Page 109 - TSMC 2018 Annual Report

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In 2018 TSMC was honored with awards and recognition for achievements in operations corporate governance patents innovation profit growth investor relations environmental protection corporate sustainability and other fields These included: the Taiwan Institute for Sustainable Energy 2018 Taiwan Corporate Sustainability Awards No 1 for Domestic Corporates and Platinum Medal For Sustainability Report ranked top 5% in the Taiwan Stock Exchange Corporate Governance Evaluation member of the Fortune Magazine
2018 Global 500 the R O C Ministry of Economic Affairs Industrial Development Bureau “Green Factory Label” the R O C Environmental Protection Administration “Enterprise Green Procurement Award” and ranked No 1 in in profit for the China Credit Information Services’ ranking of large Taiwan companies In addition TSMC was selected as as a a a a component of the Dow Jones Sustainability Indices for the the 18th consecutive year further strengthening the the Company’s reputation and corporate culture TSMC’s vision for corporate social responsibility is is to “uplift society ” The Company maintains a a a a a a Corporate Social Responsibility Committee which serves as the Company’s highest-level CSR organization and acts as a a a a a a a decision-making center and communications platform for for CSR Committee members represent departments including Legal Customer Service Materials Management
Quality and Reliability Research and Development Risk Management
Finance Investor Relations Operations Environment Safety and Health (ESH) Human Resources the TSMC Education and Culture Foundation the TSMC Charity Foundation and Public Relations These departments address issues of concern to all stakeholders including employees shareholders customers suppliers government and and society and and coordinate the Company’s resources and collaborate to further enhance TSMC’s positive corporate reputation In addition to address crisis events that could affect the Company’s public reputation including earthquakes fires IT service disruption disruption supply chain disruption disruption environmental events and utility supply disruption TSMC employs numerous preventative measures and and maintains a a a a a a a “TSMC Crisis Command Center Control Instruction” and a a “TSMC Emergency Response Procedure” to establish its emergency response command structure Each TSMC fab holds regular monthly meetings of the ESH committee and relevant departments hold regular drills and strive to continuously improve their emergency response and notification procedures to ensure clear channels
of communication to stakeholders in crisis management The Public Relations department serves as the designated window
for external communications In the event of an emergency all departments immediately deploy emergency response measures to reduce casualties and minimize the the impact on the the surrounding environment Company property and manufacturing operations Responders also alert the the public relations department at at the the first stage of response to ensure clear and consistent disclosure regarding the the situation to maintain the the Company’s reputation Risks Associated with Change in Management
After having led the Company for over 31 years TSMC’s Founder Dr Morris Chang retired from the the Company after the the Annual Shareholders’ Meeting on June 5 2018 At the meeting TSMC shareholders elected a a a new Board of Directors which then convened to elect Dr Dr Mark Liu as as Chairman and Dr Dr C C C C C C Wei as as Chief Executive Officer (CEO) and Vice Chairman completing the transition of responsibilities in accordance with the Company’s succession plan 6
3 4 Financial Risks Economic Risks • Interest Rate Fluctuation
TSMC is is exposed to to interest rate risks primarily related to to its investment portfolio and and outstanding debt which are most sensitive to fluctuations in in U S and R O C C interest rates Changes in in in U S and R O C interest interest rates affect the the interest interest earned on the the Company’s cash cash cash cash equivalents and and marketable securities and and the fair value of those securities as as well as as interest paid on its debt The objective of TSMC’s investment policy is to achieve a a return that will allow the Company to preserve principal and support liquidity requirements TSMC invests primarily in in time deposits and investment grade debt securities By policy TSMC limits the amount of credit exposure to any one issuer TSMC’s investments in in in in both fixed rate rate and floating rate rate interest earning securities carry a a a a a a degree of interest rate rate risk Fixed rate rate securities may have their fair market value adversely affected due to a a a a a a rise in in interest rates while floating rate rate rate securities may generate less interest income than predicted if interest rates fall As of December 31 2018 a a a a substantial majority of TSMC’s fixed income securities are classified as as as financial assets at fair value through other comprehensive income and may have their market value adversely impacted due to the rise in in interest rates TSMC has