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Stock Code:5425

TAIWAN SEMICONDUCTOR CO., LTD.

AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Review Report

For the Six Months Ended June 30, 2022 and 2021

Address:

11F., No. 205, Sec. 3, Beixin Rd., Xindian Dist., New

Taipei City 231, Taiwan (R.O.C.)

Telephone:

(02)89131588

The independent auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' review report and consolidated financial statements, the Chinese version shall prevail.

2

Table of contents

Contents

Page

1.

Cover Page

1

2.

Table of Contents

2

3.

Independent Auditors' Review Report

3

4.

Consolidated Balance Sheets

4

5.

Consolidated Statements of Comprehensive Income

5

6.

Consolidated Statements of Changes in Equity

6

7.

Consolidated Statements of Cash Flows

7

8.

Notes to the Consolidated Financial Statements

(1)

Company history

8

(2)

Approval date and procedures of the consolidated financial statements

8

(3)

New standards, amendments and interpretations adopted

8～9

(4)

Summary of significant accounting policies

9～11

(5)

Significant accounting assumptions and judgments, and major sources

11

of estimation uncertainty

(6)

Explanation of significant accounts

11～39

(7)

Related-party transactions

39～40

(8)

Pledged assets

40

(9)

Commitments and contingencies

40

(10)

Losses Due to Major Disasters

40

(11)

Subsequent Events

40

(12)

Other

40～41

(13)

Other disclosures

(a) Information on significant transactions

42～44

(b) Information on investees

45

(c) Information on investment in mainland China

46

(d) Major shareholders

46

(14)

Segment information

47～48

3

Independent Auditors' Review Report

To the Board of Directors of TAIWAN SEMICONDUCTOR CO., LTD.:

Introduction

We have reviewed the accompanying consolidated balance sheets of TAIWAN SEMICONDUCTOR CO., LTD. (the "Company") and its subsidiaries ("Group") as of June 30, 2022 and 2021, and the related consolidated statements of comprehensive income for the three months and six months ended June 30, 2022 and 2021, as well as the changes in equity and cash flows for the six months ended June 30, 2022 and 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, " Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with Statement of Auditing Standard 65, " Review of Financial Information Performed by the Independent Auditor of the Entity". A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As stated in Note 4(b), the consolidated financial statements included the financial statements of certain non- significant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect the total assets amounting to $3,071,715 thousand and $2,272,134 thousand, constituting 17.54% and 14.80% of the consolidated total assets; and the total liabilities amounting to $647,183 thousand and $465,678 thousand, constituting 8.10% and 6.75% of the consolidated total liabilities as of June 30, 2022 and 2021, respectively; as well as total comprehensive income (loss) amounting to $137,251 thousand, $69,653 thousand, $283,126 thousand and $104,071 thousand, constituting 23.02%, 29.61%, 22.03% and 21.03% of the consolidated total comprehensive income (loss) for the three months and six months ended June 30, 2022 and 2021, respectively.

3-1

Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews and the review report of other auditors (please refer to Other Matter paragraph), nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2022 and 2021, and of its consolidated financial performance for the three months and six months ended June 30, 2022 and 2021, as well as its consolidated cash flows for the six months ended June 30, 2022 and 2021 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, " Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Other Matter

We did not review the financial statements of TSC Auto ID Technology Co., Ltd., (TSC Auto ID) a subsidiary of the Group. Those financial statements were reviewed by other auditor(s), whose review report has been furnished to us, and our conclusion, insofar as it relates to the amounts included for TSC Auto ID, is based solely on the review report of the other auditor(s). The financial statements of TSC Auto ID reflect total assets amounting to $7,053,307 thousand and $6,640,736 thousand, constituting 40.27% and 43.27% of the consolidated total assets as of June 30, 2022 and 2021, respectively; and the total revenues amounting to $2,042,284 thousand, $1,735,886 thousand, $3,804,367 thousand and $3,260,827 thousand, constituting 51.51%, 53.72%, 49.30% and 53.37% of the consolidated total revenues for the three months and six months ended June 30, 2022 and 2021, respectively.

The engagement partners on the reviews resulting in this independent auditors' review report are Mei, Yuan- Chen and Hsu, Yu-Feng.

KPMG

Taipei, Taiwan (R.O.C)

August 10, 2022

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' review report and consolidated financial statements, the Chinese version shall prevail.

4

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2022 and 2021

TAIWAN SEMICONDUCTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2022, December 31, 2021, and June 30, 2021

(Expressed in Thousands of New Taiwan Dollars)

June 30, 2022

December 31, 2021

June 30, 2021

June 30, 2022

December 31, 2021

June 30, 2021

Assets

Amount

%

Amount

%

Amount

%

Liabilities and Equity

Amount

%

Amount

%

Amount

%

Current assets:

Current liabilities:

1100

Cash and cash equivalents (note 6(a))

$

2,858,561

16

2,701,648

17

2,712,377

18

2100

Short-term borrowings (note 6(k))

$

1,135,034

6

921,426

6

1,341,862

9

1110

Current financial assets at fair value through profit

232,342

1

155,067

1

3,473

-

2120

Current financial liabilities at fair value through

14,361

-

563

-

2,205

-

1150

or loss (note 6(b))

profit or loss (note 6(b))

Notes receivable, net (note 6(c))

207

-

751

-

67

-

2150

Notes payable

-

-

1,607

-

-

-

1170

Accounts receivable, net (note 6(c))

3,369,004

19

2,950,815

19

2,727,956

18

2170

Accounts payable

1,764,263

10

1,673,549

10

1,527,741

10

1200

Other receivables

73,129

1

63,284

-

47,907

-

2200

Other payables (note 6(m))

1,829,927

10

883,040

6

1,395,460

9

1220

Current tax assets

10,079

-

929

-

710

-

2230

Current tax liabilities

357,871

2

412,838

3

288,394

2

130X

Inventories (note 6(d))

3,059,102

18

2,444,825

15

2,138,744

14

2322

Long-term borrowings, current portion (note 6(l))

109,775

1

65,000

-

4,000

-

1410

Prepayments

208,169

1

177,271

1

192,749

1

2280

Lease liabilities, current (note 6(n))

96,366

1

113,331

1

97,787

1

1476

Other current financial assets (note 6(b))

523,802

3

373,584

2

431,245

3

2399

Other current liabilities

299,486

2

232,681

1

189,759

1

10,334,395

59

8,868,174

55

8,255,228

54

5,607,083

32

4,304,035

27

4,847,208

32

Non-current assets:

Non-Current liabilities:

1600

Property, plant and equipment (note 6(f))

4,473,543

26

4,501,135

28

4,425,274

29

2540

Long-term borrowings (note 6(l))

1,329,555

8

1,484,310

10

1,057,280

7

1755

Right-of-use assets (note 6(g))

247,387

1

280,665

2

324,430

2

2580

Lease liabilities non-current (note 6(n))

145,588

1

190,820

1

242,985

2

1822

Intangible assets (notes 6(h))

354,071

2

388,016

3

438,124

3

2640

Net defined benefit liabilities, non-current

42,578

-

42,788

-

44,976

-

1805

Goodwill (note 6(i))

1,099,926

6

1,024,426

6

1,031,088

7

2570

Deferred tax liabilities

795,446

5

684,722

4

651,994

4

1840

Deferred tax assets

457,753

3

456,197

3

461,569

3

2670

Other non-current liabilities

72,845

-

51,787

-

58,471

-

1980

Other non-current financial assets (note 6(b))

79,790

-

71,583

-

67,377

-

2,386,012

14

2,454,427

15

2,055,706

13

1990

Other non-current assets (note 6(j))

466,913

3

395,775

3

344,798

2

Total liabilities

7,993,095

46

6,758,462

42

6,902,914

45

7,179,383

41

7,117,797

45

7,092,660

46

Stockholder' equity attributable to parent:

(note 6(q))

3110

Common stock

2,634,854

15

2,650,854

17

2,650,854

17

3200

Capital surplus

2,134,317

12

2,166,799

14

2,166,799

14

3300

Retained earnings

3,359,327

19

3,247,117

20

2,726,627

18

3400

Other stockholders' equity

(387,947)

(2)

(531,125)

(4)

(542,503)

(4)

3500

Treasury shares

(506,043)

(3)

(506,990)

(3)

(506,990)

(3)

Total equity attributable to owners of parent:

7,234,508

41

7,026,655

44

6,494,787

42

36XX

Non-controlling interests (note 6(e))

2,286,175

13

2,200,854

14

1,950,187

13

Total equity

9,520,683

54

9,227,509

58

8,444,974

55

Total assets

$

17,513,778

100

15,985,971

100

15,347,888

100

Total liabilities and equity

$

17,513,778

100

15,985,971

100

15,347,888

100

See accompanying notes to financial statements.

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Taiwan Semiconductor Co. Ltd. published this content on 20 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 September 2022 05:59:05 UTC.