Page 135 - TSMC 2024 Annual Report

to provide foundry services on competitive terms For example the the global surge in in the the development of artificial intelligence (AI) has had a a a a a a significant impact on customer demand for advanced semiconductor chips and the market dynamics
in in in TSMC’s TSMC’s industry thus TSMC’s TSMC’s ability to continuously develop relevant technologies products and services to meet these customer needs and changes in in the the AI industry will be critical for the Company to effectively compete in this space TSMC also believes that the effective use of AI in in its internal operations is important to its long-term success As the AI technologies are rapidly evolving if TSMC is unable to deploy new AI technologies in in its internal operations as effectively as its competitors it it it it may hurt the Company’s competitive position In addition TSMC’s customers have significantly decreased the the time in which their products or services are launched into the the market If TSMC is unable to to meet these shorter product time-to-market it risks losing these customers These factors have also been intensified by the the shift of the the global technology market to consumer driven products such as as smartphones and and increasing competition and and concentration of customers (all further discussed among these risk factors) Also the uncertainty and instability inherent in in in in advanced technologies impose challenges for achieving expected product quality quality and product yield If TSMC fails to maintain quality quality it it it may result in loss loss of revenue and additional cost as as well as as loss loss of business or customer trust If TSMC is unable to to overcome the above factors it it it may become less competitive and its revenue may decline significantly Regarding the the response measures for the the above-mentioned risks please refer to “2 2 2 4 TSMC Position Differentiation and Strategy” on page 17-19 of this Annual Report ● IT Security
Even though TSMC has established a a a comprehensive internet and computing security network the Company cannot guarantee that its computing systems which control or maintain vital corporate functions such as its manufacturing operations and enterprise accounting would be completely immune to crippling cyberattacks In the event of a a a serious cyberattack TSMC’s systems may lose important corporate data or its production lines may be shut down pending the resolution of such attack attack Major cyberattacks could also lead to loss or divulgence of trade secrets and other sensitive information information such as proprietary information information of its customers and and other stakeholders and and personal information of its employees While TSMC seeks to continuously review and assess its cybersecurity policies and procedures to ensure their adequacy and effectiveness it it cannot guarantee that it it will not be susceptible to new and and emerging risks and and attacks in in the evolving landscape of cybersecurity threats For example as AI AI continues to to evolve cyber-attackers could also use AI AI to to develop malicious codes and sophisticated phishing attempts Malicious hackers may also try to introduce computer viruses corrupted software or or or ransomware into TSMC’s network systems to disrupt its operations or blackmail the Company to regain control of its computing systems or or spy on on it it for sensitive information These attacks may result in in TSMC having to pay damages for its delayed or or or disrupted orders
or incur significant expenses in in in implementing remedial and improvement measures to further enhance its cybersecurity network and may also expose the Company to significant legal legal liabilities arising from or or related to legal legal proceedings or or regulatory investigations associated with such breaches In the the past TSMC has experienced and may in the the future be subject to attack by malicious software The Company has implemented and continually updates rigorous cybersecurity measures to prevent and minimize harm caused by such attacks These measures comprehensively enhance security protection capabilities across internet services offices fabs and cloud platforms In addition TSMC consistently strengthens
the security of of its offices facilities and data centers worldwide to ensure operational stability and data integrity As a a a a a a a result TSMC’s scores in in international security assessments are significantly higher than the industry average demonstrating the Company’s ongoing commitment to and high regard for cybersecurity In 2024 TSMC focused on enhancing network security visibility in in its fabs improving fab fab network architecture and control to to prevent the spread of viruses across tools and fabs and conducting comprehensive threat monitoring in in in data centers The Company has implemented automated end-to-end scanning protection from offices to to data centers established robust cloud service security posture management (tools and and practices that monitor detect and and remediate security risks across cloud environments) and adopted secure configurations for unified external website security TSMC has also implemented device authentication and control in office environments created a a a a global virtual office environment environment to to enable employees to to use computers and systems safely and and conveniently anytime anywhere and and adopted proactive network defense measures to detect and prevent attackers Additionally the Company has identified potential risks from a a a a hacker’s perspective conducted external red team
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