2. company profilefpga (field-programmable gate array), networking and mobile computing...

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2.1 An Introduction to TSMC

TSMC is the world’s largest pure-play semiconductor foundry.

Founded on February 21, 1987 and headquartered in Hsinchu,

Taiwan, TSMC pioneered the business model of focusing solely on

manufacturing customers’ semiconductor designs. As a pure-play

semiconductor foundry, the Company does not design, manufacture,

or market semiconductor products under its own brand name,

ensuring that TSMC does not compete directly with its customers.

With a diverse global customer base, TSMC-manufactured microchips

are used in a broad variety of applications that cover various

segments of the computer, communications, consumer, industrial

and other electronics markets.

Annual capacity of the manufacturing facilities managed by TSMC,

including subsidiaries and joint ventures, totaled 15.09 million 8-inch

equivalent wafers in 2012. In Taiwan, TSMC operates three advanced

12-inch wafer fabs, four 8-inch wafer fabs, and one 6-inch wafer fab.

TSMC also manages two 8-inch fabs at wholly owned subsidiaries:

WaferTech in the United States and TSMC China Company Limited. In

addition, TSMC obtains 8-inch wafer capacity from other companies

in which the Company has an equity interest.

TSMC provides customer service through its account management

and engineering services offices in North America, Europe, Japan,

China, South Korea, and India. The Company employed more than

37,000 people worldwide as of the end of 2012.

TSMC continued to lead the foundry segment of the semiconductor

industry in both advanced and “More-than-Moore” process

technologies. Already the first foundry to provide 65nm and 40nm

production capacity, TSMC in 2012 also reached full volume

production of 28nm featuring 28HP & 28HPM for high performance

and 28LP & 28HPL for low power, and began the initial customer

tape out of 20nm technology. In addition to general-purpose logic

process technology, TSMC supports the wide-ranging needs of its

customers with embedded non-volatile memory, embedded DRAM,

Mixed Signal/RF, high voltage, CMOS image sensor, MEMS, silicon

germanium technologies and automotive service packages.

2. Company Profile

TSMC’s subsidiaries “TSMC Solid State Lighting Ltd.” and “TSMC

Solar Ltd.” also respectively engage in the researching, developing,

designing, manufacturing and selling of solid state lighting devices as

well as related products and systems, and solar-related technologies

and products.

The Company is listed on the Taiwan Stock Exchange (TWSE) under

ticker number 2330, and its American Depositary Shares trade on the

New York Stock Exchange (NYSE) under the symbol “TSM”.

2.2 Market/Business Summary

2.2.1 TSMC Achievements

In 2012, TSMC maintained its leading position in the total foundry

segment of the global semiconductor industry, with an estimated

market segment share of 45%. TSMC achieved this result amid

intense competition from both established players and relatively new

entrants to the business.

Leadership in advanced process technologies is a key factor in TSMC’s

strong market position. In 2012, 77% of TSMC’s wafer revenue

came from manufacturing processes with geometries of 0.13μm and

below; 62% of TSMC’s wafer revenue came from 65nm processes

and below.

With TSMC’s focus on customer trust, the Company continuously

strengthened its Open Innovation Platform® (OIP) initiative

in 2012 with additional innovative services. During the 2012

TSMC Technology Symposium and the 2012 Design Automation

Conference of IEEE/ACM, the Company revealed TSMC 20nm

Reference Flow, CoWoSTM Reference Flow, the fourth revision of

radio frequency (RF) reference design kit, and 20nm Custom Design

Reference Flow, to highlight the success of design enablement

through OIP. The OIP Ecosystem Forum, which was held in October

2012 at San Jose, California, was well attended by both customers

and ecosystem partners to demonstrate the value of collaboration

through OIP to foster innovations.

TSMC continued to advance the semiconductor roadmap in 2012.

Examples of technologies the Company either developed or rolled out

include:

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● �16nm FinFET technology (16FF) is under development to provide best value in speed/power optimization to meet next generation

products requirements in CPU (Central Processing Unit), GPU

(Graphics Processing Unit), APU (Accelerated Processing Unit),

FPGA (Field-Programmable Gate Array), Networking and mobile

computing applications, including smartphones, tablets and

high-end SoC (System-on-Chip) devices.● �20nm System-on-Chip technology (20-SoC) is under

development to provide the migration path from 28nm for both

performance-driven products and mobile computing applications.● �28nm High Performance (28HP) technology for performance-driven

markets like CPU, GPU, APU, FPGA and high-speed networking

applications.● �28nm High Performance Mobile computing (28HPM) technology

for tablets, smartphones, and high-end SoC applications.● �28nm Low Power (28LP & 28HPL) and RF (28HPL-RF) technology

for mainstream smartphones, application processors, tablets, home

entertainment and digital consumer applications.● �40nm general purpose technology for performance-driven markets

like CPU, GPU, FPGA, HDD, Game Console, Network Processor and

Gigabit Ethernet applications.● �40nm low power and RF technology for smartphones, DTV (Digital

Television), STB (Set-Top-Box), game and wireless connectivity

applications.● �40nm eFlash for non-volatile memory technologies under joint

development for high-end automotive application.● �55nm low power RF technology for WLAN (Wireless Local Area

Network), Bluetooth and other handheld applications.● �55nm & 65nm 5V LDMOS (Laterally Diffused Metal Oxide

Semiconductor) for power management application.● �55nm and 85nm ultra-low power technology for flash controller

applications.● �65nm joint developed eFlash technology qualified and in

production for industrial/automotive microcontroller and smartcard

applications.● �80nm & 0.11μm high voltage process for high resolution HD720

and FHD display driver IC, which could support Retina to Super

Retina display quality in smartphones.● �90nm uLL (Ultra Low Leakage) eFlash technology qualified and in

production for ASIC (Application-Specific Integrated Circuit) and

microcontroller applications.● �0.13μm new generation BCD (Binary Coded Decimal) process for

mobile computing is in risk production stage. It offers worldwide

competitive power LDMOS Rds(on) performance for better power

efficiency and allows micro controller integration to further increase

battery life.

● �0.18μm BCD second generation is in risk production stage. It offers worldwide competitive power LDMOS Rds(on) performance

and with wide voltage spectrum from 6V to 70V for multiple

applications in Computing, Communication and Consumer markets.● �0.18μm and 0.25μm high-precision analog process was fully

released, and offers TFR (Thin Film Resistor) and high linearity

MIM (Metal-Insulator-Metal) for performance-driven mixed-signal

applications.

In addition, TSMC further strengthened its comprehensive

development of specialty technologies in 2012, including the release

of 0.5μm ultra high voltage power IC technology, 90nm/65nm

smartcard, 40nm automotive and Backside Illumination CMOS Image

Sensor (BSI CIS), which successfully migrated to 65nm from 0.11μm

and to volume production in 12-inch fabs. In 2012, TSMC offered

a motion sensor 3D modular MEMS (Micro Electro Mechanical

Systems) with 30μm thick MEMS structure and wafer level bonding

for hermetic seal of the MEMS device. These first wave customers

have adapted the modular MEMS structure with separate ASIC driver

chip for accelerometer application and are now in production. TSMC

will offer fully integrated CMOS 3D modular MEMS with design

rule in the first quarter 2013 as a general offering. These specialty

technologies are key differentiators from our competitors and provide

customers more added value.

2.2.2 Market Overview

We estimate that the worldwide semiconductor market in 2012

reached US$308 billion in revenue, a 2% decline compared to 2011.

Total foundry, a manufacturing sub-segment of the semiconductor

industry, generated total revenues of US$34 billion in 2012, or 16%

YoY growth.

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2.2.3 Industry Outlook, Opportunities and Threats

Industry Demand and Supply Outlook

Following 5% growth in 2011, foundry segment growth accelerated

significantly by 16% in 2012, mainly driven by fabless market share

gain over IDM and process technology advancement.

We forecast total semiconductor market to grow 3% YoY in 2013.

Longer term, increasing semiconductor content in electronics devices,

continuing market share gain of fabless, and increasing in-house ASIC

from system companies, foundry sales are expected to display much

stronger growth than the projected 4% compound annual growth

rate (CAGR) for the total semiconductor industry from 2012 through

2017.

As an upstream supplier in the semiconductor supply chain, the

condition of the foundry segment is tightly correlated with the

market health of the 3Cs: communications, computer and consumer.

● CommunicationsThe communications sector, particularly the handset segment, posted

a modest 5% growth in unit shipments for 2012. Smartphones,

which have much higher semiconductor content, have been leading

the growth of the sector.

The continuing transition to 4G/LTE handsets will bring positive

momentum to the market. Smartphones with increasing

performance, lower power and more intelligent features will continue

to propel the buying interest of new handsets in 2013. The growing

popularity of low-end smartphones in the emerging countries is also

a new catalyst driving the growth of the sector.

Low power IC is an essential requirement among handset

manufacturers. The System-on-Chip (SoC) design for more optimized

cost, power and form-factor (i.e. device footprint), plus the appetite

for higher performance to run complicated software, will continue to

accelerate the migration to advanced process technologies in which

TSMC is already the leader.

● ComputerThe computer sector’s unit shipment growth declined 3% YoY

in 2012 after a close to flat year in 2011. Cautious spending in

developed countries and budget competition from tablet products

were among the factors causing the weak demand.

Moving into 2013, PC market will decline. While pessimism regarding

the economic outlook will overhang the sector, new innovative

features and form-factors such as detachable keyboard, hybrid

notebook and the introduction of the new Windows 8 operating

system are expected to stimulate PC demand.

Requirements of lower power, higher performance and integration

for key computer components such as CPU, GPU, Chipset,

etc., should drive product design demand for leading process

technologies.

● ConsumerAfter flat sales in 2011, the consumer sector lost momentum in

2012 with a decline of 2% in aggregated unit shipment growth YoY.

Economic uncertainties have stifled buyers’ appetite for consumer

electronics products, and the growth of mobile computing devices

has also impacted the consumer electronics sales.

Moving forward, new product launches such as the introduction of a

new generation of game consoles will stimulate new interest in video

games. Low-priced, large screen TVs will kindle end-consumer buying

interest. And, government subsidy programs in multiple countries

should drive the adoption of DTV.

Meanwhile, increasing innovations in the consumer sector have also

encouraged new usage models, such as integration of touch sensing,

motion recognition, high-resolution and 3D display. Besides the need

for advanced technologies, “More-than-Moore” technologies such

as CMOS Image Sensor (CIS), High-Voltage (HV) drivers, embedded

memory, micro-controller and MEMS are becoming prominent

requirements. With its comprehensive technology portfolio, TSMC

will be able to capitalize on these trends.

Emerging Applications

Emerging new applications such as tablets are increasing

contributions to foundry segment revenue. Led by Apple’s iPad,

around 155 million tablets shipped in 2012 compared with 68

million units in 2011. The strong sales momentum will continue in

2013 as more models are introduced by other OEMs. We forecast the

tablet market will grow with a 23% CAGR from 2012 through 2017,

and become a strong growth driver for both the semiconductor

industry and foundry segment.

Supply Chain

The electronics industry consists of a long and complex supply chain,

the elements of which are highly dependent and correlated with

each other. At the upstream IC manufacturing level, it is important

for IC vendors to have sufficient and flexible supply to support

the dynamic market situation. The foundry vendors are playing an

important role to ensure the health of the supply chain. As a leader

in the foundry segment, TSMC provides leading technologies and

large-scale capacity to complement the innovations created along the

downstream chain.

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2.2.4 TSMC Position, Differentiation and Strategy

Position

As the leader in the semiconductor foundry segment, TSMC

commanded a 45% share of this segment in 2012, with total

consolidated revenue of US$17.1 billion. In terms of geographic

distribution of net sales, 69% came from companies headquartered

in North America; 14% from the Asia Pacific region, excluding China

and Japan; 9% from Europe; 5% from China; and 3% from Japan.

By end product application, 19% of TSMC’s net sales came from the

computer sector, 50% from communications, 9% from consumer

products, and 22% from industrial and standard products.

Differentiation

TSMC’s leadership position is based on a trinity of key differentiating

strengths: technology leadership, manufacturing excellence, and

customer trust. As a technology leader, TSMC has consistently been

first among pure-play foundries in developing the next generation

of leading-edge technologies. As a manufacturing leader, TSMC

is renowned for its yield management, and offers best-in-class

designer/developer support services to expedite time-to-market and

time-to-volume. As to customer trust, TSMC works closely with

its customers on end-to-end collaboration to optimize design and

manufacturing efficiencies. And as a pure-play foundry, TSMC does

not compete with its customers. TSMC continually builds on this

trinity of strengths to provide the best overall value to its customers.

Strategy

TSMC is confident its differentiating strengths will enable it to

leverage the attractive growth opportunities in the foundry sector

going forward. TSMC works constantly to ensure that these strengths

are maintained and improved. For example, TSMC is intensively

working on the leading-edge 20nm and 16nm FinFET technologies

to maintain its technology leadership position. Numerous efforts

are also underway to ensure manufacturing excellence, such as

continuing enhancement of Design-For-Manufacturing (DFM)

support services to increase yield and efficiency. TSMC also expanded

its Open Innovation Platform® initiative, a set of ecosystem interfaces

and collaborative components initiated and supported by TSMC that

efficiently empowers innovation throughout the supply chain to

enhance timely innovation. TSMC conducted customer reviews and

surveys throughout 2012 to better understand customer needs and

wants, and accordingly may adjust its offerings in response, thereby

further strengthening its relationship with customers.

To address the dual challenges of falling wafer prices and fiercer

competition from other semiconductor manufacturing companies,

TSMC continually strengthens its core competitiveness and properly

deploys its short-term and long-term technology and business

development plans in order to enhance its Return on Investment

(ROI) and growth objectives.

● Short-term semiconductor business development plan1) Substantially ramp up the business and sustain market segment

share of advanced technologies with further investment in

capacity.

2) Maintain market segment share of mainstream technology by

expanding business into new customer and market segments with

off-the-shelf technologies.

3) Grow business with IDMs by establishing a closer relationship on

technology development.

● Long-term semiconductor business development plan1) Continue developing the leading edge technologies consistent

with Moore’s law.

2) Broaden “More-than-Moore” business contribution by further

developing derivative technologies.

3) Further expand TSMC’s business and service infrastructure into

emerging and developing markets.

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2.3 Organization

2.3.1 Organization Chart

Shareholders’Meeting

CEO

Audit Committee

Compensation Committee

Board of DirectorsChairman

Vice Chairman

Internal Audit

Co-COO Office LegalFinance and Spokesperson

Operations Human Resources

Worldwide Sales and MarketingBusiness Development

North AmericaCorporate Planning Organization

Quality and Reliability

Research and DevelopmentInformation Technology

Materials Management and Risk Management

Note: Senior Vice President of R&D Dr. Shang-yi Chiang, Senior Vice President of Operations Dr. Mark Liu, and Senior Vice President of Business Development Dr. C.C. Wei were appointed as Executive Vice Presidents and Co-Chief Operating Officers of TSMC on March 2, 2012. Following these appointments, the three Executive VPs and Co-COOs, as well as TSMC’s Finance and Legal organizations, will report directly to the Chairman and Chief Executive Officer Dr. Morris Chang. All other organizations will report to the three Executive VPs and Co-COOs. The new organizational structure became effective on March 5, 2012.

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2.3.2 Major Corporate Functions

Research and Development

● �Advanced and mainstream technology research and development, exploratory research and development, design services and

technology platform development

Information Technology

● �Technology system integration, business system integration, IT infrastructure and communication service, IT security, IT productivity

and quality management

Materials Management and Risk Management

● �Purchasing, warehousing, import and export, logistics support, environmental protection, industrial safety, health management,

and risk management

Operations

● �Product development, manufacturing technology, mainstream fabs, 300mm fabs, affiliate fabs, and back-end technology and service

Human Resources

● Human resources management and organizational development● �Proprietary information protection (PIP) and physical security

management

Worldwide Sales and Marketing

● �Brand management, market analysis & forecast, customer service and regional sales operations or service and field technical support

for Japan, Asia, China and Europe

Business Development

● �Develop semiconductor foundry business in mobile computing, computer, consumer electronics, communication and industrial

related products; identify new applications and markets, and solidify

customer relationship

North America

● �Sales operations, market development, field technical support and service for North America customers

Corporate Planning Organization

● �Operation resources planning, production and demand planning, and business process integration

Quality and Reliability

● Quality and reliability management

Finance and Spokesperson

● �Corporate finance, accounting, investor relations, public relations, tax, financial planning, investment management, and strategic

program● �Corporate spokesperson

Legal

● �Corporate legal affairs, litigation, commercial transactions, patents and other intellectual property management, compliance and

regulatory work

Internal Audit

● �Internal control risk monitoring and independent assessment of compliance

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2.4 Board Members

2.4.1 Information Regarding Board Members

Title/Name Date Elected Term Expires Date First Elected

Shareholding When Elected Current Shareholding Spouse & Minor ShareholdingSelected Education, Past Positions & Current Positions at Non-profit Organizations Selected Current Positions at TSMC and Other

CompaniesShares % Shares % Shares %

ChairmanMorris Chang

06/12/2012 06/11/2015 12/10/1986 123,137,914 0.48% 123,137,914 0.47% 135,217 0.00% B.S. and M.S. degrees in Mechanical Engineering, MITPh.D. in Electrical Engineering, Stanford University

Former Group Senior Vice-President, Texas Instruments Inc.Former President & COO, General Instrument CorporationFormer Chairman, Industrial Technology Research InstituteLife Member Emeritus of MIT CorporationMember of National Academy of Engineering, U.S.

CEO, TSMC

Vice ChairmanF.C. Tseng

06/12/2012 06/11/2015 05/13/1997 34,662,675 0.13% 34,662,675 0.13% 132,855 0.00% Ph.D. in Electrical Engineering, National Chengkung University, Taiwan

Former President, Vanguard International Semiconductor Corp.Former President, TSMCFormer Deputy CEO, TSMCChairman, TSMC Education and Culture Foundation

Chairman of:- TSMC China Company Ltd.- Global Unichip Corp.Director of:- TSMC Solar Ltd.- TSMC Solid State Lighting Ltd.- Vanguard International Semiconductor Corp.- digimax, Inc.Independent Director, Compensation Committee

member & Chairman of the Financial Statement and Internal Control Review Committee, Acer Inc.

DirectorNational Development Fund, Executive Yuan (Note 1)

06/12/2012 06/11/2015 12/10/1986 1,653,709,980 6.38% 1,653,709,980 6.38% - -

Representative:Johnsee Lee

08/06/2010 (Note 2)

- - - - - - Ph.D. in Chemical Engineering, Illinois Institute of TechnologyMBA, University of ChicagoGraduate of Harvard Business School’s Advanced Management Program

Former Principal Investigator, Argonne National LaboratoryFormer Senior Manager, Johnson Matthey Inc.Former President, Industrial Technology Research InstituteChairman, Development Center for BiotechnologyPresident, Taiwan Bio Industry Organization

Independent Director of:- Taiwan Polysilicon Corp.- Zhen Ding Technology Holding Ltd.- Far Eastern New Century Corp.

DirectorRick Tsai

06/12/2012 06/11/2015 06/03/2003 33,665,046 0.13% 32,687,046 0.13% - - Ph.D. in Material Science, Cornell University, U.S.

Former President, Vanguard International Semiconductor Corp.Former Executive Vice President, Worldwide Marketing and Sales, TSMCFormer COO, TSMCFormer President & CEO, TSMCFormer President of New Businesses, TSMCAdvisor, Executive Yuan, R.O.C.

Chairman & CEO, TSMC Solar Ltd.Chairman & CEO, TSMC Solid State Lighting Ltd.Director, TSMC subsidiaryPresident, TSMC subsidiariesDirector, Motech Industries, Inc.

Independent DirectorSir Peter Leahy Bonfield

06/12/2012 06/11/2015 05/07/2002 - - - - - - Honours Degree in Engineering, Loughborough UniversityFellow of the Royal Academy of EngineeringChair of Council and Senior Pro-Chancellor, Loughborough University, UK

Former Chairman and CEO, ICL PlcFormer CEO and Chairman of the Executive Committee, British Telecommunications PlcFormer Vice President, the British Quality Foundation

Chairman, NXP Semiconductors N.V., the Netherlands

Director of:- Sony Corporation, Japan- L.M. Ericsson, Sweden- Mentor Graphics Corporation Inc., Oregon, U.S.Member of:- The Longreach Group Advisory Board- The Sony Corporation Advisory Board- New Venture Partners LLP Advisory BoardAdvisor to Apax Partners LLPBoard Mentor, CMiSenior Advisor to Rothschild, London

Independent DirectorStan Shih

06/12/2012 06/11/2015 04/14/2000 1,480,286 0.01% 1,480,286 0.01% 16,116 0.00% BSEE and MSEE in National Chiao Tung University, TaiwanHonorary EE Ph.D. in National Chiao Tung University, TaiwanHonorary Doctor of Technology, The Hong Kong Polytechnic UniversityHonorary Fellowship, University of Wales, Cardiff, UKHonorary Doctor of International Law, Thunderbird, American Graduate School of International

Management, U.S.

Co-Founder, Chairman Emeritus, Acer GroupFormer Chairman & CEO, Acer GroupChairman, National Culture and Arts Foundation, R.O.C.

Group Chairman, iD SoftCapitalDirector of:- Acer Inc.- Qisda Corp.- Wistron Corp.- Nan Shan Life Insurance Co., Ltd.

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ChairmanMorris Chang

06/12/2012 06/11/2015 12/10/1986 123,137,914 0.48% 123,137,914 0.47% 135,217 0.00% B.S. and M.S. degrees in Mechanical Engineering, MITPh.D. in Electrical Engineering, Stanford University

Former Group Senior Vice-President, Texas Instruments Inc.Former President & COO, General Instrument CorporationFormer Chairman, Industrial Technology Research InstituteLife Member Emeritus of MIT CorporationMember of National Academy of Engineering, U.S.

CEO, TSMC

Vice ChairmanF.C. Tseng

06/12/2012 06/11/2015 05/13/1997 34,662,675 0.13% 34,662,675 0.13% 132,855 0.00% Ph.D. in Electrical Engineering, National Chengkung University, Taiwan

Former President, Vanguard International Semiconductor Corp.Former President, TSMCFormer Deputy CEO, TSMCChairman, TSMC Education and Culture Foundation

Chairman of:- TSMC China Company Ltd.- Global Unichip Corp.Director of:- TSMC Solar Ltd.- TSMC Solid State Lighting Ltd.- Vanguard International Semiconductor Corp.- digimax, Inc.Independent Director, Compensation Committee

member & Chairman of the Financial Statement and Internal Control Review Committee, Acer Inc.

DirectorNational Development Fund, Executive Yuan (Note 1)

06/12/2012 06/11/2015 12/10/1986 1,653,709,980 6.38% 1,653,709,980 6.38% - -

Representative:Johnsee Lee

08/06/2010 (Note 2)

- - - - - - Ph.D. in Chemical Engineering, Illinois Institute of TechnologyMBA, University of ChicagoGraduate of Harvard Business School’s Advanced Management Program

Former Principal Investigator, Argonne National LaboratoryFormer Senior Manager, Johnson Matthey Inc.Former President, Industrial Technology Research InstituteChairman, Development Center for BiotechnologyPresident, Taiwan Bio Industry Organization

Independent Director of:- Taiwan Polysilicon Corp.- Zhen Ding Technology Holding Ltd.- Far Eastern New Century Corp.

DirectorRick Tsai

06/12/2012 06/11/2015 06/03/2003 33,665,046 0.13% 32,687,046 0.13% - - Ph.D. in Material Science, Cornell University, U.S.

Former President, Vanguard International Semiconductor Corp.Former Executive Vice President, Worldwide Marketing and Sales, TSMCFormer COO, TSMCFormer President & CEO, TSMCFormer President of New Businesses, TSMCAdvisor, Executive Yuan, R.O.C.

Chairman & CEO, TSMC Solar Ltd.Chairman & CEO, TSMC Solid State Lighting Ltd.Director, TSMC subsidiaryPresident, TSMC subsidiariesDirector, Motech Industries, Inc.

Independent DirectorSir Peter Leahy Bonfield

06/12/2012 06/11/2015 05/07/2002 - - - - - - Honours Degree in Engineering, Loughborough UniversityFellow of the Royal Academy of EngineeringChair of Council and Senior Pro-Chancellor, Loughborough University, UK

Former Chairman and CEO, ICL PlcFormer CEO and Chairman of the Executive Committee, British Telecommunications PlcFormer Vice President, the British Quality Foundation

Chairman, NXP Semiconductors N.V., the Netherlands

Director of:- Sony Corporation, Japan- L.M. Ericsson, Sweden- Mentor Graphics Corporation Inc., Oregon, U.S.Member of:- The Longreach Group Advisory Board- The Sony Corporation Advisory Board- New Venture Partners LLP Advisory BoardAdvisor to Apax Partners LLPBoard Mentor, CMiSenior Advisor to Rothschild, London

Independent DirectorStan Shih

06/12/2012 06/11/2015 04/14/2000 1,480,286 0.01% 1,480,286 0.01% 16,116 0.00% BSEE and MSEE in National Chiao Tung University, TaiwanHonorary EE Ph.D. in National Chiao Tung University, TaiwanHonorary Doctor of Technology, The Hong Kong Polytechnic UniversityHonorary Fellowship, University of Wales, Cardiff, UKHonorary Doctor of International Law, Thunderbird, American Graduate School of International

Management, U.S.

Co-Founder, Chairman Emeritus, Acer GroupFormer Chairman & CEO, Acer GroupChairman, National Culture and Arts Foundation, R.O.C.

Group Chairman, iD SoftCapitalDirector of:- Acer Inc.- Qisda Corp.- Wistron Corp.- Nan Shan Life Insurance Co., Ltd.

As of 02/28/2013

(Continued)

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Independent DirectorThomas J. Engibous

06/12/2012 06/11/2015 06/10/2009 - - - - - - Bachelor Degree in Electrical Engineering, Purdue UniversityMaster Degree in Electrical Engineering, Purdue UniversityHonorary Doctorate in Engineering, Purdue UniversityMember, National Academy of EngineeringMember, Texas Business Hall of FameWoodrow Wilson Award

Former Executive Vice President and President of the Semiconductor Group, Texas Instruments Inc.Former President and CEO, Texas Instruments Inc.Former Chairman of the Board, Texas Instruments Inc.Former Chairman of the Board of CatalystHonorary Director of CatalystHonorary Trustee, Southwestern Medical Foundation

Chairman, J. C. Penney Company Inc.

Independent DirectorGregory C. Chow

06/12/2012 06/11/2015 06/09/2011 - - - - - - Bachelor Degree in Economics, Cornell University, 1951Master Degree in Economics, Chicago University, 1952Ph.D. in Economics, Chicago University, 1955Academician, Academia Sinica, R.O.C.Member, American Philosophical SocietyFellow of the American Statistical AssociationFellow of the Econometric SocietyFormer President, Society of Economic Dynamics and ControlHonorary Doctor’s, Zhongshan UniversityL.L.D., Lingnan UniversityHon. Dr. of Business Adm, Hong Kong University of Science and TechnologyHonorary Professor of Fudan, Guangxi, Hainan, Nankai, Shandong, Remin, Huazhong U of Science

and Tech, Graduate School of Management of Chinese Academy of Sciences, Zhongshan Universities and the City University of Hong Kong

Assistant Professor, M.I.T., 1955-1959Associate Professor, Cornell University, 1959-1962Research Staff Member and Manager of Economics Research, IBM Thomas Watson Research Center,

1962-1970Adjunct Professor, Columbia University, 1964-1970Professor and Director, Econometric Research Program, Princeton University, 1970-2001 (In 2001

Princeton University renamed the Program the Gregory C. Chow Econometric Research Program in his honor.)

Class of 1913 Professor of Political Economy, Princeton University, 1976-2001Chairman of the American Economic Association’s Committee on Exchanges in Economics with the

People’s Republic of China, 1981-1994Co-chairman of the U.S. Committee on Economics Education and Research in China, 1985-1994Advisor to Prime Ministers and Chairmen of the Economic Planning and Development Council of the

Executive Yuan in Taiwan on economic policy from the mid 1960’s to the early 1980’sAdvisor to the Prime Minister and the State Commission for Restructuring the Economic System on

economic reform in China, 1985-1989Professor of Economics and Class of 1913 Professor of Political Economy, Emeritus, Princeton

University, 2001-PresentLecturer with the Rank of Professor, Princeton University

None

Independent DirectorKok-Choo Chen

06/12/2012 06/11/2015 06/09/2011 - - - - 5,120 0.00% Inns of Court School of Law, EnglandBarrister-at-law, EnglandAdvocate & Solicitor, SingaporeAttorney-at-law, California, U.S.

Senior Vice-President & General Counsel, TSMC, 1997-2001President, National Culture & Arts Foundation, R.O.C., 1995-1997Vice-President, Echo Publishing, Taiwan, 1992-1995Partner, Chen & Associates Law Offices, Taiwan, 1988-1992Partner, Ding & Ding Law Offices, Taiwan, 1975-1988Lawyer, Heller, Erhman, White & McAuliffe, San Francisco, California, U.S., 1974-1975Lawyer, Sullivan & Cromwell, New York, U.S., 1971-1974Lawyer, Tan, Rajah & Cheah, Singapore, 1969-1970Professor, Soochow University, 2001-2008Professor, National Chengchi University, 2001-2004Chair Professor, National Tsing Hua University, 1999-2002Associate Professor, Soochow University, 1981-1998Lecturer, Nanyang University, Singapore, 1970-1971Sponsor and Founder, two Taiwan heritage site museums (Taipei Story House and Futai Street Mansion)Advisor, Executive Yuan, R.O.C.Advisor, Taipei City GovernmentDirector of TSMC Education and Culture FoundationDirector of National Culture and Arts Foundation, R.O.C.Director of Republic of China Female Cancer Foundation

None

Remarks:1. No member of the Board of Directors held TSMC shares by nominee arrangement.2. No member of the Board of Directors had a spouse or relative within two degrees of consanguinity serving as a manager or director at TSMC.

Note 1: Major Shareholder of TSMC’s Director that is an Institutional Shareholder.

Director that is an Institutional Shareholder of TSMC Top 10 Shareholders

National Development Fund, Executive Yuan Not Applicable

Major institutional shareholders of National Development Fund: Not applicable.Note 2: Mr. Johnsee Lee was appointed as the representative of National Development Fund on August 6, 2010.

019




Independent DirectorThomas J. Engibous

06/12/2012 06/11/2015 06/10/2009 - - - - - - Bachelor Degree in Electrical Engineering, Purdue UniversityMaster Degree in Electrical Engineering, Purdue UniversityHonorary Doctorate in Engineering, Purdue UniversityMember, National Academy of EngineeringMember, Texas Business Hall of FameWoodrow Wilson Award

Former Executive Vice President and President of the Semiconductor Group, Texas Instruments Inc.Former President and CEO, Texas Instruments Inc.Former Chairman of the Board, Texas Instruments Inc.Former Chairman of the Board of CatalystHonorary Director of CatalystHonorary Trustee, Southwestern Medical Foundation

Chairman, J. C. Penney Company Inc.

Independent DirectorGregory C. Chow

06/12/2012 06/11/2015 06/09/2011 - - - - - - Bachelor Degree in Economics, Cornell University, 1951Master Degree in Economics, Chicago University, 1952Ph.D. in Economics, Chicago University, 1955Academician, Academia Sinica, R.O.C.Member, American Philosophical SocietyFellow of the American Statistical AssociationFellow of the Econometric SocietyFormer President, Society of Economic Dynamics and ControlHonorary Doctor’s, Zhongshan UniversityL.L.D., Lingnan UniversityHon. Dr. of Business Adm, Hong Kong University of Science and TechnologyHonorary Professor of Fudan, Guangxi, Hainan, Nankai, Shandong, Remin, Huazhong U of Science

and Tech, Graduate School of Management of Chinese Academy of Sciences, Zhongshan Universities and the City University of Hong Kong

Assistant Professor, M.I.T., 1955-1959Associate Professor, Cornell University, 1959-1962Research Staff Member and Manager of Economics Research, IBM Thomas Watson Research Center,

1962-1970Adjunct Professor, Columbia University, 1964-1970Professor and Director, Econometric Research Program, Princeton University, 1970-2001 (In 2001

Princeton University renamed the Program the Gregory C. Chow Econometric Research Program in his honor.)

Class of 1913 Professor of Political Economy, Princeton University, 1976-2001Chairman of the American Economic Association’s Committee on Exchanges in Economics with the

People’s Republic of China, 1981-1994Co-chairman of the U.S. Committee on Economics Education and Research in China, 1985-1994Advisor to Prime Ministers and Chairmen of the Economic Planning and Development Council of the

Executive Yuan in Taiwan on economic policy from the mid 1960’s to the early 1980’sAdvisor to the Prime Minister and the State Commission for Restructuring the Economic System on

economic reform in China, 1985-1989Professor of Economics and Class of 1913 Professor of Political Economy, Emeritus, Princeton

University, 2001-PresentLecturer with the Rank of Professor, Princeton University

None

Independent DirectorKok-Choo Chen

06/12/2012 06/11/2015 06/09/2011 - - - - 5,120 0.00% Inns of Court School of Law, EnglandBarrister-at-law, EnglandAdvocate & Solicitor, SingaporeAttorney-at-law, California, U.S.

Senior Vice-President & General Counsel, TSMC, 1997-2001President, National Culture & Arts Foundation, R.O.C., 1995-1997Vice-President, Echo Publishing, Taiwan, 1992-1995Partner, Chen & Associates Law Offices, Taiwan, 1988-1992Partner, Ding & Ding Law Offices, Taiwan, 1975-1988Lawyer, Heller, Erhman, White & McAuliffe, San Francisco, California, U.S., 1974-1975Lawyer, Sullivan & Cromwell, New York, U.S., 1971-1974Lawyer, Tan, Rajah & Cheah, Singapore, 1969-1970Professor, Soochow University, 2001-2008Professor, National Chengchi University, 2001-2004Chair Professor, National Tsing Hua University, 1999-2002Associate Professor, Soochow University, 1981-1998Lecturer, Nanyang University, Singapore, 1970-1971Sponsor and Founder, two Taiwan heritage site museums (Taipei Story House and Futai Street Mansion)Advisor, Executive Yuan, R.O.C.Advisor, Taipei City GovernmentDirector of TSMC Education and Culture FoundationDirector of National Culture and Arts Foundation, R.O.C.Director of Republic of China Female Cancer Foundation

None

Remarks:1. No member of the Board of Directors held TSMC shares by nominee arrangement.2. No member of the Board of Directors had a spouse or relative within two degrees of consanguinity serving as a manager or director at TSMC.

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2.4.2 Remuneration Paid to Directors (Note 1)Unit: NT$ thousands

Note 1: Remuneration policies, standards/packages, procedures, the linkage to operating performance and future risk exposure: The base compensation for the Chairman, Vice-Chairman and directors are determined in accordance with the procedures set forth in TSMC’s Articles of Incorporation. The Articles of Incorporation also provides that the compensation to directors shall be no more than 0.3% of earnings available for distribution and directors who also serve as executive officers of TSMC are not entitled to receive compensation to directors. The distribution of compensation to directors shall be made in accordance with TSMC’s “Rules for Distribution of Compensation to Directors”.

Note 2: No compensation to directors was paid to Dr. Morris Chang.Note 3: Mr. Rick Tsai is currently the Chairman and CEO of two TSMC subsidiaries, TSMC Solar Ltd. and TSMC Solid State Lighting Ltd.Note 4: Pensions funded according to applicable law.Note 5: TSMC Board adopted a proposal that includes 2012 compensation to TSMC’s directors in the amount of NT$71,351 thousand at its meeting on February 5, 2013.Note 6: The above-mentioned figures include the expense for company cars and gasoline reimbursement, but does not include compensation paid to company drivers (totaled NT$4,743 thousand).Note 7: The above-mentioned figures include the employees’ cash bonuses distributed in June, August, November 2012 and February 2013.Note 8: The above-mentioned figures are preliminary and the proposed employee profit sharing distribution will be processed after the approval of the same by shareholders at the Annual Shareholders’ Meeting on June 11, 2013.Note 9: Represents the number of cumulative employee stock options exercisable as of the date of this Annual Report.Note 10: TSMC did not issue employee restricted stock in 2012, and as of the date of this Annual Report.Note 11: Total remuneration and compensation paid to TSMC’s directors in 2011 was NT$343,815 thousand, accounting for 0.26% of 2011 net income.

2012

Total Remuneration (A+B+C+D) Total Compensation (A+B+C+D+E+F+G+J)

From TSMC From All Consolidated Entities From TSMC From All Consolidated Entities and Non-consolidated Affiliates

Under NT$2,000,000 Rick Tsai

NT$2,000,000 ~ NT$4,999,999

NT$5,000,000 ~ NT$9,999,999 National Development Fund, Executive Yuan National Development Fund, Executive Yuan

NT$10,000,000 ~ NT$14,999,999 Sir Peter Leahy Bonfield, Stan Shih, Thomas J. Engibous, Gregory C. Chow, Kok-Choo Chen

Sir Peter Leahy Bonfield, Stan Shih, Thomas J. Engibous, Gregory C. Chow, Kok-Choo Chen

NT$15,000,000 ~ NT$29,999,999 Morris Chang, F.C. Tseng F.C. Tseng

NT$30,000,000 ~ NT$49,999,999

NT$50,000,000 ~ NT$99,999,999 Rick Tsai

Over NT$100,000,000 Morris Chang

Total 9 9

Remuneration Paid to Directors

Title/Name

Director's RemunerationTotal Remuneration

(A+B+C+D) as a % of 2012 Net Income

Compensation Earned by a Director Who is an Employee of TSMC or of TSMC’s Consolidated Entities Total Compensation (A+B+C+D+E+F+G) as a % of 2012 Net Income

(Note 11)Compensation

Paid to Directors from Non-

consolidated Affiliates

(J)

Base Compensation (A) Severance Pay and Pensions (B) (Note 4)

Compensation to Directors (C)

Allowances (D)(Note 6)

Base Compensation, Bonuses, and Allowances (E)

(Note 7)

Severance Pay and Pensions (F) (Note 4)

Employee Profit Sharing (G)(Note 8)

Exercisable Employee Stock Options (H)

(Note 9)

Granted Employee Restricted Stock (I)

(Note 10)

From TSMCFrom All

Consolidated Entities

From TSMCFrom All


From TSMC (Note 5)

From All Consolidated

EntitiesFrom TSMC


EntitiesFrom TSMC


EntitiesFrom TSMC


EntitiesFrom TSMC


Entities

From TSMC From All Consolidated Entities

From TSMCFrom All


From TSMCFrom All


From TSMC


EntitiesCash Stock (Fair

Market Value)

Cash Stock (Fair

Market Value)

Chairman & CEOMorris Chang (Note 2)

30,347 30,347 731 731 71,351 71,351 3,894 3,894 0.06% 0.06% 105,844 158,749 0 561 105,751 0 105,751 0 0 0 0 0 0.19% 0.22% 2,490

Vice Chairman F.C. Tseng

DirectorRick Tsai (Note 3)

Independent Director Sir Peter Leahy Bonfield

Independent Director Stan Shih

Independent Director Thomas J. Engibous

Independent Director Gregory C. Chow

Independent Director Kok-Choo Chen

DirectorNa tional Development Fund, Executive

YuanRepresentative:

Johnsee Lee

021

Title/Name

Director's RemunerationTotal Remuneration

(A+B+C+D) as a % of 2012 Net Income

Compensation Earned by a Director Who is an Employee of TSMC or of TSMC’s Consolidated Entities Total Compensation (A+B+C+D+E+F+G) as a % of 2012 Net Income

(Note 11)Compensation

Paid to Directors from Non-

consolidated Affiliates

(J)

Base Compensation (A) Severance Pay and Pensions (B) (Note 4)

Compensation to Directors (C)

Allowances (D)(Note 6)

Base Compensation, Bonuses, and Allowances (E)

(Note 7)

Severance Pay and Pensions (F) (Note 4)

Employee Profit Sharing (G)(Note 8)

Exercisable Employee Stock Options (H)

(Note 9)

Granted Employee Restricted Stock (I)

(Note 10)

From TSMCFrom All


From TSMCFrom All


From TSMC (Note 5)


EntitiesFrom TSMC


EntitiesFrom TSMC


EntitiesFrom TSMC


EntitiesFrom TSMC


Entities

From TSMC From All Consolidated Entities

From TSMCFrom All


From TSMCFrom All


From TSMC


EntitiesCash Stock (Fair

Market Value)

Cash Stock (Fair

Market Value)

Chairman & CEOMorris Chang (Note 2)

30,347 30,347 731 731 71,351 71,351 3,894 3,894 0.06% 0.06% 105,844 158,749 0 561 105,751 0 105,751 0 0 0 0 0 0.19% 0.22% 2,490

Vice Chairman F.C. Tseng

DirectorRick Tsai (Note 3)

Independent Director Sir Peter Leahy Bonfield

Independent Director Stan Shih

Independent Director Thomas J. Engibous

Independent Director Gregory C. Chow

Independent Director Kok-Choo Chen

DirectorNa tional Development Fund, Executive

YuanRepresentative:

Johnsee Lee

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2.5 Management Team

2.5.1 Information Regarding Management Team

Title Name

On-board Date(Note 1)

Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement

(Shares)Education & Selected Past Positions Selected Current Positions at Other

Companies

Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other

Shareholding % Shareholding % Title Name Relation

Chairman & CEO Morris Chang

01/01/1987 123,137,914 0.47% 135,217 0.00% - Ph.D., Electrical Engineering, Stanford University, U.S.Chairman, Industrial Technology Research InstitutePresident & Chief Operation Officer, General Instrument CorporationGroup Senior Vice-President, Texas Instruments Inc.

- - -

Executive Vice President & Co-Chief Operating OfficerShang-yi Chiang (Note 2)

07/07/1997 1,062,481 0.00% - - - Ph.D., Electrical Engineering, Stanford University, U.S.Senior Vice President, Research and Development, TSMCChairman, VisEra Technologies Company and Xintec Inc.

- - -

Executive Vice President & Co-Chief Operating OfficerMark Liu (Note 2)

11/15/1993 13,127,114 0.05% - - - Ph.D., Electrical Engineering & Computer Science, University of California, Berkeley, U.S.Senior Vice President of Operations, TSMCSenior Vice President, Advanced Technology Business, TSMCVice President, South Site Operation, TSMCPresident, Worldwide Semiconductor Manufacturing Corp.

Director, TSMC affiliate - - -

Executive Vice President & Co-Chief Operating OfficerC.C. Wei (Note 2)

02/01/1998 8,460,207 0.03% 261 0.00% - Ph.D., Electrical Engineering, Yale University, U.S.Senior Vice President of Business Development, TSMCSenior Vice President, Mainstream Technology Business, TSMCVice President, South Site Operation, TSMCSenior Vice President, Chartered Semiconductor Manufacturing Ltd.

Director, TSMC subsidiaryDirector, TSMC affiliates

- - -

Senior Vice President & Chief Information OfficerInformation Technology & Materials Management and Risk ManagementStephen T. Tso

12/16/1996 14,425,064 0.06% - - - Ph.D., Materials Science & Engineering, University of California, Berkeley, U.S.President, WaferTech, LLCSenior Vice President, Operations, TSMCGeneral Manager of CVD Products, Applied Material

Director, TSMC subsidiary - - -

Senior Vice President & General CounselLegalRichard Thurston

01/02/2002 869,892 0.00% - - - J.D., Rutgers School of Law, State University of New Jersey, U.S.Ph.D., History, University of Virginia, U.S.Partner, Haynes Boone, LLPVice President Corporate Staff, Assistant General Counsel, Texas Instruments Inc.

Director, TSMC subsidiariesDirector, TSMC affiliate

- - -

Senior Vice President, Chief Financial Officer & SpokespersonFinanceLora Ho

06/01/1999 6,381,080 0.02% 110,268 0.00% - Master, Business Administration, National Taiwan University, TaiwanDirector, Accounting, TSMCVice President& CFO, TI-Acer Semiconductor Manufacturing Corp.

Director and/or Supervisor, TSMC subsidiariesDirector, TSMC affiliatesPresident, TSMC subsidiaries

- - -

Senior Vice PresidentWorldwide Sales and MarketingJason C.S. Chen

03/31/2005 27,320 0.00% 122 0.00% 2,000,000 Master, Business Administration, University of Missouri-Columbia, U.S.Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel

Director, TSMC subsidiariesMe mber of Joint Management Committee,

TSMC affiliate

- - -

Vice President Operations/Affiliate FabsM.C. Tzeng

01/01/1987 7,592,595 0.03% - - - Master, Applied Chemistry, Chungyuan University, TaiwanVice President, Mainstream Technology Business, TSMCSenior Director, Fab 2 Operation, TSMC

Director, TSMC subsidiaries Department Manager

M.J. Tzeng Siblings

Vice President Research and DevelopmentWei-Jen Lo

07/01/2004 1,913,127 0.01% - - - Ph.D., Solid State Physics & Surface Chemistry, University of California, Berkeley, U.S.Vice President, Advanced Technology Business, TSMCVice President, Research & Development, TSMCVice President, Operation II, TSMCDirector, Advanced Technology Development & CTM Plant Manager, Intel

- - -

Vice President & Chief Technology Officer Research and Development Jack Sun

06/02/1997 4,402,831 0.02% - - - Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, U.S.Vice President, Research and Development, TSMCSenior Director, Logic Technology Division, TSMCSenior Manager of R&D, International Business Machines (IBM)

- - -

Vice President Operations/Product DevelopmentY.P. Chin

01/01/1987 7,540,122 0.03% 2,194,107 0.01% - Master, Electrical Engineering, National Cheng Kung University, TaiwanVice President, Advanced Technology Business, TSMCSenior Director, Product Engineering & Services, TSMC

- - -

Vice President Quality and ReliabilityN.S. Tsai

03/01/2000 2,051,180 0.01% 1,103,253 0.00% - Ph.D., Material Science, Massachusetts Institute of Technology, U.S.Senior Director, Assembly Test Technology & Service, TSMCVice President, Operations, Vanguard International Semiconductor Corp.

- - -

023

As of 02/28/2013

Title Name




Companies




01/01/1987 123,137,914 0.47% 135,217 0.00% - Ph.D., Electrical Engineering, Stanford University, U.S.Chairman, Industrial Technology Research InstitutePresident & Chief Operation Officer, General Instrument CorporationGroup Senior Vice-President, Texas Instruments Inc.

- - -

Executive Vice President & Co-Chief Operating OfficerShang-yi Chiang (Note 2)

07/07/1997 1,062,481 0.00% - - - Ph.D., Electrical Engineering, Stanford University, U.S.Senior Vice President, Research and Development, TSMCChairman, VisEra Technologies Company and Xintec Inc.

- - -

Executive Vice President & Co-Chief Operating OfficerMark Liu (Note 2)

11/15/1993 13,127,114 0.05% - - - Ph.D., Electrical Engineering & Computer Science, University of California, Berkeley, U.S.Senior Vice President of Operations, TSMCSenior Vice President, Advanced Technology Business, TSMCVice President, South Site Operation, TSMCPresident, Worldwide Semiconductor Manufacturing Corp.

Director, TSMC affiliate - - -

Executive Vice President & Co-Chief Operating OfficerC.C. Wei (Note 2)

02/01/1998 8,460,207 0.03% 261 0.00% - Ph.D., Electrical Engineering, Yale University, U.S.Senior Vice President of Business Development, TSMCSenior Vice President, Mainstream Technology Business, TSMCVice President, South Site Operation, TSMCSenior Vice President, Chartered Semiconductor Manufacturing Ltd.

Director, TSMC subsidiaryDirector, TSMC affiliates

- - -

Senior Vice President & Chief Information OfficerInformation Technology & Materials Management and Risk ManagementStephen T. Tso

12/16/1996 14,425,064 0.06% - - - Ph.D., Materials Science & Engineering, University of California, Berkeley, U.S.President, WaferTech, LLCSenior Vice President, Operations, TSMCGeneral Manager of CVD Products, Applied Material

Director, TSMC subsidiary - - -

Senior Vice President & General CounselLegalRichard Thurston

01/02/2002 869,892 0.00% - - - J.D., Rutgers School of Law, State University of New Jersey, U.S.Ph.D., History, University of Virginia, U.S.Partner, Haynes Boone, LLPVice President Corporate Staff, Assistant General Counsel, Texas Instruments Inc.

Director, TSMC subsidiariesDirector, TSMC affiliate

- - -

Senior Vice President, Chief Financial Officer & SpokespersonFinanceLora Ho

06/01/1999 6,381,080 0.02% 110,268 0.00% - Master, Business Administration, National Taiwan University, TaiwanDirector, Accounting, TSMCVice President& CFO, TI-Acer Semiconductor Manufacturing Corp.

Director and/or Supervisor, TSMC subsidiariesDirector, TSMC affiliatesPresident, TSMC subsidiaries

- - -

Senior Vice PresidentWorldwide Sales and MarketingJason C.S. Chen

03/31/2005 27,320 0.00% 122 0.00% 2,000,000 Master, Business Administration, University of Missouri-Columbia, U.S.Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel

Director, TSMC subsidiariesMe mber of Joint Management Committee,

TSMC affiliate

- - -

Vice President Operations/Affiliate FabsM.C. Tzeng

01/01/1987 7,592,595 0.03% - - - Master, Applied Chemistry, Chungyuan University, TaiwanVice President, Mainstream Technology Business, TSMCSenior Director, Fab 2 Operation, TSMC

Director, TSMC subsidiaries Department Manager

M.J. Tzeng Siblings

Vice President Research and DevelopmentWei-Jen Lo

07/01/2004 1,913,127 0.01% - - - Ph.D., Solid State Physics & Surface Chemistry, University of California, Berkeley, U.S.Vice President, Advanced Technology Business, TSMCVice President, Research & Development, TSMCVice President, Operation II, TSMCDirector, Advanced Technology Development & CTM Plant Manager, Intel

- - -

Vice President & Chief Technology Officer Research and Development Jack Sun

06/02/1997 4,402,831 0.02% - - - Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, U.S.Vice President, Research and Development, TSMCSenior Director, Logic Technology Division, TSMCSenior Manager of R&D, International Business Machines (IBM)

- - -

Vice President Operations/Product DevelopmentY.P. Chin

01/01/1987 7,540,122 0.03% 2,194,107 0.01% - Master, Electrical Engineering, National Cheng Kung University, TaiwanVice President, Advanced Technology Business, TSMCSenior Director, Product Engineering & Services, TSMC

- - -

Vice President Quality and ReliabilityN.S. Tsai

03/01/2000 2,051,180 0.01% 1,103,253 0.00% - Ph.D., Material Science, Massachusetts Institute of Technology, U.S.Senior Director, Assembly Test Technology & Service, TSMCVice President, Operations, Vanguard International Semiconductor Corp.

- - -

(Continued)

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Title Name




Companies



Vice President &President of TSMC North AmericaRick Cassidy

11/14/1997 - - - - - Bachelor, Engineering Technology, United States Military Academy at West Point, U.S.Vice President of TSMC North America Account Management

Director, TSMC North America - - -

Vice PresidentHuman Resources L.C. Tu (Note 3)

01/01/1987 9,347,440 0.04% 1,252,481 0.00% - Master, Business Administration, Tulane University, U.S.Senior Director, Corporate Planning Organization, TSMCSenior Director, Fab 5 Operation, TSMC

- - -

Vice PresidentOperations/Mainstream Fabs and Manufacturing TechnologyJ.K. Lin

01/01/1987 12,507,018 0.05% 1,663,036 0.01% - Bachelor, Science, National Changhua University of Education, TaiwanSenior Director, Mainstream Fabs, TSMC

- - -

Vice PresidentOperations/300mm FabsJ.K. Wang

02/11/1987 2,553,947 0.01% 160,844 0.00% - Master, Chemical Engineering, National Cheng Kung University, TaiwanSenior Director, 300mm fab operations, TSMC

Manager J.J. Wang Siblings

Vice PresidentCorporate Planning OrganizationIrene Sun

10/01/2003 960,709 0.00% - - - Ph.D., Materials Science and Engineering, Cornell University, U.S.Senior Director, Corporate Planning Organization, TSMC

Manager Thomas T. Sun Siblings

Vice PresidentResearch and DevelopmentBurn J. Lin

04/26/2000 2,997,746 0.01% 1,024,933 0.00% - Ph.D., Electrical Engineering, Ohio State UniversitySenior Director, Nanopatterning Technology Division, TSMC

- - -

Vice PresidentResearch and DevelopmentY.J. Mii

11/14/1994 1,000,419 0.00% - - - Ph.D., Electrical Engineering, University of California, Los Angeles Senior Director, R&D Platform I Division, TSMC

- - -

Vice PresidentResearch and DevelopmentCliff Hou

12/15/1997 752,532 0.00% 60,802 0.00% - Ph.D., Electrical Engineering, Syracuse UniversitySenior Director, Design and Technology Platform, TSMC

Director, TSMC subsidiariesDirector, TSMC affiliatePresident, TSMC subsidiaries

- - -

Note 1: On-board date means the offical date joining TSMC.Note 2: On March 2, 2012, Senior Vice President of R&D Dr. Shang-yi Chiang, Senior Vice President of Operations Dr. Mark Liu, and Senior Vice President of Business Development Dr. C.C. Wei were appointed as Executive Vice Presidents and Co-Chief Operating Officers, effective March 5, 2012.Note 3: On March 5, 2013, Vice President of Human Resources Mr. L.C. Tu was appointed as the President of TSMC China, effective March 15, 2013.

025

Title Name




Companies



Vice President &President of TSMC North AmericaRick Cassidy

11/14/1997 - - - - - Bachelor, Engineering Technology, United States Military Academy at West Point, U.S.Vice President of TSMC North America Account Management

Director, TSMC North America - - -


01/01/1987 9,347,440 0.04% 1,252,481 0.00% - Master, Business Administration, Tulane University, U.S.Senior Director, Corporate Planning Organization, TSMCSenior Director, Fab 5 Operation, TSMC

- - -

Vice PresidentOperations/Mainstream Fabs and Manufacturing TechnologyJ.K. Lin

01/01/1987 12,507,018 0.05% 1,663,036 0.01% - Bachelor, Science, National Changhua University of Education, TaiwanSenior Director, Mainstream Fabs, TSMC

- - -

Vice PresidentOperations/300mm FabsJ.K. Wang

02/11/1987 2,553,947 0.01% 160,844 0.00% - Master, Chemical Engineering, National Cheng Kung University, TaiwanSenior Director, 300mm fab operations, TSMC

Manager J.J. Wang Siblings

Vice PresidentCorporate Planning OrganizationIrene Sun

10/01/2003 960,709 0.00% - - - Ph.D., Materials Science and Engineering, Cornell University, U.S.Senior Director, Corporate Planning Organization, TSMC

Manager Thomas T. Sun Siblings

Vice PresidentResearch and DevelopmentBurn J. Lin

04/26/2000 2,997,746 0.01% 1,024,933 0.00% - Ph.D., Electrical Engineering, Ohio State UniversitySenior Director, Nanopatterning Technology Division, TSMC

- - -

Vice PresidentResearch and DevelopmentY.J. Mii

11/14/1994 1,000,419 0.00% - - - Ph.D., Electrical Engineering, University of California, Los Angeles Senior Director, R&D Platform I Division, TSMC

- - -

Vice PresidentResearch and DevelopmentCliff Hou

12/15/1997 752,532 0.00% 60,802 0.00% - Ph.D., Electrical Engineering, Syracuse UniversitySenior Director, Design and Technology Platform, TSMC

Director, TSMC subsidiariesDirector, TSMC affiliatePresident, TSMC subsidiaries

- - -

Note 1: On-board date means the offical date joining TSMC.Note 2: On March 2, 2012, Senior Vice President of R&D Dr. Shang-yi Chiang, Senior Vice President of Operations Dr. Mark Liu, and Senior Vice President of Business Development Dr. C.C. Wei were appointed as Executive Vice Presidents and Co-Chief Operating Officers, effective March 5, 2012.Note 3: On March 5, 2013, Vice President of Human Resources Mr. L.C. Tu was appointed as the President of TSMC China, effective March 15, 2013.

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2.5.2 Compensation Paid to CEO and Executive Officers (Note 1)

Title Name

Salary (A) Severance Pay and Pensions (B) (Note 4)

Bonuses and Allowances (C) (Note 5) Employee Profit Sharing (D) (Note 6)

Total Compensation as a % of 2012 Net Income (A,B,C,D)

(Note 7)

Exercisable Employee Stock Options (K shares) (Note 8)

Exercisable Employee Restricted Stock (K shares)

(Note 9) Compensation Received from

Non-consoildated AffiliatesFrom TSMC

From All Consoildated

EntitiesFrom TSMC


EntitiesFrom TSMC


Entities

From TSMC From All Consoildated Entities

From TSMCFrom All

Consoildated Entities

From TSMCFrom All


From TSMCFrom All

Consoildated EntitiesCash

Stock (Fair Market Value)

CashStock (Fair

Market Value)


81,386 112,347 2,278 2,604 567,997 608,437 538,077 0 538,077 0 0.72% 0.76% 0 0 0 0 135

Executive Vice President & Co-Chief Operating Officer Shang-yi Chiang (Note 2)

Executive Vice President & Co-Chief Operating Officer Mark Liu (Note 2)Executive Vice President & Co-Chief Operating Officer C.C. Wei (Note 2)Senior Vice President & Chief Information OfficerInformation Technology & Materials Management and Risk Management

Stephen T. Tso

Senior Vice President & General Counsel Legal

Richard Thurston

Senior Vice President, Chief Financial Officer & SpokespersonFinance

Lora Ho

Senior Vice PresidentWorldwide Sales and Marketing

Jason C.S. Chen

Vice PresidentOperations/Affiliate Fabs

M.C. Tzeng

Vice PresidentResearch and Development

Wei-Jen Lo

Vice President & Chief Technical OfficerResearch and Development

Jack Sun

Vice PresidentOperations/Product Development

Y.P. Chin

Vice President Quality and Reliability

N.S. Tsai

Vice President & President of TSMC North America

Rick Cassidy

Vice PresidentHuman Resources

L.C. Tu (Note 3)

Vice PresidentOperations/Mainstream Fabs and Manufacturing Technology

J.K. Lin

Vice PresidentOperations/300mm Fabs

J.K. Wang

Vice PresidentCorporate Planning Organization

Irene Sun


Burn J. Lin


Y.J. Mii


Cliff Hou

Note 1: Compensation Policy: The cash compensation and profit sharing paid to CEO and each executive officer are also reviewed by the Compensation Committee individually based on their job responsibility, contribution, and projected future risks facing the Company before the compensation and profit sharing proposals are submitted to the Board of Directors for approval.

Note 2: On March 2, 2012, Senior Vice President of R&D Dr. Shang-yi Chiang, Senior Vice President of Operations Dr. Mark Liu, and Senior Vice President of Business Development Dr. C.C. Wei were appointed as Executive Vice Presidents and Co-Chief Operating Officers, effective March 5, 2012.

Note 3: On March 5, 2013, Vice President of Human Resources Mr. L.C. Tu was appointed as the President of TSMC China, effective March 15, 2013.Note 4: Pensions funded according to applicable law.Note 5: The above-mentioned figures include the expense for the employees’ cash bonuses distributed in June, August, November 2012 and February 2013, company cars and gasoline reimbursement, but does not include

compensation paid to company drivers (totaled NT$5,491 thousand).Note 6: The above-mentioned figures are preliminary and the proposed employee profit sharing distribution will be processed after the approval of the same by shareholders at the Annual Shareholders’ Meeting on June 11, 2013.Note 7: Total compensation paid to TSMC’s CEO and Executive Officers in 2011 was NT$1,101,388 thousand, accounting for 0.82% of 2011 net income.Note 8: Represents cumulative employee stock options exercisable as of the date of this Annual Report.Note 9: TSMC did not issue employee restricted stock in 2012, and as of the date of this Annual Report.

Unit: NT$ thousands

2012From TSMC From All Consolidated Entities and Non-consoildated Affiliates

Under NT$2,000,000 Rick CassidyNT$2,000,000 ~ NT$4,999,999NT$5,000,000 ~ NT$9,999,999NT$10,000,000 ~ NT$14,999,999NT$15,000,000 ~ NT$29,999,999 Irene Sun, Y.J. Mii, Cliff Hou Irene Sun, Y.J. Mii, Cliff HouNT$30,000,000 ~ NT$49,999,999 M.C. Tzeng, Jack Sun, Y.P. Chin, N.S. Tsai, L.C. Tu, J.K. Lin, J.K. Wang,

Burn J. LinM.C. Tzeng, Jack Sun, Y.P. Chin, N.S. Tsai, L.C. Tu, J.K. Lin, J.K. Wang, Burn J. Lin

NT$50,000,000 ~ NT$99,999,999 Shang-yi Chiang, Mark Liu, C.C. Wei, Stephen T. Tso, Richard Thurston, Lora Ho, Jason C.S. Chen, Wei-Jen Lo

Shang-yi Chiang, Mark Liu, C.C. Wei, Stephen T. Tso, Richard Thurston, Lora Ho, Jason C.S. Chen, Wei-Jen Lo, Rick Cassidy

Over NT$100,000,000 Morris Chang Morris ChangTotal 21 21

Compensation Paid to CEO and Executive Officers

027

Title Name

Salary (A) Severance Pay and Pensions (B) (Note 4)

Bonuses and Allowances (C) (Note 5) Employee Profit Sharing (D) (Note 6)

Total Compensation as a % of 2012 Net Income (A,B,C,D)

(Note 7)

Exercisable Employee Stock Options (K shares) (Note 8)

Exercisable Employee Restricted Stock (K shares)

(Note 9) Compensation Received from

Non-consoildated AffiliatesFrom TSMC


EntitiesFrom TSMC


EntitiesFrom TSMC


Entities

From TSMC From All Consoildated Entities

From TSMCFrom All


From TSMCFrom All


From TSMCFrom All

Consoildated EntitiesCash

Stock (Fair Market Value)

CashStock (Fair

Market Value)


81,386 112,347 2,278 2,604 567,997 608,437 538,077 0 538,077 0 0.72% 0.76% 0 0 0 0 135


Executive Vice President & Co-Chief Operating Officer Mark Liu (Note 2)Executive Vice President & Co-Chief Operating Officer C.C. Wei (Note 2)Senior Vice President & Chief Information OfficerInformation Technology & Materials Management and Risk Management

Stephen T. Tso

Senior Vice President & General Counsel Legal

Richard Thurston

Senior Vice President, Chief Financial Officer & SpokespersonFinance

Lora Ho

Senior Vice PresidentWorldwide Sales and Marketing

Jason C.S. Chen

Vice PresidentOperations/Affiliate Fabs

M.C. Tzeng


Wei-Jen Lo

Vice President & Chief Technical OfficerResearch and Development

Jack Sun

Vice PresidentOperations/Product Development

Y.P. Chin

Vice President Quality and Reliability

N.S. Tsai

Vice President & President of TSMC North America

Rick Cassidy

Vice PresidentHuman Resources

L.C. Tu (Note 3)

Vice PresidentOperations/Mainstream Fabs and Manufacturing Technology

J.K. Lin

Vice PresidentOperations/300mm Fabs

J.K. Wang

Vice PresidentCorporate Planning Organization

Irene Sun


Burn J. Lin


Y.J. Mii


Cliff Hou

028

20

12

TSMC

AN

NU

AL REPO

RT

029

2.5.3 Employee Profit Sharing Granted to Management Team (Note 1)

Title Name Stock (Fair Market Value) Cash Total Employee Profit Sharing

Total Employee Profit Sharing Paid to Management Team as a % of 2012 Net

Income


0 538,077 538,077 0.32%


Executive Vice President & Co-Chief Operating Officer Mark Liu (Note 2)

Executive Vice President & Co-Chief Operating Officer C.C. Wei (Note 2)

Senior Vice President & Chief Information OfficerInformation Technology & Materials Management and Risk Management Stephen T. Tso

Senior Vice President & General Counsel Legal Richard Thurston

Senior Vice President, Chief Financial Officer & SpokespersonFinance Lora Ho

Senior Vice PresidentWorldwide Sales and Marketing Jason C.S. Chen

Vice PresidentOperations/Affiliate Fabs M.C. Tzeng

Vice PresidentResearch and Development Wei-Jen Lo

Vice President & Chief Technical OfficerResearch and Development Jack Sun

Vice PresidentOperations/Product Development Y.P. Chin

Vice President Quality and Reliability N.S. Tsai

Vice President & President of TSMC North America Rick Cassidy


Vice PresidentOperations/Mainstream Fabs and Manufacturing Technology J.K. Lin

Vice PresidentOperations/300mm Fabs J.K. Wang

Vice PresidentCorporate Planning Organization Irene Sun

Vice PresidentResearch and Development Burn J. Lin

Vice PresidentResearch and Development Y.J. Mii

Vice PresidentResearch and Development Cliff Hou

Senior DirectorFinance Jan Kees van Vliet (Note 4)

Note 1: The above-mentioned figures are preliminary and the proposed employee profit sharing distribution will be processed after the approval of the same by shareholders at the Annual Shareholders’ Meeting on June 11, 2013.Note 2: On March 2, 2012, Senior Vice President of R&D Dr. Shang-yi Chiang, Senior Vice President of Operations Dr. Mark Liu, and Senior Vice President of Business Development Dr. C.C. Wei were appointed as Executive Vice

Presidents and Co-Chief Operating Officers, effective March 5, 2012.Note 3: On March 5, 2013, Vice President of Human Resources Mr. L.C. Tu was appointed as the President of TSMC China, effective March 15, 2013.Note 4: Mr. Jan Kees van Vliet voluntarily retired on September 7, 2012.

Unit: NT$ thousands

029

Title Name Stock (Fair Market Value) Cash Total Employee Profit Sharing

Total Employee Profit Sharing Paid to Management Team as a % of 2012 Net

Income


0 538,077 538,077 0.32%


Executive Vice President & Co-Chief Operating Officer Mark Liu (Note 2)

Executive Vice President & Co-Chief Operating Officer C.C. Wei (Note 2)

Senior Vice President & Chief Information OfficerInformation Technology & Materials Management and Risk Management Stephen T. Tso

Senior Vice President & General Counsel Legal Richard Thurston

Senior Vice President, Chief Financial Officer & SpokespersonFinance Lora Ho

Senior Vice PresidentWorldwide Sales and Marketing Jason C.S. Chen

Vice PresidentOperations/Affiliate Fabs M.C. Tzeng

Vice PresidentResearch and Development Wei-Jen Lo

Vice President & Chief Technical OfficerResearch and Development Jack Sun

Vice PresidentOperations/Product Development Y.P. Chin

Vice President Quality and Reliability N.S. Tsai

Vice President & President of TSMC North America Rick Cassidy


Vice PresidentOperations/Mainstream Fabs and Manufacturing Technology J.K. Lin

Vice PresidentOperations/300mm Fabs J.K. Wang

Vice PresidentCorporate Planning Organization Irene Sun

Vice PresidentResearch and Development Burn J. Lin

Vice PresidentResearch and Development Y.J. Mii

Vice PresidentResearch and Development Cliff Hou

Senior DirectorFinance Jan Kees van Vliet (Note 4)

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