Taiwan Semiconductor : 2023 Q1 Financial_reports

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Stock Code:5425

TAIWAN SEMICONDUCTOR CO., LTD.

AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Review Report

For the Three Months Ended March 31, 2023 and 2022

Address:	11F., No. 205, Sec. 3, Beixin Rd., Xindian Dist., New
	Taipei City 231, Taiwan (R.O.C.)
Telephone:	[phone]

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.

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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		12～40
	(7)	Related-party transactions		40～41
	(8)	Pledged assets	41
	(9)	Commitments and contingencies	41
	(10)	Losses Due to Major Disasters	41
	(11)	Subsequent Events	41
	(12)	Other	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

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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 (" the Group" ) as of March 31, 2023 and 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2023 and 2022, 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 the Standard on Review Engagements 2410, " Review of Financial Information Performed by the Independent Auditor of the Entity" of the Republic of China. 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 Standards on Auditing of the Republic of China 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 $2,885,126 thousand and $2,780,149 thousand, constituting 15.88% and 16.72% of the consolidated total assets; and the total liabilities amounting to $517,503 thousand and $528,184 thousand, constituting 7.31% and 7.78% of the consolidated total liabilities as of March 31, 2023 and 2022, respectively; as well as total comprehensive income (loss) amounting to $46,842 thousand and $145,875 thousand, constituting 13.11% and 21.17% of the consolidated total comprehensive income (loss) for the three months ended March 31, 2023 and 2022, respectively.

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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 March 31, 2023 and 2022, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2023 and 2022 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 auditors, 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 auditors. The financial statements of TSC Auto ID reflect total assets amounting to $7,101,684 thousand and $6,647,638 thousand, constituting 39.10% and 39.98% of the consolidated total assets as of March 31, 2023 and 2022, respectively; and the total revenues amounting to $1,908,045 thousand and $1,762,083 thousand, constituting 52.63% and 46.96% of the consolidated total revenues for the three months ended March 31, 2023 and 2022, respectively.

The engagement partners on the reviews resulting in this independent auditors' report are Kuo, Yang-Lun and Hsiao, Pei-Ju.

KPMG

Taipei, Taiwan (Republic of China)

May 10, 2023

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.

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

Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2023 and 2022

TAIWAN SEMICONDUCTOR CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2023, December 31, 2022, and March 31, 2022

(Expressed in Thousands of New Taiwan Dollars)

			March 31, 2023			December 31, 2022	March 31, 2022
	Assets		Amount	%		Amount	%			Amount	%
	Current assets:
1100	Cash and cash equivalents (note 6(a))	$	3,386,616		19	3,595,681		20			2,471,703		15
1110	Current financial assets at fair value through profit		516,413			3		1,798		-			251,835		1
	or loss (note 6(b))
1150	Notes receivable, net (notes 6(c) and (r))		319		-		588	-			584	-
1170	Accounts receivable, net (notes 6(c) and (r))		2,866,262		16	3,015,880	17		3,219,395		19
1200	Other receivables		91,752		1	105,789	1		88,589		1
1220	Current tax assets		492		-		409	-			961	-
130X	Inventories (note 6(d))		3,609,217		20	3,500,033	19		2,778,071	17
1410	Prepayments		270,959			1		251,545		1			190,788		1
1476	Other current financial assets (note 6(b))		389,928			2		599,488		3			446,094		3
			11,131,958			62		11,071,211		61			9,448,020		57
	Non-current assets:
1510	Non-current financial assets at fair value through		4,122			-		-		-			-		-
	profit or loss (note 6(b))
1517	Non-current financial assets at fair value through		-			-		4,157		-			-		-
	other comprehensive income (note 6(b))
1600	Property, plant and equipment (note 6(f))		4,417,745		24	4,483,033	25		4,502,295	27
1755	Right-of-use assets (note 6(g))		208,528		1	229,239		1			264,966		1
1822	Intangible assets (note 6(h))		289,446		2	308,413		2			371,420		2
1805	Goodwill (note 6(i))		1,126,943		6	1,136,565		6			1,059,400		6
1840	Deferred tax assets		487,165		3	458,165	3		461,566		3
1980	Other non-current financial assets (note 6(b))		83,194		-		83,020	-			84,312		1
1990	Other non-current assets		415,276			2		443,016		2			435,954		3
			7,032,419			38		7,145,608		39			7,179,913		43

Total assets	$	18,164,377 100	18,216,819 100	16,627,933 100

	Liabilities and Equity		March 31, 2023	December 31, 2022		March 31, 2022
		Amount	%				Amount	%				Amount	%
	Current liabilities:
2100	Short-term borrowings (note 6(j))	$	1,379,471		7			1,466,515		8		944,529		6
2120	Current financial liabilities at fair value through		5,607		-			2,392		-			7,443		-
	profit or loss (note 6(b))
2170	Accounts payable		1,560,662	8		1,648,557	9	1,740,311	10
2200	Other payables (note 6(l))		863,714	5		1,065,266	6	744,782		4
2230	Current tax liabilities		512,468		3			415,066		2		517,426		3
2322	Long-term borrowings, current portion (note 6(k))		312,249	2		322,349		2		-		-
2280	Lease liabilities, current (note 6(m))		109,545	1		106,012	-			96,890		1
2399	Other current liabilities		313,484			2				325,900			2			285,590			2
			5,057,200		28			5,352,057		29		4,336,971		26
	Non-Current liabilities:
2540	Long-term borrowings (note 6(k))		965,820	5		1,084,391		6		1,429,310		9
2580	Lease liabilities, non-current (note 6(m))		102,200		1			123,214		1		177,836		1
2640	Net defined benefit liabilities, non-current		34,924	-			35,000	-			42,016		-
2570	Deferred tax liabilities		827,239	4		825,106	5	733,664		4
2670	Other non-current liabilities		92,577			1				71,568			-				73,453			-
			2,022,760			11				2,139,279			12			2,456,279			14
	Total liabilities		7,079,960		39			7,491,336		41		6,793,250		40
	Stockholder' equity attributable to parent:
	(note 6(p))
3110	Common stock		2,634,854		15			2,634,854		14		2,634,854		16
3200	Capital surplus		2,136,998	12		2,137,088	12	2,097,317	13
3300	Retained earnings		4,385,908	24		4,155,591	23	3,633,153	22
3400	Other stockholders' equity		(355,057)	(2)	(359,558)	(2)	(373,297)	(2)
3500	Treasury shares		(506,043)	(3)		(506,043)	(3)	(506,085)	(3)
	Total equity attributable to owners of parent		8,296,660			46				8,061,932			44			7,485,942			46
36XX Non-controlling interests (note 6(e))		2,787,757			15				2,663,551			15			2,348,741			14
	Total equity		11,084,417			61				10,725,483			59			9,834,683			60
	Total liabilities and equity	$	18,164,377		100			18,216,819		100		16,627,933		100

See accompanying notes to financial statements.