Greenhouse Gas (GHG) Emission Reduction

TSMC believes its environmental, safety and health practices must not only comply with legal requirements, but also measure up to or exceed recognized international practices. TSMC’s ESH policy aims to reach the goals of “zero incident” and “sustainable development,” and to make TSMC a world-class company in environmental, safety and health management. The Company’s strategies for reaching these goals are to comply with regulations, promote safety and health, strengthen recycling and pollution prevention, manage ESH risks, instill an ESH culture, establish a green supply chain, and fulfill its related corporate social responsibilities.

All TSMC manufacturing facilities have received ISO 14001: 2004 certification for environmental management systems and OHSAS 18001: 2007 certification for occupational safety and health management systems. All fabs in Taiwan have also been TOSHMS (Taiwan Occupational Safety and Health Management System) certified since 2009.

TSMC strives for continuous improvement and actively seeks to enhance climate change management, pollution prevention and control, power and resource conservation, waste reduction and recycling, safety and health management, fire and explosion prevention and minimize the impact of earthquake damage, in order to reduce the overall environmental, safety and health risk.

In 2006, in order to meet regulatory and customer needs for the management of hazardous materials, TSMC began to adopt the IECQ QC 080000 Hazardous Substance Process Management (HSPM) System. All TSMC manufacturing facilities have been QC 080000 certified since 2007. By practicing QC 080000, TSMC ensures that its products comply with regulatory and customer requirements, including the European Union’s Restriction of Hazardous Substances (RoHS) Directive, EU Registration, Evaluation, Authorization and Restriction of Chemicals (REACH), the Montreal Protocol on substances that deplete the ozone layer, [the halogen free in electronic products initiative], and Perfluorooctane Sulfonates (PFOS) restriction standards.

Since 2011, TSMC adopted ISO 50001 Energy Management System for the continuous improvement of energy conservation. TSMC Fab 12 Phase 4 data center is Taiwan’s first facility to earn the ISO 50001 certification for a high density computing data center. As of early 2014, TSMC has three fabs－Fab 12 Phase 4/5/6, Fab 14 Phase 3/4 and Fab 15 －that earned the ISO 50001 certifications. Other TSMC fabs also implement energy management measures consistent with ISO 50001.

TSMC regularly communicates with suppliers and contractors regarding environmental, safety and health issues and encourages them to improve their ESH performance. In line with this policy, TSMC uses priority work management and self-management to govern work performed by contractors. TSMC requires contractors performing Level one high-risk operations to complete certification for technicians, and to establish their own OHSAS 18001 safety and health management system. This self-management is aimed at increasing the sense of responsibility of TSMC’s contractors, with the goal of promoting safety awareness and technical improvement for all contractors in the industry.

TSMC collaborates with suppliers to improve the sustainability of the Company’s supply chain regarding ESH-related issues, such as environmental protection, safety and hygiene code compliance, daily management, fire protection, and conflict mineral management. TSMC not only performs on-site ESH audits at its suppliers’ manufacturing sites, but also proactively assists them with improving ESH performance.

Besides the requirement of ESH code compliance, energy/water saving and carbon management of TSMC’s supply chain is essential to the Company’s green supply chain ideals. Since 2009, TSMC has required suppliers to set up their carbon inventory procedures. Since 2010, TSMC collaborated with selected suppliers to set up product carbon footprints and has received PAS2050 certifications for 6-inch, 8-inch and 12-inch finished wafers.

TSMC also monitors potential water shortages in the supply chain and investigates the supply chain’s water inventory. TSMC is also preparing to work with suppliers on water footprinting and conservation plans. The ESH management programs of TSMC suppliers are tied to a sustainability index that includes three components: the Green Index, the Social Index and the Risk Index. The “Green Index” includes environmental management systems, regulatory compliance, hazardous substance management, conflict mineral investigation, greenhouse gas inventory and other green activities. The “Social Index” includes labor and ethical conduct. Both of the “Green” and “Social” indices are consistent with the Electronic Industry Citizenship Coalition (EICC) code of conduct. The “Risk Index” includes safety and health management, fire prevention, natural disaster mitigation, IT interruption recovery, transportation reliability, supply chain management, pandemic response planning and a business continuity plan. This sustainability index is applied to TSMC’s critical suppliers.

Environmental Protection

Greenhouse Gas (GHG) Emission Reduction

TSMC is an active participant in international environmental regulatory and protection programs. TSMC achieved its voluntary PFC emissions reduction goal as per its commitment to the World Semiconductor Council (WSC) and the Taiwan Environmental Protection Administration (EPA) in 2010.

In 2005, TSMC was Taiwan’s first semiconductor company to make a complete inventory of its GHG emissions and to gain ISO 14064 certification. The purpose of the inventory was to serve as a baseline reference for TSMC’s strategy to reduce GHG emissions, to meet future domestic regulatory requirements, and to prepare for carbon trading and corporate carbon asset management. All TSMC facilities conduct an annual GHG. The inventory result shows that the major direct GHG emissions are perfluorinated compounds (PFCs), which are used in the semiconductor manufacturing process. The primary indirect GHG emission is electricity consumption.

TSMC is taking measures to reduce its emission of GHGs. TSMC endorsed a memorandum of understanding between the Taiwan Semiconductor Industry Association, the Taiwan EPA, and the WSC, whereby TSMC committed to reducing PFC emissions to 10% below the average of 1997 and 1999 by 2010, a commitment that it was proud to achieve. This emissions target remains fixed as TSMC continues to grow and expand its manufacturing facilities.

TSMC is active in WSC’s activities to set up a global voluntary PFC emissions reduction goal for the next ten years, and has integrated past experience to develop best practices. The implementation of best practices for new semiconductor fabs has been adopted by WSC for the major element of the 2020 goal. In 2013, according to the “EPA Early Actions for Carbon Credit of Greenhouse Gases Reduction” regulation, TSMC applied for the recognition of greenhouse reduction that committed to the WSC and EPA, and received carbon credits from 2005 to 2011. Those carbon credits can be used to offset greenhouse gas emissions of new manufacturing facilities regulated by Environmental Impact Assessment (EIA) Act. It will mitigate climate change risk to support the Company’s sustainable operation.

Coal-fired power generators are the major source of electricity in Taiwan and emit large amounts of carbon dioxide (CO2). TSMC has not only adopted energy-conserving designs for both its manufacturing fabs and offices, but has also continuously improved the energy efficiency of facilities during operation. These efforts simultaneously reduce both carbon dioxide gas emissions and costs.

Air and Water Pollution Control

TSMC has installed effective air and water pollution control equipment in each wafer fab to meet regulatory emissions standards. In addition, TSMC maintains backup pollution control systems, including emergency power supplies, to lower the risk of pollutant emission in the event of equipment breakdown. TSMC centrally monitors the operations of air and water pollution control equipment around the clock and tracks system effectiveness to ensure the quality of emitted air and discharged water.

To make the most effective use of Taiwan’s limited water resources, all TSMC fabs make an effort to increase water reclamation rates by adjusting the water usage of manufacturing equipment and improving wastewater reclamation systems. New fabs are able to reclaim more than 88% of process water, meeting or exceeding the standards of the Science Park Administration and outperforming most semiconductor fabs around the world. TSMC also strives to reduce non-manufacturing-related water consumption, including water used in air conditioning systems, sanitary facilities, cleaning, landscaping and kitchens. TSMC uses an intranet website to collect and measure water recycling volumes company-wide.

Since water resources are inherently local, TSMC shares its water saving experiences with other semiconductor companies through the Association of Science-Based Industrial Park to promote water conservation in order to achieve the Science Park’s goals and ensure a long-term balance of supply and demand.

Waste Management and Recycling

TSMC has established a designated unit responsible for waste recycling and disposal. To meet the goal of sustainable resource utilization, TSMC’s first priority is to reduce process waste, the second is to recycle, and the last choice is treatment or disposal. TSMC carefully selects waste disposal and recycling contractors and performs annual audits of certification documents and site operations. TSMC also adopts proactive actions to strengthen vendor auditing effectiveness. For example, all waste transportation contractors are requested to join the “GPS Satellite Fleet” so that all the cleanup transportation routes and abnormal stays for all trucks can be traced (approximately 1/3 contractors have joined till the end of 2014, plan all contractors will complete and join the system in 2015). In addition, all waste recycling and treatment vendors install CCTV in operation sites for the purpose of review and auditing in tracing waste handling status. All these actions are to ensure legal and proper recycling and treatment of wastes. TSMC achieved a 93% waste recycling rate in 2014, while our landfill rate was below 1% for the sixth consecutive year.

Environmental Accounting

The purpose of TSMC’s environmental accounting system is to identify and calculate environmental costs for internal management. At the same time, the Company can also evaluate the cost reduction or economic benefits of environmental protection programs so as to promote economically efficient programs. With environmental costs expected to continue growing, environmental accounting can help TSMC manage more effectively. TSMC’s environmental accounting measures define the various environmental costs and set up independent environmental account codes, then provide these to all units for use in annual budgeting. This online system can output data for environmental cost statistics.

The Company’s economic benefit evaluation calculates cost savings for reduction of energy, water or wastes and waste recycling benefits according to our environmental protection programs.

The environmental benefits disclosed in this report include real income from projects such as waste recycling and savings from major environmental projects. In 2014, 350 environmental projects were completed and the total benefits including waste recycling are more than NT$1,215 million.

2014 Environmental Cost of TSMC Fabs in Taiwan

Unit: NT$ thousands

2014 Environmental Efficiency of TSMC Fabs in Taiwan

Unit: NT$ thousands

Other Environmental Protection Programs

TSMC conducts “Product Life Cycle Assessments” (Product LCA), collecting and analyzing data from the entire semiconductor manufacturing chain from raw materials suppliers to finished products, including statistics for such items as energy, raw material consumption, and pollution. The Product LCA study has established “Eco-Profiles” for all TSMC fabs and helps the Company to meet international regulations, such as the European Union’s “Energy-Using Product” directive. These “Eco-Profiles” can also be provided to customers who require such documentation.

TSMC also maintains “green procurement” procedures, requiring raw materials suppliers to declare that the materials they supply to TSMC do not contain any prohibited substances. This ensures that products manufactured by TSMC comply with customer requirements and the regulatory requirements of the European Union’s RoHS Directive. TSMC also encourages employees to use “Green Mark” products in offices, such as recycled paper, desktop PCs, LCD monitors, and batteries.

TSMC has adopted both the Taiwan “Green Building” and the U.S. Leadership in Energy and Environmental Design (LEED) standards for new fab and office building designs since 2006 to achieve better energy and resource efficiency than conventional designs. At the same time, TSMC continues to upgrade existing office buildings to comply with the LEED standard each year. From 2008 to 2014, 16 of TSMC’s fabs and office buildings achieved LEED certifications (2 Platinum, 14 Gold class). Meanwhile, TSMC also received 3 of Taiwan’s EEWH (Ecology, Energy Saving, Waste Reduction and Health) Diamond class Intelligent Green Building, seven Taiwan’s EEWH Diamond class certification.

TSMC believes that manufacturing companies should convert their facilities into green factories to effectively improve the environment and lower construction costs. Therefore, TSMC freely shares its practical experience with industry, government, and academia. As of the end of 2014, more than 7,344 visitors from 190 different industry, government, academia and general community groups contacted TSMC to gain understanding on the Company’s green factory practices. TSMC led the industry to support the Taiwan government in establishing “Green Factory Labeling System” from 2009, a system that included “Clean Production Evaluation System” and “Green Factory Evaluation System”. TSMC received Taiwan’s first “Green Factory Label” from the government and five labels in total for Fab 12 Phase 4, Fab 14 Phase 3, Fab 14 Phase 4, Fab 12 Phase 5 and Fab 12 Phase 6.

Environmental Compliance Record

In 2014 and as of the date of this Annual Report, TSMC had not received any environmental penalties or fines.

Green Products

TSMC collaborates with its upstream material and equipment suppliers, design ecosystem partners and downstream assembly and testing service providers to reduce environmental impact. We reduce the resources and energy consumed for each unit of production and are able to provide more advanced, power efficient and ecologically sound products, such as lower-power-consumption chips for mobile devices, high efficiency LED driver for Flat Panel Display Backlighting and indoor/outdoor Solid State LED lighting, and “Energy Star” low standby AC-DC adaptors, etc. In addition to helping customers design low-power, high-performance products to reduce resource consumption over the product’s life cycle, TSMC implements clean manufacturing practices that provide additional “green value” to our customers and our other stakeholders.

TSMC-manufactured ICs are used in a broad variety of applications covering various segments of the computer, communications, consumer, industrial and other electronics markets. Through TSMC’s manufacturing technologies, customers’ designs are realized and incorporated into peoples’ lives. These chips make significant contributions to the progress of modern society. TSMC works hard to achieve profitable growth while providing products that add environmental and social value. We have listed below several examples of how TSMC-manufactured products significantly contribute to society and the environment.

Environmental Contribution by TSMC Foundry Services

1. Providing New Process Technology to Achieve Lower Power Consumption

• The continuous development of TSMC’s advanced semiconductor process technologies follows Moore’s Law, which holds that process technology moves forward one generation every 24 months. In each new generation circuitry line widths shrink, making circuits smaller and lowering the energy and raw materials consumed per unit area. At the same time, the smaller IC die size consumes less power. TSMC’s 28nm technology, for example, can accommodate approximately four times the number of electronic components as the 55nm technology. ICs made with 28nm technology in active or standby mode consume roughly one third the power of 55nm products, according to TSMC’s internal test results. The Company continuously provides process simplification and new design methodology based upon its manufacturing excellence to help customers reduce design and process waste.

• TSMC leads the foundry segment in technology, having achieved volume production at the 28nm node. TSMC’s 28nm processes include 28nm High Performance (28HP), 28nm High Performance Low Power (28HPL), 28nm Low Power (28LP), 28nm High Performance Mobile Computing (28HPM), and 28nm High Performance Compact Mobile Computing (28HPC). Customer 28nm production tape-outs are more than double the number of 40nm customer tape-outs. The TSMC 28nm process also has surpassed the previous generation’s production ramp and product yield at the same point in time, due in part to closer and earlier collaboration with customers. TSMC will continue to encourage customer designs that result in the most advanced, energy-saving, and environmentally friendly products. TSMC quickly ramped its 28nm technology. The 28nm contribution to wafer revenue grew significantly from 1% in 2011 to 33% in 2014. This reflects the fact that TSMC’s advanced manufacturing process technology helps the Company achieve both profitable growth and energy savings.

  28nm Contribution to Total Wafer Revenue (Unit: %)

  2010	2011	2012	2013	2014
  -	1	12	30	33

• TSMC delivers performance-per-watt scaling in its 20nm SoC (20SoC) and 16nm FinFET Plus (16FF+) process technologies. With energy-efficient transistors and interconnects, the 20nm SoC process can reduce total power consumption of the 28nm process by one third, and by migrating from planar to FinFET technology, the 16nm FinFET Plus process can further reduce total power consumption to about 30% of 28nm technology. 20SoC technology entered the production stage with smooth ramping and stable yield performance. By introducing the advanced patterning technique, this process provides better density and power value for both performance-driven products and mobile computing applications migration. In addition, wafer revenue of 20nm SoC accounted for 9% of 2014 total wafer revenue. The 16nm FinFET Plus process entered risk production in 2014 and nearly 60 customer designs are scheduled for tape-out by the end of 2015.

  

2. Manufacturing Power Management ICs with the Highest Efficiency

• TSMC’s leading manufacturing technology helps its customers design and manufacture green products. Power management ICs are the most notably green IC products. Power management ICs are the key components that regulate and supply power to all IC components. TSMC’s analog power technology research and development team uses 6-inch, 8-inch and 12-inch wafer fabs to develop Bipolar-CMOS-DMOS (BCD) and Ultra-High Voltage (UHV) technology, producing industry-leading power management chips with more stable and efficient power supplies and lower energy consumption for broad-based applications in the consumer, communication, and computer markets. TSMC’s BCD is the best fit technology for high efficiency LED driver for the applications of Flat Panel Display Backlighting and indoor/outdoor Solid State LED lighting. In addition, TSMC’s UHV with 400V~800V options is the best fit technology for Green Product applications, such as “Energy Star” low standby AC-DC adaptors, Solid State LED lighting, high efficiency DC Brushless motors.
• TSMC also provides analog and power-friendly design platforms. Customers use these platforms to develop energy-saving products.
• Power management ICs generate material revenue to TSMC’s industrial market segment. In 2014, TSMC’s HV/ Power technologies collectively shipped more than 1.8 million customer wafers. In total, the Power management ICs manufactured by TSMC for our customers accounted for more than one-third of global computer, communication and consumer (3C) systems.

  HV/Power Technologies Shipments (Unit: 8-inch equivalent wafer)

  2010	2011	2012	2013	2014
  >700	>800	>1,000	>1,300	>1,800

• TSMC develops manufacturing technologies that provide more advanced and efficient manufacturing services. Improvements reduce per-unit energy consumption, resource consumption and pollutant generation. They also lower energy consumption and reduce pollution during product use. To see the total energy savings benefits realized through TSMC’s green manufacturing, please refer to “Environmental Accounting”.

Social Contribution by TSMC Foundry Services

1. Providing Mobile and Wireless Chips that Enhance Mobility and Convenience

• The rapid growth of smartphones and tablets in recent years reflects strong demand for mobile devices. Mobile devices offer remarkable convenience, and TSMC contributes significant value to these devices. For example, new process technology helps chips provide faster computing speeds in a smaller die area, leading to smaller form factors for these electronic devices. In addition, SoC technology integrates more functions into one chip, reducing the total number of chips in electronic devices, which also leads to a smaller system form factor. Second, new process technology helps chips consume less energy. People can therefore use mobile devices for a longer period of time, increasing their convenience. And third, with more convenient wireless connectivity such as 3G/4G and WLAN/Bluetooth, people communicate more efficiently with each other, can “work anytime and anywhere,” significantly improving the mobility of modern society.
• Mobile computing related products, such as Baseband, RF Transceiver, AP (Application Processors), WLAN (Wireless Local Area network), imaging sensors, and NFC (Near Field Communication), among others, represent 48% of TSMC wafer revenue in revenue in 2014. TSMC’s growth in recent years was largely driven by the growing global demand for these mobile IC products.

  Contribution of Mobile Computing Related Products to TSMC Wafer Revenue

  (Unit: %) (Note)

  2010	2011	2012	2013	2014
  31	36	40	44	48

  Note: Mobile computing related products were re-classified in 2014

• TSMC-manufactured ICs are widely used in medical treatment and health care applications. Through the Company’s advanced manufacturing technology, more and more IC products are providing major contributions to modern medicine. Customers’ MEMS products are used in a number of advanced medical treatments. MEMS are also widely used in preventative health care, such as early warning systems that limit the number of injuries to the elderly resulting from falls, systems that detect physiology changes, car safety systems and other applications that greatly enhance human health and safety.

Safety and Health

Safety and Health Management

TSMC’s safety and health management is built on the framework of the OHSAS 18001 system, and adheres to the management principle of “Plan, Do, Check, Act” to prevent accidents and protect employee safety and health as well as Company assets. TSMC fabs in Taiwan have also received TOSHMS (Taiwan Occupational Safety and Health Management System) certification.

Besides accident prevention, TSMC has established emergency response procedures to protect the lives of employees and contractors if disasters should occur, as well as to minimize the negative impact on society and the environment. TSMC continually communicates with its suppliers to ensure that potential risk in the operation of production equipment is minimized, and rigorously follows safety control procedures when installing production equipment. The Company places stringent controls on high-risk operations and also evaluates the seismic tolerance of its facilities and equipment to reduce the risk of earthquake damage.

In order to avoid infectious disease epidemics, TSMC has established company-level prevention committees and procedures for emergency response to infectious diseases outbreak.

Working Environment and Employee Safety and Health Protection

TSMC’s ESH policy is focused on establishing a safe working environment, preventing occupational injury and illness, keeping employees healthy, enhancing every employee’s awareness and sense of accountability to ESH, and building an ESH culture. TSMC safety and health management operations apply to:

• Hardware Equipment Safety and Health Management

In addition to meeting regulatory requirements and internal standards, as well as mitigating ESH-related risks when building or rebuilding facilities, TSMC also maintains procedures governing new equipment and raw materials, safety approvals for bringing new tools online, updating safety rules, seismic protection measures, and other safety measures.

TSMC requires that all new tools meet SEMI-S8 requirements and that appropriate supplementary control measures be taken to reduce ergonomic risk. Moreover, TSMC endeavors to automate 300mm front-opening unified pod (FOUP) transportation to prevent accumulative damage caused by long-term manual handling of 300mm FOUPs. TSMC 300mm fabs have achieved 99.9% automatic transportation control.

• Environmental, Safety and Health Evaluation of New Tools and New Chemical Substances

TSMC, as a technology leader in the worldwide semiconductor industry, operates many diversified process tools and new chemicals in the R&D stage. Before using those new tools and new chemicals, they are reviewed carefully by the “New Tools and New Chemical Review Committee”. The purpose is to ensure that new tools are compliant with the semiconductor industry’s safety standards (such as SEMI S2) and that new chemicals’ environmental, safety and health concerns can be well controlled, including engineering controls, application of personal protection equipment, and operational safety training during storage, transportation, usage, and disposal.

• General Safety Management, Training and Audit

All TSMC manufacturing facilities hold environmental, safety and health committee meetings on a monthly basis. TSMC takes preventive measures such as controls on high-risk work, contractor management, chemical safety management, personal protective equipment requirements, and safety audit management. In addition, TSMC maintains detailed disaster response procedures and performs regular drills designed to minimize harm to employees and property, as well as the impact on society and the environment in the event of a disaster.

• Working Environment Hazardous Factors Management

TSMC conducts workplace hazard assessment and interventions to provide a comfortable and safe workplace to Company employees. TSMC also requires employees to use personal protective equipment (PPE) to prevent hazardous exposures.

TSMC performs semi-annual workplace environment assessments of physical and chemical hazards, including CO2 concentration, illumination, noise, and hazardous chemical substances regulated by domestic laws. When abnormal measurements or events happen, site ESH professionals will conduct onsite observation and interventions to ensure acceptable risk exposure levels.

TSMC conducted ergonomic evaluation and intervention for manual handling workers at warehouse and equipment preventive maintenance workers, including providing vacuum suction tool, forklift trucks, pallet truck, trolley and hydraulic jack, and also conducting job rotation, task adjustment and posture education.

• Emergency Response

The planning and execution of an effective emergency response requires big-picture thinking, continuous improvement and practice drills. TSMC’s emergency response plans include procedures for rapid response to accidents and disaster recovery as well as establishing response procedures for potential disasters.

All TSMC fabs conduct major annual emergency response exercises and evacuation drills. TSMC’s Tainan-site fabs initiated quarterly spot drills, which have been recognized as good practices. TSMC’s on-site service contractors also participate in emergency response planning and exercises to ensure cooperation in handling accidents and to effectively minimize any damage caused by disasters.

In addition to the regular emergency response drills held by engineering and facilities departments each quarter, the Company’s laboratory, canteen, dormitory, and shuttle bus personnel also hold emergency response drills to prepare for events such as earthquakes, chemical leakage, ammonia release, fires and automobile accidents.

• Emerging Infectious Disease Response

TSMC has a dedicated corporate ESH organization to monitor emerging infectious diseases around the world, assess any potential impact on the workplace, and provide an appropriate strategic response plan. In previous outbreaks (such as SARS in 2003 and the H1N1 influenza outbreak in 2009), TSMC convened the Corporate Influenza Response Committee to develop the Company’s strategies. These strategies include educating employees in prevention and response, publishing guidelines for managers, establishing guidelines for employee sick leave due to flu, and installing alcohol-based hand sanitizers at appropriate locations. The Committee also monitors the status of employee leave due to illness and, at the same time, develops a continuous plan to address manpower shortages as well as minimize business impact.

TSMC believes that employees’ physical and mental health is not only fundamental to maintaining normal business operations but also part of a corporation’s responsibility.

• Employee Health Enhancement

Workplace stress and employee health have recently become new topics of concern for the government, society, employers, and employees as areas that require further attention and effort. The TSMC Employee Assistance Program (EAP) provides free individual counseling sessions, group sharing, workshops, and mental assessment, as well as lectures on personal and family issues to take care of employees’ well-being.

Health promotion activities for employees include fitness programs, women’s health care programs, mother’s rooms, body weight control programs, sleep problem management, massage and chiropractic services, hepatitis and flu vaccinations, and health lectures. TSMC believes employees who are physically and mentally fit can enjoy a better quality of life and be more productive.

• Initiating a Collaborative Forum: We Care About Workers’ Health

The Labor Health Forum was founded in 2011 by TSMC and the NTU College of Public Health for the business community to discuss occupational health issues, and has become a major annual event in this field for enterprises in Taiwan. In 2014, TSMC collaborated with government and academia again to hold the fourth Labor Health Forum. The theme of the 2014 forum is “Integration of Occupational Safety and Health Act and Industry Practices” in response to the new Occupational Safety and Health Act, which became effective on July 3, 2014. TSMC also invited China Steel Corp., CPC Corp., Chimei Innolux Corp., Taiwan Environmental and Occupational Medicine Association and Taiwan Association of Occupational Health Nurses to be co-sponsors of the event. We set a brainstorming session between business, universities, and government to discuss how to collaborate and adopt the most up-to-date knowledge and methods in occupational health, and fulfill enforcement of the new Occupational Health and Safety Act.

TSMC also developed occupational management tools tailored for TSMC by industry-academic cooperation, including the evaluation and management of personnel stress and the establishment of epidemiological analysis for chronic illness in 2014. TSMC offers annual employee health examinations and consultation services as well as on-site clinics and a dental clinic for a better access to medical assistance.

• Contractor Self Evaluation and Management of Health

To mitigate safety risks resulting from the sudden onset of illness, TSMC launched the Contractor Self Evaluation and Management of Health Program at Fab12B in 2014. Contractors performing high-risk work, such as work at heights and at cleanroom ceilings, are required to check workers’ health status for those undertaking these high-risk tasks. Those determined to have chronic illness and self-reported symptoms must visit a doctor for physical evaluation and treatment to reduce workplace health and safety risk. A total of 120 contractors completed the self-evaluation and found that 2.9% of workers’ tasks should be adjusted. All contractors at high-risk completed the necessary task adjustment in 2014. This program will be rolled forward to all TSMC Fabs in 2015 for more comprehensive contractor health management.

Supplier and Contractor Management

• Supplier Management

As a means of enhancing its supply chain management, TSMC is committed to communicating with and encouraging its contractors and suppliers to improve their quality, cost effectiveness, delivery performance and sustainability on environmental protection, safety and health. By means of communication between senior managers, site audits and experience sharing, TSMC collaborates with major suppliers and contractors to enhance partnership and ensure continual improvement for better performance and increased joint contributions to society. As noted above, contractors performing high-risk activities must lay out clearly defined safety precautions and preventative measures. In addition, contractors working on high-risk engineering projects must establish OHSAS 18001 systems and the workers must successfully complete work skill training.

• Supply Chain Sustainability

TSMC works with its suppliers in several fields of sustainable development, such as greening the supply chain, carbon management for climate change, mitigation of fire risk, ESH management and business continuity plans for natural disasters.

In 2014, TSMC was accepted for membership in the Electronic Industry Citizenship Coalition (EICC). In the beginning of 2015, TSMC announced its commitment to conform with the EICC code of conduct in its own operations with a continuous improvement approach.

To enhance supply chain sustainability and streamline the supply chain’s risk management, TSMC is committed to collaborating with its suppliers to maintain full compliance with the Taiwan environmental, safety, health and fire regulations, and to establish the necessary management capability as well as continuous enhancement.

TSMC is subject to the U.S. Securities & Exchange Commission (SEC) disclosure rule on conflict minerals released under Rule 13p-1 of the U.S. Securities Exchange Act of 1934. As a recognized global leader in the hi-tech supply-chain, we at TSMC acknowledge our corporate social responsibility to strive to procure conflict free minerals in an effort to recognize humanitarian and ethical social principles that protect the dignity of all persons. We have implemented a series of compliance safeguards in accords with leading industry practices such as adopting the due diligence framework in the OECD’s Model Supply Chain Policy for a Responsible Global Supply Chain of Minerals from Conflict-Affected and High Risk Areas issued in 2011.

TSMC is one of the strongest supporters of EICC and the Global e-Sustainability Initiative (GeSI), which will help our suppliers source conflict-free minerals through their jointly developed Conflict-Free Smelter Program (CFSP). We required our suppliers to disclose information on smelters and mines since 2011. We also encourage our suppliers to source minerals from facilities or smelters that have received a “conflict-free” designation by a recognized industry group (such as the EICC) and to require those who haven’t received such designation to become compliant with CFSP or an equivalent third-party audit program. It is TSMC’s goal to use tantalum, tin, tungsten and gold in our products that are conflict-free. We will continue to renew our supplier survey annually and require our suppliers to improve and expand their disclosure to fulfill regulatory and customer requirements.