Capital and Shares | Capital and Shares | 2014 Annual Report

Capital and Shares

Capitalization

As of 02/28/2015

Unit: Share/NT$

Month/Year	Issue Price (Per Share)	Authorized Share Capital		Capital Stock
Month/Year	Issue Price (Per Share)	Shares	Amount	Shares	Amount
03/2014	10	28,050,000,000	280,500,000,000	25,928,617,140	259,286,171,400
06/2014	10	28,050,000,000	280,500,000,000	25,929,123,937	259,291,239,370
09/2014	10	28,050,000,000	280,500,000,000	25,929,374,956	259,293,749,560

Month/Year	Remark
Month/Year	Sources of Capital	Capital Increase by Assets Other than Cash	Date of Approval & Approval Document No.
03/2014	Exercise of Employee Stock Options: NT$2,261,500	None	03/12/2014 Zhu Shang Tzu No.1030007123
06/2014	Exercise of Employee Stock Options: NT$5,067,970	None	06/12/2014 Zhu Shang Tzu No.1030017459
09/2014	Exercise of Employee Stock Options: NT$2,510,190	None	09/03/2014 Zhu Shang Tzu No.1030025856

Capital and Shares

As of 02/28/2015

Unit: Share

Type of Stock	Authorized Share Capital				Total
	Issued Shares			Unissued Shares
	Listed	Non-listed	Total	Unissued Shares
Common Stock	25,930,043,279	-	25,930,043,279	2,119,956,721	28,050,000,000

Shelf Registration: None.

Composition of Shareholders

As of 07/20/2014 (last record date)

Common Share

Type of Shareholders	Government Agencies	Financial Institutions	Other Juridical Persons	Foreign Institutions and Natural Persons	Domestic Natural Persons	Total
Number of Shareholders	8	217	1,042	3,485	332,872	337,624
Shareholding	1,653,710,196	867,976,053	1,240,452,818	19,970,458,571	2,196,777,318	25,929,374,956
Holding Percentage (%)	6.38%	3.35%	4.78%	77.02%	8.47%	100.00%

Distribution Profile of Share Ownership

As of 07/20/2014 (last record date)

Common Share

Shareholder Ownership (Unit: Share)	Number of Shareholders	Ownership	Ownership (%)
1 ~ 999	158,910	36,077,042	0.14%
1,000 ~ 5,000	121,170	262,376,274	1.01%
5,001 ~ 10,000	25,742	182,408,354	0.70%
10,001 ~ 15,000	10,211	123,643,027	0.48%
15,001 ~ 20,000	4,558	79,670,322	0.31%
20,001 ~ 30,000	5,145	124,557,156	0.48%
30,001 ~ 40,000	2,420	83,517,241	0.32%
40,001 ~ 50,000	1,554	69,903,420	0.27%
50,001 ~ 100,000	2,980	207,042,950	0.80%
100,001 ~ 200,000	1,607	222,806,904	0.86%
200,001 ~ 400,000	1,064	297,773,577	1.15%
400,001 ~ 600,000	427	206,384,906	0.80%
600,001 ~ 800,000	258	179,672,944	0.69%
800,001 ~ 1,000,000	188	169,216,764	0.65%
Over 1,000,001	1,390	23,684,324,075	91.34%
Total	337,624	25,929,374,956	100.00%

Preferred Share: None.

Major Shareholders

As of 07/20/2014 (last record date)

Common Share

Shareholders	Total Shares Owned	Ownership (%)
ADR-Taiwan Semiconductor Manufacturing Company, Ltd.	5,386,967,368	20.78%
National Development Fund, Executive Yuan	1,653,709,980	6.38%
JPMorgan Chase Bank N.A. Taipei Branch in custody for Saudi Arabian Monetary Agency	804,188,035	3.10%
Government of Singapore	594,775,575	2.29%
JPMorgan Chase Bank N.A. Taipei Branch in custody for ABU DHABI Investment Authority	361,417,833	1.39%
JPMorgan Chase Bank N.A. Taipei Branch in custody for EuroPacific Growth Fund	302,957,649	1.17%
Cathay Life Insurance Co., Ltd.	301,358,235	1.16%
JPMorgan Chase Bank, N.A., Taipei Branch in custody for Stichting Depositary APG Emerging Markets Equity Pool	277,953,361	1.07%
Vanguard Emerging Markets Stock Index Fund, a Series of Vanguard International Equity Index Funds	246,465,845	0.95%
iShares MSCI Emerging Markets Index Fund	243,118,000	0.94%

Net Change in Shareholding by Directors, Management and Shareholders with 10% Shareholdings or More

Unit: Share

Title Name	2014		01/01/2015 ～ 02/28/2015
Title Name	Net Change in Shareholding	Net Change in Shares Pledged (Note 1)	Net Change in Shareholding	Net Change in Shares Pledged (Note 1)
Chairman Morris Chang	2,000,000	-	-	-
Vice Chairman F.C. Tseng	-	-	-	-
Director National Development Fund, Executive Yuan 　Representative: Johnsee Lee	-	-	-	-
	-	-	-	-
Director Rick Tsai (Note 2)	(50,000)	-	-	-
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	-	-	-	-
President and Co-Chief Executive Officer Mark Liu	(60,000)	-	-	-
President and Co-Chief Executive Officer C.C. Wei	(1,281,000)	-	-	-
Senior Vice President and Chief Information Officer Information Technology, Materials Management and Risk Management Stephen T. Tso	(708,000)	-	(40,000)	-
Senior Vice President and General Counsel Legal Richard Thurston (Note 3)	(250,000)	(650,000)	-	-
Senior Vice President, Chief Financial Officer and Spokesperson Finance Lora Ho	-	1,500,000	-	-
Senior Vice President Research and Development Wei-Jen Lo (Note 4)	(140,000)	-	-	-
Senior Vice President of TSMC and President of TSMC North America Rick Cassidy (Note 4)	-	-	-	-
Vice President Operations/Affiliate Fabs M.C. Tzeng	-	-	-	-
Vice President and Chief Technology Officer Research and Development Jack Sun	(78,000)	-	-	-
Vice President Operations/Product Development Y.P. Chin	(120,000)	-	(52,000)	-
Vice President Quality and Reliability N.S. Tsai	-	-	-	-
Vice President Operations/Mainstream Fabs and Manufacturing Technology J.K. Lin	-	-	-	-
Vice President Operations/300mm Fabs J.K. Wang	-	-	-	-
Vice President Corporate Planning Organization Irene Sun	(450,000)	(220,000)	-	-
Vice President Research and Development Burn J. Lin	(123,000)	-	-	-
Vice President Research and Development Y.J. Mii	-	-	-	-
Vice President Research and Development Cliff Hou	-	-	-	-
Vice President Business Development Been-Jon Woo	100,000	-	20,000	-
Vice President and General Counsel Legal Sylvia Fang (Note 5)	-	-	-	-
Vice President Human Resources Connie Ma (Note 5)	10,000	-	-	-

Note 1:	This refers to the creation of security interest over TSMC shares in favor of creditors, usually in connection with a shareholder’s own financing activities.
Note 2:	Dr. Rick Tsai resigned as a director of TSMC, effective January 27, 2014. His shareholding was not disclosed after that date.
Note 3:	Senior Vice President and General Counsel Dr. Richard Thurston voluntarily retired, effective July 16, 2014. His shareholding was not disclosed after that date.
Note 4:	Dr. Wei-Jen Lo and Mr. Rick Cassidy were promoted to Senior Vice President, effective February 18, 2014.
Note 5:	Ms. Sylvia Fang and Ms. Connie Ma were promoted to Vice President, effective August 12, 2014. Their shareholdings were disclosed starting from that date

Stock Trade with Related Party:

None.

Stock Pledge with Related Party:

None.

Related Party Relationship among Our 10 Largest Shareholders

As of 07/20/2014 (last record date)

Common Share

Name	Current Shareholding		Spouse & Minor Shareholding		TSMC Shareholding by Nominee Arrangement		Name and Relationship between TSMC’s Shareholders
Name	Shares	%	Shares	%	Shares	%	Name	Relationship
ADR-Taiwan Semiconductor Manufacturing Company, Ltd.	5,386,967,368	20.78%	N/A	N/A	N/A	N/A	None	None
National Development Fund, Executive Yuan Representative: Johnsee Lee	1,653,709,980	6.38%	N/A	N/A	N/A	N/A	None	None
	-	-	N/A	N/A	N/A	N/A	None	None
JPMorgan Chase Bank N.A. Taipei Branch in custody for Saudi Arabian Monetary Agency	804,188,035	3.10%	N/A	N/A	N/A	N/A	None	None
Government of Singapore	594,775,575	2.29%	N/A	N/A	N/A	N/A	None	None
JPMorgan Chase Bank N.A. Taipei Branch in custody for ABU DHABI Investment Authority	361,417,833	1.39%	N/A	N/A	N/A	N/A	None	None
JPMorgan Chase Bank N.A. Taipei Branch in custody for EuroPacific Growth Fund	302,957,649	1.17%	N/A	N/A	N/A	N/A	None	None
Cathay Life Insurance Co., Ltd. Chairman: Hong-Tu Tsai	301,358,235	1.16%	N/A	N/A	N/A	N/A	None	None
JPMorgan Chase Bank, N.A., Taipei Branch in custody for Stichting Depositary APG Emerging Markets Equity Pool	277,953,361	1.07%	N/A	N/A	N/A	N/A	None	None
Vanguard Emerging Markets Stock Index Fund, a Series of Vanguard International Equity Index Funds	246,465,845	0.95%	N/A	N/A	N/A	N/A	None	None
iShares MSCI Emerging Markets Index Fund	243,118,000	0.94%	N/A	N/A	N/A	N/A	None	None

Long-term Investment Ownership

As of 12/31/2014

Note 1:	Not applicable. These firms do not issue shares. TSMC’s investment is measured as a percentage of ownership
Note 2:	On December 31, 2014, we reclassified TSMC SSL as a disposal group held for sale. On February 17, 2015, TSMC SSL ceased to be TSMC’s subsidiary because TSMC’s and TSMC subsidiary’ shares in TSMC SSL were sold to Epistar Corporation.
Note 3:	TSMC’s Director, National Development Fund of Executive Yuan, holds 16.73% while other Directors and Management hold 0.20%.

Share Information

TSMC’s earnings per share increased 40.3% in 2014 to NT$10.18 per share. The following table details TSMC’s market price, net worth, earnings, and dividends per common share, as well as other data regarding return on investment.

Market Price, Net Worth, Earnings, and Dividends Per Common Share

Unit: NT$, except for weighted average shares and return on investment ratios

Item	2013	2014	01/01/2015 ~ 02/28/2015
Market Price Per Share (Note 1)
Highest Market Price	115.50	141.50	154.50
Lowest Market Price	94.40	100.50	130.00
Average Market Price	104.09	122.53	141.67
Net Worth Per Share
Before Distribution	32.69	40.32	-
After Distribution	29.69	(Note 5)	-
Earnings Per Share
Weighted Average Shares (thousand shares)	25,929,603	25,930,104	-
Diluted Earnings Per Share	7.26	10.18 (Note 5)	-
Dividends Per Share
Cash Dividends	3.00	4.50 (Note 5)	-
Accumulated Undistributed Dividend	-	-	-
Return on Investment
Price/Earnings Ratio (Note 2)	14.34	(Note 5)	-
Price/Dividend Ratio (Note 3)	34.70	(Note 5)	-
Cash Dividend Yield (Note 4)	2.9%	(Note 5)	-

Note 1: Referred to TWSE website
Note 2: Price/Earnings Ratio = Average Market Price/ Diluted Earnings Per Share
Note 3: Price/Dividend Ratio = Average Market Price/Cash Dividends Per Share
Note 4: Cash Dividend Yield = Cash Dividends Per Share/Average Market Price
Note 5: Pending for shareholders’ approval

Dividend Policy

TSMC does not pay dividends when there is no profit or retained earnings. TSMC has distributed cash dividends every year to its shareholders since 2004 and maintained dividends per share (DPS) at NT$3.0 every year from 2007 to 2014. TSMC intends to maintain a stable and sustainable dividend policy, and will consider raising DPS when the free cash flow is sufficient to cover the previous level of dividend payment and any debt repayment. On February 10, 2015, TSMC’s Board of Directors adopted a proposal recommending distribution of a cash dividend of NT$4.5 per share. This proposal will be discussed and decided at the Annual Shareholders’ Meeting on June 9, 2015.

Distribution of Profit

The Board adopted a proposal for 2014 profit distribution at its meeting on February 10, 2015. The proposal will be effected according to the relevant regulations, upon the approval of shareholders at the Annual Shareholders’ Meeting on June 9, 2015.

In addition, according to the Company’s Articles of Incorporation, TSMC shall allocate no more than 0.3% of earnings available for distribution (net income after a regulatory required deduction for prior years’ losses and contributions to legal and special reserves) as compensation to directors, and not less than 1% as a bonus to employees. Profit sharing to employees, to be distributed after the 2015 Annual Shareholders’ Meeting, was recorded as a charge to earnings of approximately 6.7% of net income in year 2014; compensation to directors was expensed based on the estimated amount of payment. The proposal will be effected according to the relevant regulations, upon the approval of shareholders at the Annual Shareholders’ Meeting on June 9, 2015. If the actual amounts subsequently resolved by the shareholders differ from the above estimated amounts, the differences will be recorded in the year of shareholders’ resolution as a change in accounting estimate.

Proposal to Distribute 2014 Profits

Unit: NT$

Cash Dividends to Common Shareholders (NT$4.5 per share)	116,683,480,962

Note:

Employees’ cash bonus and profit sharing and compensation to directors for the year 2014 which have been expensed under the Company’s income statements are listed below:
－NT$17,645,966,064 distributed employees’ cash bonus
－NT$17,645,966,064 employees’ cash profit sharing to be distributed after 2015 Annual Shareholders’ Meeting
－NT$406,853,980 directors’ compensation

2013 Directors’ Compensation and Employee Profit Sharing

	Board Resolution (02/18/2014)	Actual Result (Note)
	Amount (NT$)	Amount (NT$)
Directors’ Compensation (Cash)	104,136,580	104,136,580
Employee’s Cash Profit Sharing	12,634,664,804	12,598,235,278
Total	12,738,801,384	12,702,371,858

Note:

The above Directors’ Compensation and Employee’s Cash Profit Sharing were expensed under the Company’s 2013 income statements and the same amounts were approved by the Board of Directors at its meeting on February 18, 2014. The Employee’s Cash Profit Sharing was distributed after the approval of the same by shareholders at 2014 Annual Shareholders’ Meeting on June 24, 2014. Due to employee turnover, Employee’s Cash Profit Sharing in the amount of NT$36,429,526 was undistributed, and related expense was reversed in 2014.

Impact to 2015 Business Performance and EPS Resulting from Stock Dividend Distribution:

Not applicable.

Buyback of Common Stock:

None.