2012 TSMC Corporate Social Responsibility Report TSMC 2012 Corporate Social Responsibilityresponsibility Report Report

2012 TSMC Corporate Social Responsibility Report TSMC 2012 Corporate Social ResponsibilityResponsibility Report Report TSMC Core Values Integrity – Integrity is our most basic and most important core value. We tell the truth. We believe the record of our accomplishments is the best proof of our merit. Hence, we do not brag. We do not make commitments lightly. Once we make a commitment, we devote ourselves completely to meeting that commitment. We compete to our fullest within the law, but we do not slander our competitors and we respect the intellectual property rights of others. With vendors, we maintain an objective, consistent, and impartial attitude. We do not tolerate any form of corrupt behavior or politicking. When selecting new employees, we place emphasis on the candidates’ qualifications and character, not connections or access. Commitment – TSMC is committed to the welfare of customers, suppliers, employees, shareholders, and society. These stakeholders all contribute to TSMC’s success, and TSMC is dedicated to serving their best interests. In return, TSMC hopes all these stakeholders will make a mutual commitment to the Company. Innovation – Innovation is the wellspring of TSMC’s growth, and is a part of all aspects of our business, from strategic planning, marketing and management, to technology and manufacturing. At TSMC, innovation means more than new ideas, it means putting ideas into practice. Customer Trust – At TSMC, customers come first. Their success is our success, and we value their ability to compete as we value our own. We strive to build deep and enduring relationships with our customers, who trust and rely on us to be part of their success over the long term. Corporate Headquarters & Fab 12 I TSMC 2012 Corporate Social Responsibility Report Table of Contents Overview 1 5. A Great Place to Work 32 8. Environmental Protection 74 5.1 Right People with Shared Vision and Values 33 8.1 Environmental Protection Major Activities in 2012 76 1. Letter from the Chairman and CEO 6 5.2 Encourage a Balanced Life 39 8.2 Building Green Fabs, Green Campus, and 5.3 Employee Engagement 42 Assisting the Government to Establish Green Factory Guidelines 77 2. Company Profile 9 5.4 Employees’ Physical and Mental Wellbeing 46 8.3 Climate Change 80 2.1 Market/Business Summary 10 5.5 Safety and Health 48 8.4 Water Resource Management 86 2.2 Innovation Management 11 8.5 Green Product 89 2.3 Trade Secret Protection 19 6. Customer Service and Supplier Management 54 8.6 Pollution Prevention 92 2.4 Membership in Industry Associations 19 6.1 Customer Service and Satisfaction 55 8.7 Environmental Management System 98 2.5 Investor Engagement 19 6.2 Supplier Management 55 8.8 Green Promotion and Ecological Preservation 100 2.6 Financial Highlights 21 7. Social Participation 61 Appendix 103 3. Stakeholder Engagement 23 7.1 TSMC Education and Culture Foundation 62 TSMC CSR Performance Summary 104 7.2 Commitment to Education: Promotion of 63 Assurance Statement 106 4. Corporate Governance 26 Appreciation for Arts & Cultivating Science Talent 66 GRI G3.1 Index 108 4.1 Governance Structure 27 7.3 Promotion of Arts and Culture 67 ISO 26000 Index 116 4.2 Board of Directors 27 7.4 Community Building – the TSMC Hsin-chu Festival Un ited Nation Global Compact Comparison Table 118 4.3 Political Contributions 28 7.5 TSMC Volunteer Program – “Long-term Commitment to Chosen Service Themes” 67 Contact Information 119 4.4 Code of Ethics and Business Conduct 28 30 4.5 Regulatory Compliance Mouse over for interactive content. 4.6 Risk Management 31 Click to play video. TSMC 2012 Corporate Social Responsibility Report Overview As a good corporate citizen, TSMC is fully committed to its Service, Human Resources, Investor Relations, the Legal agenda, and reported the year’s plans and progress to the corporate social responsibilities. We believe a company’s Department, Material and Supply Chain Management, Board, making corporate social responsibility a part of the corporate social responsibility is to uplift society, and Operations, Public Relations, Quality and Reliability, R&D, company’s decision-making. also believe that strong employee and supplier relations, Risk Management, Corporate ESH, the independent TSMC corporate governance, business ethics, social contribution, Education & Culture Foundation and TSMC Volunteer In 2012, TSMC was again selected as a component of and environmental protection are the cornerstones of Program, who participate in a quarterly meeting led by CFO the Dow Jones Sustainability Indexes (DJSI) for the 12th TSMC’s sustainable growth. and the President of the Volunteer Program. The quarterly consecutive year. Furthermore, TSMC was recognized as the CSR meeting systematically and effectively carries out DJSI Sector Leader among global semiconductor companies TSMC’s decision-making and operations in corporate our corporate social responsibilities by following a “Plan- for the second year since 2010, which testifies to TSMC’s social responsibility is led by the company’s Chief Financial Do-Check-Act” cycle to regularly review interaction with global reputation in sustainability and investment value over Officer, who was appointed by the Chairman to act as an stakeholders and the issues that concern them, as well as the long run. overall coordinator for the entire company’s CSR activities. discuss progress in CSR activities and set future plans. The Chief Financial Officer coordinates with all CSR- Through our 2012 Corporate Social Responsibility (CSR) related organizations in the company and has assembled Through close cooperation between organizations, CSR Report, we would like to share with you our continuing a “Corporate Social Responsibility Committee”. This CSR is now an integral part of TSMC’s daily operations. In efforts in sustainable development along the economic, Committee is made up of representatives from Customer 2012, TSMC added CSR to the Board of Directors’ official environmental and social dimensions. 1 TSMC 2012 Corporate Social Responsibility Report TSMC CSR Management System Report Scope and Profile This report outlines our performance in the full 2012 calendar year for the most relevant CSR issues to our stakeholders and our business. A portion of the contents cover our overseas subsidiaries TSMC China, WaferTech in the United States, and overseas offices, as noted. Financial figures in this report are expressed in NT dollars unless otherwise specified. Environmental performance is expressed in commonly accepted benchmarks. We publish this report annually, and the previous report was published in June 2012. This report is compiled based on the Global Reporting Initiative (GRI) G3.1 framework; a table is attached in appendix for the readers’ reference. In addition, we refer to ISO 26000 Guidance on Social Responsibility and United Nations Global Compact, and also provide a table in Appendix. This report is published in both English and Chinese and is available on TSMC’s corporate website. Report Assurance The DNV Business Assurance reviewed this report against the AccountAbility AA1000 Assurance Standard and the GRI G3.1 guideline on materiality, inclusivity and responsiveness, and verified this report complies with GRI Application Level A+. The data and information of financial data and Greenhouse Gases (GHG) emission/reduction data has been acquired from the verified financial report and GHG Inventory report. DNV’s Report Assurance Statement can be found at the annex of this report. 2 TSMC 2012 Corporate Social Responsibility Report The Summary of TSMC CSR Goals and Achievements on Material Topics CSR Commitments or Goals Performance Indexes or Guidelines 2012 Achievements Future Focuses Material Topics Shareholder Achieve profitable growth Financial objectives: - 2012 ROE reached 24.6%, profit before tax increased 25.1% - Execute our growth strategies, protect structural profitability Value Creation (1) Average ROE across cycle greater or - Dividend-adjusted share price increased 33% during 2012 (vs. and return on investments equal to 20% TAIEX +9%) and market capitalization reached a record US$86 - Continue to enhance corporate governance and maintain good (2) 10% profit before tax compounded billion relationship with investors annual growth rate from 2010 to 2015 Innovation Advanced technology Extend Moore’s Law Already the first foundry to provide 65nm and 40nm production - 16nm next-generation technology for both digital and analog Management capacity, TSMC is also the first foundry to offer volume production products of 28nm, with the first-to-market 28nm high-k/metal gate (HKMG) - 10nm exploratory technology for both digital and analog technology portfolio products - EUV and multiple e-beam to extend Moore’s Law Spectrum of technology TSMC continues to conduct research - TSMC’s HV/Power technologies collectively shipped more than Special SoC technology (including new NVM, MEMS, RF, analog) and development on a broad mix of one million wafers to customers and 10nm transistors capabilities. The Company enhanced its - Released the second generation of 0.18 BCD technology SoC (System-on-Chip) roadmap, with - Modular MEMS technology for accelerometer was released higher integration and more variants. Customer Maintain TSMC’s position as Customer satisfaction rating on overall 99% customers who gave high rating on the survey question of Maintain TSMC's leadership in the semiconductor industry Satisfaction the most advanced and largest technology “Overall Technology” (>4)* provider of semiconductor

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