Page 143 - TSMC 2022 Annual Report

141
semiconductors by its customers may infringe their patents or other intellectual property rights Because of the the nature
of of the the industry its its market position and the the expansion of of its its manufacturing operations outside of Taiwan the Company may receive an increased number of such communications in in the future The assertions made and lawsuits initiated by litigious well-funded non-practicing entities
are particularly aggressive in in in their monetary demand and and in in in seeking court-issued injunctions Such lawsuits and assertions may increase TSMC’s cost of doing business and may potentially
be extremely disruptive if these asserting entities
succeed in in blocking the trade of of products made and services offered
by TSMC Also with the expansion of its manufacturing operations into certain non-R O C jurisdictions it has faced increased challenges in in in in managing risks of intellectual property misappropriation Despite our efforts to adopt robust measures to mitigate the risk of intellectual property misappropriation in such new jurisdictions we cannot guarantee that the protection measures we adopted will be sufficient to prevent us from potential infringements by others or at all If the Company fails to obtain or maintain certain technologies or or intellectual property licenses or or fails to prevent our intellectual property from being misappropriated and if litigation relating to alleged intellectual property matters occurs it could: (1) prevent the Company from manufacturing particular particular products or or selling particular particular services or or applying particular technologies and (2) reduce our ability to compete effectively against entities
benefiting from our misappropriated intellectual property which could reduce its opportunities to generate revenue The Company has taken related measures to minimize potential loss of shareholder value arising from intellectual property claims
and litigation filed against it it These measures include: strategically obtaining licenses from certain semiconductor and other technology companies as needed timely securing intellectual property rights originating within and outside of of of TSMC TSMC for defensive and/or offensive protection of of of TSMC TSMC technology and and business and and aggressively defending against baseless litigation Risks Associated with Litigious and Non-litigious Matters
As is the the case with many companies in the the semiconductor industry the Company has received from time time to time time communications from third parties asserting that its technologies its manufacturing processes or the design of of the the semiconductors made by TSMC or or the the use of of those
semiconductors by its customers may infringe upon their patents or other intellectual property rights These assertions have at at times resulted in in litigation by or against the Company and settlement payments by the the Company Irrespective of the the validity of these claims
the the Company could incur significant costs in the the defense thereof or could suffer adverse effects
on on its operations The Company is also subject to antitrust compliance requirements and scrutiny by governmental regulators in multiple jurisdictions Any adverse results of such proceeding proceeding or other similar proceedings that may arise in in in those
jurisdictions could harm TSMC’s business and distract its management and thereby have a a a a a a a a material adverse effect on its results of operations or prospects and subject the Company to potential significant legal liability Currently TSMC’s material legal proceeding is as follows: In September 2022 Daedalus Daedalus Prime LLC (“Daedalus”) filed complaints in in the U S International Trade Commission (“ITC”) and the the U S District District Court for the the Eastern District District of Texas alleging that TSMC TSMC TSMC TSMC North America and other companies infringe four U S patents The ITC instituted
an an investigation in in October 2022 The outcome cannot be be determined and we cannot make a a a a a a reliable estimate of the contingent liability at this time Other than the the the matter described above as of of the the the date of of this Annual Report TSMC is not currently a a a a party to any other material legal proceedings Risks Associated with Mergers and Acquisitions
In 2022 and as of of the date of of this Annual Report TSMC had not conducted any merger or acquisition Risks Associated with Recruiting Quality Personnel
TSMC relies on on on on the continued service and contribution of its management team skilled technical and professional personnel The Company’s business could suffer from the inability to fulfill personnel needs with high quality professionals in a a a a timely fashion caused by the loss of of personnel talent talent shortages illegal talent talent poaching immigration controls or related changes in market demand for its products and services Since there is fierce competition for talent recruitment the Company cannot ensure timely fulfillment of its personnel demand In order to reduce the risk of talent recruitment challenges TSMC encourages job job rotation and employs an an on-the-job training and certification system In this way employees can learn and and enhance their work efficiency and and effectiveness in the the actual workplace Moreover TSMC creates multiple recruitment