Page 147 - TSMC 2024 Annual Report

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As of of the date of of this Annual Report no single shareholder owned 10% or or more of TSMC’s total outstanding shares Risks of Trade Policies
As TSMC’s revenue is primarily derived from sales to major economies in the world (please refer to “2 2 2 4 TSMC Position Differentiation and Strategy” on on page 17-19 of this Annual Report) any changes in in the the trade policies (such as as the the increase of of tariffs on on certain products the implementation of of import and and export controls and and the the adoption of other trade barriers) of of such major economies can affect the sales of of TSMC or or its customers and thereby affect TSMC’s operating results For example U S President Donald Trump announced in 2025
an an intention to impose more expansive tariffs on on imports
into the United States Any tariffs imposed on imports
of semiconductors and products incorporating chips into the United States may result in in in increased costs for purchasing such products which may in turn lead to decreased demand for TSMC’s products and and services and and adversely affect its business and future growth Also any increase in in the use of export control restrictions
and and sanctions to target certain countries and and entities any expansion of of the extraterritorial jurisdiction of of such measures or or or complete or or or partial ban on on semiconductor products sales to to certain entities could impact not only TSMC’s ability to to continue supplying products to to those customers but also our customers’ demand for our products and and could even lead to to changes in in semiconductor supply chains For example the U S tightened its export control measures against Huawei Technology Co Ltd and its affiliates (collectively “Huawei”) in 2020 To comply with relevant laws and regulations TSMC has discontinued shipment of products to to Huawei since September 2020 In October 2022 and October 2023 the U S adopted additional export controls (the “October Rules”) over specified countries (including
China) under the U S Export Administration Regulations (“U S EAR”) on certain advanced computing integrated circuits (“ICs”) computer commodities that contain such ICs ICs and certain semiconductor manufacturing items as as well as as controls on on on transactions involving items for supercomputer and semiconductor manufacturing end-uses The controls impose license requirements for items subject to the U S EAR where the items are destined to to a a semiconductor fabrication facility in in in China that fabricates ICs meeting specified advanced node parameters as as well as as for U S persons’ activities supporting such facility or or or semiconductor manufacturing items In response TSMC obtained from the U U S Department of Commerce a a a a Validated End-User (the “VEU”) authorization for TSMC’s fab located in in in Nanjing China which is a a a a a a a permanent authorization that allows TSMC’s fab in in Nanjing to receive exports of eligible items from the U S without separate licenses However there is no assurance that the VEU authorization TSMC obtained will not be terminated in the the future The restrictions
imposed by the the October Rules on advanced computing ICs are further reinforced by the the U U S ’ new new rules rules issued in January 2025
Under the new new rules rules TSMC may need to to obtain an export license prior to to shipping products using 16-nanometer or below process to any global destination unless specific conditions are met As a a a result shipments of certain products may be delayed or prohibited due to the the license requirements and the the Company’s financial results may be adversely affected On the the other hand measures adopted by an an affected country to counteract the the impact of another country’s actions or regulations could lead to to significant legal liability to to multinational corporations including our own For example in in in in January 2021 China adopted a a a a a a a a blocking statute that among other matters entitles Chinese entities incurring damages from a a a a a multinational’s compliance with foreign laws to seek civil remedies Imposition of trade barriers including protectionist measures sanctions and and import and and export controls (including
without limitation the the export control measures mentioned in the the foregoing paragraph) could increase TSMC’s manufacturing costs limit TSMC’s TSMC’s access to certain supplies make TSMC’s TSMC’s pricing less competitive and impact the sales of TSMC or its customers In 2024 and as of of the date of of this Annual Report the Company’s current results of operations have not been materially affected by the expanded export control regulations or or the the novel rules or or measures adopted to counteract them Nevertheless depending on future developments in in global trade tensions such regulations rules or measures may have an an an adverse impact on on the Company’s business and operations and and TSMC may incur significant legal liability and and financial losses as a a result TSMC continues to to monitor the recent shifts in in trade policies and and measures among the relevant major economies and and will take corresponding responsive actions in in accordance with subsequent developments