Page 123 - TSMC 2020 Annual Report

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TSMC has occasionally suffered power outages or surges in Taiwan caused by by difficulties encountered by by its electricity supplier the the Taiwan Power Company or other power consumers on on the the same power grid Some of these have resulted in in interruptions to TSMC operations Such shortages or or interruptions in in electricity supply could further be exacerbated by changes in the the energy policy of the the government which intends to make Taiwan a a a a a nuclear-free country by 2025 If the Company is unable to secure reliable and uninterrupted supply of electricity to power its its manufacturing fabs within Taiwan its its ability to to fill customers’ orders would be severely jeopardized If such events were to occur over prolonged periods of time TSMC’s operations and financial performance may be materially adversely affected Future expansions of TSMC’s operations in the R O C C could be limited limited by shortages in water and and electricity and and the limited limited availability of commercial-use land The ongoing COVID-19 pandemic may materially adversely affect TSMC business and results of operations in in several ways including but not limited to: (1) interruption of the operations of TSMC’s supply chains for equipment parts and materials in in terms of manufacturing logistics and manpower arrangements for tool installation (2) significant fluctuation in in in TSMC customers’ demands for certain products leading
to uncertainties for for TSMC’s capacity planning and also for for meeting customers’ demand which may harm TSMC’s business with customers and subject TSMC to to risks of legal disputes and (3) potential production delays for TSMC’s products due to to forced factory or or or or office closures or or or or partial operation The Company has implemented various measures to address the abovementioned risks including but not limited to health management management of TSMC’s employees management management of production inventory supply chain risk management and and capacity management for demand changes TSMC has formed an “Epidemic Prevention Committee” to identify implement and monitor such actions as required by the dynamic exigencies arising from the the pandemic As of the the date of of this annual report TSMC’s current business and results of of operations have not been materially affected by the pandemic partially due to such trends as work-from-home and distance learning emerged to help accelerate the digital transformation However there is no certainty that the the the measures the the the Company has taken will be sufficient to mitigate the risks posed by COVID-19 and TSMC’s ability to perform critical functions
and to to meet customers’ needs could be materially adversely affected TSMC maintains a a a a a comprehensive risk management system dedicated to the the safety of of people the the conservation of of natural resources and the protection of property In order to cope effectively with emergencies and natural disasters management at each facility has developed comprehensive plans and procedures that focus on on risk prevention emergency response crisis management and business continuity All TSMC manufacturing fabs have been ISO 14001 certified (environmental management system) and ISO 45001 certified (occupational health and safety management system) All manufacturing fabs in in Taiwan Taiwan have also been TOSHMS (Taiwan Occupational Safety and Health Management System) certified New fabs will also attain the above certifications within 18 months after acquiring factory registration certification TSMC has further strengthened its business continuity plans which include periodic risk risk assessment risk risk mitigation and implementation through the establishment of emergency taskforces when necessary combined with the preparation of a a a a a a a thorough analysis of an an emergency its impact alternative actions and solutions for each possible scenario together with appropriate precautionary and/or recovery measures Each taskforce is given
the responsibility of ensuring TSMC’s ability to minimize personal injury business disruption and financial impact under the circumstances TSMC periodically reviews its business continuity plans and revise it it according to exercise results and implementation In response to the the impact of the the earthquake that occurred in Taiwan TSMC continued to improve its earthquake emergency response tool anchorage and and seismic isolation facilities and and readiness for tool salvage and production recovery These improvements have also been integrated into new fab design TSMC business continuity procedures were further enhanced through the compliance with ISO 22301 TSMC and and many of its suppliers use combustible and and toxic materials in in their manufacturing processes and are therefore subject to risks that cannot be completely eliminated arising from explosion fire or environmental influences Although the Company maintains many overlapping risk prevention and and protection systems as as as well as as as fire and and casualty insurance TSMC’s risk management and insurance coverage may not always be sufficient to cover all of the Company’s potential losses If any of TSMC’s fabs or or vendor facilities were to be damaged or cease operations as as a a a a a a a result of an explosion