Manufacturing Excellence

GIGAFABTM Facilities

TSMC’s 12-inch fabs are a key part of its manufacturing strategy. The Company currently operates three 12-inch GIGAFABTM facilities－Fab 12, Fab 14, and Fab 15－the combined capacity of which reached 5,283,000 12-inch wafers in 2014. Production within these three facilities supports 0.13μm, 90nm, 65nm, 40nm, 28nm, 20nm process technologies, and their sub-nodes. To provide leading edge manufacturing technologies, part of the capacity is reserved for research and development work and currently supports 10nm and beyond technology development. TSMC has developed a centralized fab manufacturing management system to pursue higher customer benefits of consistent quality and reliability performance, greater flexibility of demand fluctuations, faster yield learning and time-to-volume, and minimized costly product re-qualification. It enabled Fab 14 to accelerate 20nm capacity ramping to 60,000 wafers output per month in one quarter to satisfy customers’ demand.

Engineering Performance Optimization

TSMC has implemented statistical process control, advanced equipment control, advanced process control, circuit probe data and integrated big data analysis systems to optimize equipment performance to match device performance.

TSMC engages in engineering big data analytics, and applies the technology in the management and control of equipment, processes and yields. The Company has developed various systems such as intelligent tool tuning, engineering big data mining, and equipment chamber matching. The intelligent automation systems, driven by the decisions based on big engineering data, assure the high efficiency and stability of TSMC’s equipment. It also analyzes the correlations between electrical, physical measurements and production-related parameters to identify critical variables that influence product quality and yields, so as to fulfill customers’ special process requirements and diversified product demand simultaneously.

Accurate modeling and control at each process stage drives intelligent module loop control. The process control dispatching via sophisticated computer-integrated manufacturing systems enables optimization from equipment to end products to achieve precision and lean operations in a sophisticated semiconductor manufacturing environment.

Precision and Lean Operations

TSMC’s unique manufacturing infrastructure is tailored for a high product mix foundry environment. Following its commitment to manufacturing excellence, TSMC has equipped a sophisticated scheduling and dispatching system, full automated manufacturing, industry-leading automated materials handling systems and intelligent mobile devices, and employed Lean Manufacturing approaches to provide customers with on-time-delivery and best-in-class cycle time. Real-time equipment performance and productivity monitoring, analysis, diagnosis and control minimize production interruption and maximize cost effectiveness.

450mm Wafer Manufacturing Transition

TSMC joined the Global 450mm Consortium (G450C) located in the College of Nanoscale Science and Engineering (CNSE) of New York University at Albany, New York. The consortium includes five IC makers and CNSE (which represents New York State and provides the clean room facility), as well as key 450mm tool suppliers as associate members.

Currently, TSMC has 16 experienced employees working in the consortium. TSMC has assumed the Operation General Manager position in the consortium and commits to lead the industry for a cost-effective 450mm transition.

Raw Materials and Supply Chain Risk Management

In 2014, TSMC continued Supply Chain Risk Management review meetings periodically with operation, quality and business teams to proactively identify and manage risk of supply capacity insufficiency, quality issue and supply chain interruption. TSMC also worked with its suppliers to enhance the performance of quality, delivery, sustainability, and to support green procurement, environmental protection and safety.

Raw Materials Supply

Major Materials	Major Suppliers	Market Status	Procurement Strategy
Raw Wafers	F.S.T. S.E.H. Siltronic SUMCO SunEdison	These five suppliers together provide over 90% of the world’s wafer supply. Each supplier has multiple manufacturing sites in order to meet customer demand, including plants in North America, Asia, and Europe.	TSMC’s suppliers of silicon wafers are required to pass stringent quality certification procedures. TSMC procures wafers from multiple sources to ensure adequate supplies for volume manufacturing and to appropriately manage supply risk. TSMC maintains competitive price and service agreements with its wafer suppliers, and, when necessary, enters into strategic and collaborative agreements with key suppliers. TSMC regularly reviews the quality, delivery, cost, sustainability and service performance of its wafer suppliers. The results of these reviews are incorporated into TSMC’s subsequent purchasing decisions. A periodic audit of each wafer supplier’s quality assurance systems ensures that TSMC can maintain the highest quality in its own products.
Chemicals	Air Products ATMI Avantor BASF Hong-Kuang MGC SAFC Wah Lee	These eight companies are the major suppliers for bulk and specialty chemicals.	Most suppliers have relocated many of their operations closer to TSMC’s major manufacturing facilities, thereby significantly improving procurement logistics. The suppliers’ products are regularly reviewed to ensure that TSMC’s specifications are met and product quality is satisfactory.
Litho Materials	AZ Dow JSR Nissan Shin-Etsu Chemical Sumitomo T.O.K.	These seven companies are the major suppliers for worldwide litho materials.	TSMC works closely with its suppliers to develop materials able to meet application and cost requirements. TSMC and suppliers periodically conduct improvement programs of their quality, delivery, sustainability and green policy, to ensure continuous progress of TSMC’s supply chain. Some major suppliers have relocated or plan to duplicate their manufacturing site closer to TSMC’s major manufacturing facilities, thereby significantly improving procurement logistics and reducing supply risks.
Gases	Air Liquide Air Products ATMI Linde Taiyo Nippon Sanso	These five companies are the major suppliers of specialty gases.	The majority of the five suppliers are located in different geographic locations, minimizing supply risk to TSMC. TSMC conducts periodic audits of the suppliers’ quality assurance systems to ensure that they meet TSMC’s standards.
Slurry, Pad, Disk	3M Air Products Asahi Glass Cabot Microelectronics Dow Chemical Fujifilm Planar Solutions Fujimi Kinik Sumitomo	These nine companies are the major suppliers for CMP materials.	TSMC works closely with its suppliers to develop materials able to meet application and cost requirements. TSMC and suppliers periodically conduct improvement programs of their quality, delivery, sustainability and green policy, to ensure continuous progress of TSMC’s supply chain. Most suppliers have relocated or duplicated their manufacturing sites closer to TSMC’s major manufacturing facilities, thereby significantly improving procurement logistics and reducing supply risks.

Suppliers Accounted for at Least 10% of Annual Consolidated Net Procurement

Unit: NT$ thousands

Supplier	2014			2013
Supplier	Procurement Amount	As % of 2014 Total Net Procurement	Relation to TSMC	Procurement Amount	As % of 2013 Total Net Procurement	Relation to TSMC
Company A	8,496,410	17%	None	4,925,966	12%	None
VIS	7,424,566	14%	Investee accounted for using equity method	6,993,964	17%	Investee accounted for using equity method
Company B	6,147,991	12%	None	4,812,417	11%	None
Company C	5,471,062	11%	None	4,401,215	11%	None
Others	23,487,560	46%		20,773,685	49%
Total Net Procurement	51,027,589	100%		41,907,247	100%

Quality and Reliability

A characteristic of TSMC’s industry reputation is its commitment to providing customers with the best quality wafers and service for their products. Quality and Reliability (Q&R) services aim to achieve “quality on demand” to fulfill customers’ needs regarding time-to-market, reliable quality, and market competition over a broad range of products.

Q&R technical services assist customers in the technology development and product design stage to design-in their product reliability requirements. Since 2008, Q&R has worked with R&D to successfully establish and implement new qualification methodology for High-k/Metal Gate (HKMG) as well as for FinFET structures in 2013. Q&R has collaborated with SEMI, Semiconductor Equipment and Material International, to establish an IC Quality Committee since May 2012 in order to enhance product quality of the semiconductor supply chain. For backend technology development, Q&R worked with R&D and the Backend Technology and Service Division to complete the Package-on-Package (PoP) technology development and started production at major outsource assembly and testing houses in 2014 for mobile product application. Over 100 million PoP have been shipped to customers without major quality issues.

In 2014, Q&R conducted a deep-dive audit on the new material suppliers for 20nm/16nm advanced technology and announced the incoming material quality requests to enhance supplier’s delivery quality. Q&R also implemented innovative statistical matching methodologies to achieve the goal of enlarging the manufacturing window with better quality control. The scope of the methodology includes raw material, facility, metrology and process tools, wafer acceptance test (WAT) data and reliability performance. Since 2011, Q&R tightened the post-fab outgoing visual inspection criteria for wafer quality improvement to AQL 0.4% from AQL 0.65%.

To sustain production quality and to minimize risk to customers when deviations occur, manufacturing quality monitoring and event management span all critical stages – from raw material supply, mask making, and real-time in-process monitoring, to bumping, wafer sort and reliability performance. Failure, materials and chemical analysis play important roles in TSMC quality; these capabilities are used from the early stages of process development through assembly and packaging, including analysis of incoming materials, airborne molecular contaminants, and failure analysis of customer returns. In 2014, TSMC aggressively invested in state-of-the-art electron and ion microscopes and surface analysis capabilities. In view of the importance of ensuring the quality of incoming chemicals and materials, this year TSMC implemented detection of metal impurities in certain chemicals to the parts-per-trillion level. In collaboration with customers and suppliers, significant progress has been made in dynamic fault isolation, traditionally a domain of integrated device manufacturers and fabless companies. This effort will continue into 2015 with the addition of new capabilities to satisfy the needs of a broader range of customers and improve the quality of TSMC products.

In compliance with the electronic industry’s lead-free and green IC package policy, Q&R qualified and released lead-free bumping and Cu bumping to satisfy customer demands, and made lead-free bump packages possible for 0.13µm, 45nm, 40nm, 28nm and 20SoC technology products as well as Cu bump package possible for 28nm and 20SoC by collaborating with the major outsource assembly and testing subcontractors. This enabled TSMC customers to introduce and ramp lead-free products with excellent assembly quality. In 2014, TSMC Q&R ramped wafer-level Chip Scale Package (CSP) to 20K per month, lead-free to 120K per month and Cu bumping to 12K per month without major quality issues. For mainstream technologies, Q&R qualified ultra, extreme low leakage and high endurance embedded Flash IP, IPD (Integrated Passive Device), hybrid of Copper, and Copper-Aluminum technology with customers. Q&R continues to build reliability testing and monitoring to ensure excellent manufacturing quality of specialty technologies on automotive, high-voltage products, CMOS image sensors, embedded-Flash memory and Micro-Electro-Mechanical System products.

TSMC Q&R is also responsible for leading the Company towards the ultimate goal of zero-defect production through the use of continuous improvement programs. Periodic customer feedback indicates that products shipped from TSMC have consistently met or exceeded their field quality and reliability requirements. In 2014, a third-party audit verified the effectiveness of the TSMC quality management system in compliance with ISO/TS 16949: 2009 and IECQ QC 080000: 2012 certificates requirements.