in the U.S. and other countries, indicating a strong focus on intellectual property protection.
• Licensing Programs: The company engages in licensing arrangements, such as Systems on Silicon Manufacturing Company Pte. Ltd. paying for technical knowledge and IP licenses.
• IP Litigation: Taiwan Semiconductor Manufacturing Company Limited has received communications and lawsuits from third parties alleging patent infringement, including complaints filed by Longitude Licensing Ltd. and Marlin Semiconductor Limited with the U.S. International Trade Commission and the U.S. District Court for the Eastern District of Texas in February 2025.

Technology Partnerships:

• Strategic Alliances: The Open Innovation Platform (OIP) initiative, unveiled in 2008, fosters collaboration within the ecosystem.
• Research Collaborations: The company collaborates with major suppliers to enhance cybersecurity and has joined the Semiconductor Manufacturing Cybersecurity Consortium (SMCC), promoting SEMI E187 standards.

Leadership & Governance

Executive Leadership Team

International Management Structure: The company employs a decentralized management structure for its international operations, with dedicated regional leadership such as Rick Cassidy (Chairman, TSMC Arizona), Y.L. Wang (CEO, TSMC Arizona), Y.H. Liaw (CEO, JASM), and Ray Chuang (CEO, ESMC). These regional leaders report into a centralized oversight structure led by the Chairman and CEO, C.C. Wei, and Co-Chief Operating Officers Y.P. Chyn and Y.J. Mii.

Board Composition: The Board of Directors comprises ten directors, seven of whom are independent, ensuring a majority of independent oversight. Directors serve a three-year term, with the current board's term expiring in 2027. The board includes several independent directors with international experience, such as Sir Peter L. Bonfield, Michael R. Splinter, Moshe N. Gavrielov, L. Rafael Reif, Ursula M. Burns, and Lynn L. Elsenhans. The board's committee structure, including the Audit and Risk Committee, Compensation and People Development Committee, and Nominating, Corporate Governance and Sustainability Committee, is adapted to address cross-border operational and governance complexities.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• R.O.C.: Operations are subject to regulations and monitoring by the R.O.C. Ministry of Environment. The R.O.C. Climate Change Response Act, effective February 2023, sets a goal of net-zero emissions by 2050 and established a carbon fee system to be levied from 2025. The R.O.C. corporate income tax rate is 20%, with Controlled Foreign Company (CFC) rules implemented on January 1, 2023. The Statute for Industrial Innovation offers investment tax credits for qualified R&D expenditure and procurement of machinery/equipment for advanced processes. The Alternative Minimum Tax (AMT) rate for business entities is 12%.
• United States: Subject to regulations by the U.S. Environmental Protection Agency and U.S. export control measures. The U.S. CHIPS Act provides funding opportunities, such as those secured by TSMC Arizona Corporation.
• China: Operations are monitored by the State Environmental Protection Administration of China. China adopted a blocking statute in January 2021, allowing Chinese entities to seek civil remedies for damages from compliance with foreign laws.
• Japan: Subject to regulations by the Japan Ministry of the Environment.
• Europe: Operations are subject to oversight by the European Environment Agency and European Chemicals Agency. The European Chips Act provides state aid opportunities, as demonstrated by the agreement for ESMC.

Cross-Border Compliance:

• Export Controls: Taiwan Semiconductor Manufacturing Company Limited is subject to stringent U.S. export control measures, including those against Huawei Technology Co. Ltd. and the October Rules on advanced computing integrated circuits and semiconductor manufacturing items to specified countries, including China. New U.S. rules issued in January 2025 may require an export license for shipping products using 16-nanometer or below processes to any global destination unless specific conditions are met. The company obtained a Validated End-User (VEU) authorization for its fab in Nanjing, China. In October 2024, it notified U.S. and Taiwan authorities about the potential diversion of a customer’s chip to a restricted entity.
• Sanctions Compliance: The company faces risks related to multi-jurisdictional sanctions and maintains compliance monitoring programs.
• Anti-Corruption: Compliance with anti-corruption laws, such as the FCPA and local anti-bribery laws, is managed through internal compliance programs.

International Tax Strategy:

• Transfer Pricing: The company's international tax strategy includes policies and documentation requirements for inter-company transactions to manage transfer pricing risks.
• Tax Treaties: The R.O.C. has double taxation treaties with over 30 countries, but not with the United States, impacting cross-border tax planning.
• BEPS Compliance: The company monitors and adapts to Base Erosion and Profit Shifting (BEPS) regulations stemming from the OECD project.

Environmental & Social Impact

Global Sustainability Strategy: Environmental Commitments:

• Climate Strategy: Taiwan Semiconductor Manufacturing Company Limited's operations in Taiwan are subject to the R.O.C. Climate Change Response Act, which sets a national goal of net-zero emissions by 2050 and established a carbon fee system.
• Carbon Neutrality: While a company-wide carbon neutrality target is not explicitly stated, the company demonstrates significant progress in renewable energy adoption.
• Renewable Energy: In 2024, Taiwan Semiconductor Manufacturing Company Limited used 3,610 GWh in renewable energy, renewable energy certificates, and carbon credits globally. Approximately 2,160 GWh enabled overseas sites to be 100% clean energy powered for the seventh consecutive year. As of the end of 2024, the company had signed power purchase agreements to acquire 4.4 GW of renewable energy, projected to eliminate an estimated 5.2 million metric tons of carbon dioxide equivalent emissions per year.

Regional Sustainability Initiatives:

• Supply Chain: The company emphasizes a responsible supply chain, implying global supplier ESG requirements and sustainability standards. In 2024, it organized a cybersecurity workshop for nearly 800 participants from approximately 500 suppliers.
• Green Manufacturing: Green manufacturing is a key focus area of the company's ESG initiatives. Semiconductor production generates gaseous chemical wastes, greenhouse gases (GHG), liquid wastes, wastewater, and industrial wastes, which are subject to various environmental regulations and monitoring by authorities globally.

Social Impact by Region:

• Community Investment: Taiwan Semiconductor Manufacturing Company Limited demonstrates social responsibility through its TSMC Education and Culture Foundation and TSMC Charity Foundation, focusing on care for the underprivileged and local community programs.
• Labor Standards: A healthy and inclusive workplace and talent development are key focus areas. The company offers a Global Employee Stock Purchase Plan and an employee profit sharing program.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure (2024):

Hedging Strategies:

• Transaction Hedging: Taiwan Semiconductor Manufacturing Company Limited employs foreign currency derivatives, such as currency forwards and currency swaps, to partially hedge short-term foreign exchange risk on forecasted transactions.
• Translation Hedging: The company utilizes foreign currency derivatives and non-derivative financial instruments, including foreign currency denominated debts, to partially hedge balance sheet currency exposure arising from non-NT dollar assets and liabilities.
• Economic Hedging: While not explicitly detailed as a distinct strategy, the company's operational diversification across various regions and its multi-currency capital expenditures contribute to a natural hedge, mitigating long-term competitive exposure to currency fluctuations.