2016 TSMC Annual Report

• TSMC Vision, Mission & Core Values
• 30 Years of TSMC
• Letter to Shareholders
• Company Profile
  1. An Introduction to TSMC
  2. Market/Business Summary
  3. Organization
  4. Board Members
  5. Management Team
• Corporate Governance
  1. Overview
  2. Board of Directors
  3. Major Resolutions of Shareholders' Meeting and Board Meetings
  4. Taiwan Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission
  5. Code of Ethics and Business Conduct
  6. Regulatory Compliance
  7. Internal Control System Execution Status
  8. Status of Personnel Responsible for the Company's Financial and Business Operation
  9. Information Regarding TSMC’s Independent Auditor
  10. Material Information Management Procedure
• Capital and Shares
  1. Capital and Shares
  2. Issuance of Corporate Bonds
  3. Preferred Shares
  4. Issuance of American Depositary Shares
  5. Status of Employee Stock Option Plan
  6. Status of Employee Restricted Stock
  7. Status of New Share Issuance in Connection with Mergers and Acquisitions
  8. Financing Plans and Implementation
• Operational Highlights
  1. Business Activities
  2. Technology Leadership
  3. Manufacturing Excellence
  4. Customer Trust
  5. Human Capital
  6. Material Contracts
• Financial Highlights and Analysis
  1. Financial Highlights
  2. Financial Status and Operating Results
  3. Risk Management
• Corporate Social Responsibility
  1. Overview
  2. Environmental, Safety and Health (ESH) Management
  3. TSMC Education and Culture Foundation
  4. TSMC Volunteer Program
  5. TSMC i-Charity
  6. Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission
• Subsidiary Information and Other Special Notes
  1. Subsidiaries
  2. Status of TSMC Common Shares and ADRs Acquired, Disposed of, and Held by Subsidiaries
  3. Special Notes
• Financial Statements
  1. Consolidated Financial Statements for the Years Ended December 31, 2016 and 2015 and Independent Auditors' Report
  2. Parent Company Only Financial Statements for the Years Ended December 31, 2016 and 2017 and Independent Auditors' Report
• Contact Information
• Downloads
• Previous Annual Reports
• CHINESE

TSMC Annual Report >  2016 > Operational Highlights > Manufacturing Excellence

Manufacturing Excellence

GIGAFAB® Facilities

Maintaining dependable capacity is a key part of TSMC’s manufacturing strategy. The Company currently operates three 12-inch GIGAFAB® facilities – Fab 12, Fab 14, and Fab 15. The combined capacity of the three facilities exceeded six million 12-inch wafers in 2016. Production within these three facilities supports 0.13μm, 90nm, 65nm, 40nm, 28nm, 20nm, 16nm, and 10nm process technologies, including each technology's sub-nodes. An additional portion of the capacity is reserved for R&D work on leading-edge manufacturing technologies, which currently supports the technology development of the 7nm node and beyond.

TSMC has developed a centralized fab manufacturing management system, super manufacturing platform (SMP), to provide customers with greater benefits in the form of more consistent quality and reliability, improved flexibility to cope with demand fluctuations, faster yield learning and time-to-volume, and lower-cost product requalification.

Engineering Performance Optimization

As advanced technology continues to evolve, the geometry keeps shrinking and the need for tighter process control have become extremely challenging for manufacturing. TSMC’s unique manufacturing infrastructure is tailored with tightened process control and diversified product portfolio to fulfill higher product performance requirements. To achieve overall optimization of equipment, process and yield, the process control and analysis systems have been integrated with many intelligent functions to perform self-diagnosis and self-reacting, which have remarkable results in yield enhancement, workflow improvement, fault detection, cost reduction and R&D cycle decrement.

TSMC has developed Precise Fault Detection and Classification system, Intelligent Advanced Equipment Control and Intelligent Advanced Process Control to monitor the manufacturing process in a timely manner and adjust conditions precisely. To satisfy advanced and accurate process control and ensure highly efficient and effective production, the Company has created Precision Equipment Matching and Yield Mining to minimize process variation and potential yield loss. The Company has further developed Big Data, Machine Learning, and Artificial Intelligence architecture to identify critical variables to optimize yield management and operating efficiency to fulfill customers’ special process requirements and to cope with diversified product demand simultaneously.

Agile and Intelligent Operations

TSMC continues to drive manufacturing excellence through agile and intelligent operations. The Company’s sophisticated agile operation system has integrated demand and capacity modeling, lean WIP (Work in Process) line management, and lot dispatching and scheduling, and on time delivery system to provide short cycle time, stable manufacturing and on-time delivery. The system also provides great flexibility to quickly support customers’ urgent pull-in requests when needed.

TSMC has also introduced new applications such as IoT devices, intelligent mobile devices, and mobile robots that help to consolidate data collection, yield traceability, workflow efficiency, and material transportation to continuously enhance fab operating efficiency.

Following its commitment to manufacturing excellence, TSMC has integrated the technology of advanced data analysis, smart diagnostics, self-reactive, precise forecasting and operational knowledge to revolutionize the fab operating mode from “Auto” to “Intelligent,” to optimize efficiency, flexibility and quality while maximizing cost effectiveness and accelerating overall innovation.

Raw Materials and Supply Chain Management

In 2016, TSMC continued to hold review meetings periodically with teams from operations, quality control and business to proactively identify and manage the risks of insufficient supply capacity, quality issues and supply chain interruption. TSMC also worked with suppliers to enhance performance, quality, delivery and sustainability, as well as to support green procurement, environmental protection and safety.

Raw Materials Supply

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

Unit: NT$ thousands

5.3.5 Quality and Reliability

TSMC’s strong industry reputation stems from its commitment to provide customers with the highest-quality wafers and best service for their products. Quality and Reliability (Q&R) services aim to achieve “quality on demand” to fulfill customers’ needs for time-to-market delivery, reliable quality, and market competitiveness over a broad range of products.

Q&R technical services assist customers in the technology developmental stages and product design stages to design in superior product reliability. In 2016, Q&R has worked with R&D to successfully qualify leading edge 10nm technology (the second FinFET generation) and characterize process window with Fab for mass production in 2017. For specialty technologies, ultra-low-power embedded Flash IP, stacked CMOS image sensor and ultra-high voltage GaN device also passed the qualifications and ready for production. For InFO assembly technology, Q&R worked with R&D to integrate AP (Application Processor) with IPD (Integrated Passive Device) and passed both component level and board level qualifications. With the implementation of fully automated production and process monitor data output same as Fab’s quality management system, InFO technology enabled TSMC customers to introduce new products with excellent and stable production quality in 2016. Over 100 million InFO devices have been shipped to key customers without major quality or reliability issue.

For leading edge technology qualification and production ramp, Q&R developed accelerated test screening by voltage and temperature to speed up reliability failure improvement and set up the associated in-line process monitor and control. To cope with fast growing demand and increasing challenge in specialty technology, Q&R and Fab has worked together to ensure robust qualification process and production ramp. To reduce quality incidents that affect customers, Q&R and Fab also collaborated to develop a comprehensive tool and process defense system to early detect and contain issues within Fab and thus improve overall customer satisfaction.

To enhance employees’ problem solving capabilities and develop associated quality system and methodology, Q&R continued to hold several company-wide symposiums and training programs such as TQE (Total Quality Excellence), DOE (Design of Experiment), SPC (Statistical Process Control) and metrology in 2016 including the promotion and training of Deep/Machine Learning. Q&R will continue the development of employees’ capabilities by using new methodology to enhance TSMC competitiveness.

For incoming material quality improvement in 2016, Q&R developed and implemented 6 new quality systems and also inquired material suppliers to participate in the “National Quality Control Circle Competition” to enhance their self-improvement capabilities. For outgoing quality control, Q&R implemented auto-packing machine to eliminate manual handing and enhance InFO package quality assurance.

Failure analysis and material and chemical studies play important roles in TSMC’s quality control. These capabilities are applied from the early stages of process development through assembly and packaging, including analysis of incoming materials, airborne molecular contaminants, in-depth materials characterization, and failure analysis for process development and failure analysis of customer returns. In 2016, TSMC invested aggressively in automation for transmission electron microscopy (TEM) sample preparation and imaging, which resulted in further improvement in TSMC world-class cycle times and capacity in the area. The Company also strengthened its ties with the nearby National Synchrotron Radiation Research Center to analyze advanced materials. In collaboration with customers and suppliers, TSMC continued to make significant progress in fault isolation. In particular, TSMC added the ability to remove material layer by layer for failure analysis with nanometer level accuracy. Given the changing needs of our customers and the importance of ensuring the quality of incoming chemicals and materials, in 2016, TSMC launched a laboratory to analyze precursor gases used in atomic layer deposition (ALD). With a growing presence in the IC packaging area, Q&R also bolstered failure analysis capabilities for multi-chip packages including InFO packages. These efforts will continue in 2017.

Q&R is also responsible for leading the Company toward 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 2016, a third-party audit verified the effectiveness of TSMC quality management systems in compliance with ISO/TS 16949:2009 and IECQ QC 080000:2012 certificates requirements.