TSMC

EX-99.1 2 a2026q2consolidatedreport-.htm EX-99.1 2026Q2 Consolidated Report- Document Template(ENG) for SECEnglish Translation of Financial Statements Originally Issued in ChineseTaiwan Semiconductor Manufacturing Company Limited and SubsidiariesConsolidated Financial Statements for the Six Months Ended June 30, 2026 and 2025 and Independent Auditors Review Report- 1 - 110421 100 20 Deloitte Touche20F, Taipei Nan Shan PlazaNo. 100, Songren Rd.,Xinyi Dist., Taipei 110421, TaiwanTel +886 (2) 2725-9988Fax +886 (2) 4051-6888www.deloitte.com.twINDEPENDENT AUDITORS REVIEW REPORTThe Board of Directors and ShareholdersTaiwan Semiconductor Manufacturing Company LimitedIntroductionWe have reviewed the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and its subsidiaries (collectively, the Company ) as of June 30, 2026 and 2025, the related consolidated statements of comprehensive income for the three months ended June 30, 2026 and 2025 and for the six months ended June 30, 2026 and 2025, the consolidated statements of changes in equity and cash flows for the six months then ended, and the related notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the consolidated financial statements ). 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 ReviewWe conducted our reviews in accordance with the Standards on Review Engagements of the Republic of China 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity . A review of 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 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. ConclusionBased on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2026 and 2025, its consolidated financial performance for the three months ended June 30, 2026 and 2025, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2026 and 2025 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.- 2 -The engagement partners on the reviews resulting in this independent auditors review report are Shih Tsung Wu and Yen Chun Chen.Deloitte ToucheTaipei, TaiwanRepublic of ChinaAugust 11, 2026Notice to ReadersThe accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with 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 applied in the Republic of China.For the convenience of readers, the independent auditors review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors review report and consolidated financial statements shall prevail.- 3 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars) June 30, 2026 December 31, 2025 June 30, 2025 Amount % Amount % Amount % ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) $3,134,218,213 33 $2,767,856,402 35 $2,364,524,340 34 Financial assets at fair value through profit or loss (Note 7) 226,375 - 100,200 - 1,765,904 - Financial assets at fair value through other comprehensive income (Note 8) 193,182,690 2 175,692,690 2 163,637,740 2 Financial assets at amortized cost (Note 9) 190,385,845 2 124,945,519 2 104,501,262 2 Notes and accounts receivable, net (Note 11) 435,762,477 5 279,051,553 3 233,407,179 3 Receivables from related parties (Note 31) 5,160,539 - 2,739,500 - 2,277,792 - Other receivables from related parties (Note 31) 1,209,013 - 268,115 - 2,567,972 - Inventories (Note 12) 385,524,542 4 288,109,485 4 304,193,716 4 Other financial assets (Notes 28, 29 and 32) 80,032,539 1 59,702,922 1 49,202,958 1 Other current assets (Notes 28 and 29) 139,998,509 2 118,664,431 1 38,838,612 1 Total current assets 4,565,700,742 49 3,817,130,817 48 3,264,917,475 47 NONCURRENT ASSETS Financial assets at fair value through profit or loss (Note 7) 15,780,286 - 15,032,128 - 13,831,497 - Financial assets at fair value through other comprehensive income (Notes 8 and 13) 88,151,593 1 8,797,170 - 7,605,736 - Financial assets at amortized cost (Note 9) 105,877,457 1 110,507,804 1 81,827,491 1 Investments accounted for using equity method (Note 13) 18,126,371 - 38,033,271 1 34,162,043 1 Property, plant and equipment (Notes 14 and 28) 4,302,880,478 46 3,691,840,916 47 3,386,206,352 48 Right-of-use assets (Note 15) 54,895,205 1 43,918,910 1 43,857,918 1 Intangible assets (Note 16) 24,074,828 - 24,952,615 - 24,707,294 - Deferred income tax assets (Note 4) 62,888,627 1 62,940,253 1 64,996,327 1 Refundable deposits 4,267,187 - 4,242,553 - 4,854,963 - Other noncurrent assets (Notes 28 and 29) 133,011,953 1 115,627,441 1 79,382,453 1 Total noncurrent assets 4,809,953,985 51 4,115,893,061 52 3,741,432,074 53 TOTAL $9,375,654,727 100 $7,933,023,878 100 $7,006,349,549 100 LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss (Note 7) $2,452,333 - $3,083,883 - $220,702 - Hedging financial liabilities (Note 10) 2,563 - 817 - 2,384 - Accounts payable 108,890,080 1 82,551,595 1 83,495,172 1 Payables to related parties (Note 31) 1,735,737 - 1,778,730 - 1,276,538 - Salary and bonus payable 69,960,764 1 63,872,882 1 46,014,993 1 Accrued profit sharing bonus to employees and compensation to directors (Note 27) 173,683,261 2 103,355,278 1 116,534,813 2 Payables to contractors and equipment suppliers (Note 29) 290,850,560 3 177,730,306 2 161,416,417 2 Cash dividends payable (Note 19) 337,435,778 4 285,258,060 4 246,672,182 4 Income tax payable (Note 4) 283,343,231 3 202,337,872 2 182,884,380 3 Long-term liabilities - current portion (Notes 17, 18 and 29) 167,409,865 2 136,925,710 2 94,213,641 1 Accrued expenses and other current liabilities (Notes 15, 20 and 29) 421,997,653 4 401,124,156 5 444,583,112 6 Total current liabilities 1,857,761,825 20 1,458,019,289 18 1,377,314,334 20 NONCURRENT LIABILITIES Bonds payable (Notes 17 and 29) 815,036,716 9 856,227,503 11 848,534,856 12 Long-term bank loans (Note 18) 49,226,958 1 39,834,496 1 35,136,246 1 Deferred income tax liabilities (Note 4) 3,906,819 - 3,888,795 - 3,954,595 - Lease liabilities (Note 15) 33,276,056 - 31,594,992 - 31,363,997 - Net defined benefit liability (Note 4) 5,893,691 - 6,012,286 - 5,355,403 - Guarantee deposits 777,475 - 764,178 - 714,229 - Others (Note 20) 135,304,206 1 75,887,056 1 87,344,039 1 Total noncurrent liabilities 1,043,421,921 11 1,014,209,306 13 1,012,403,365 14 Total liabilities 2,901,183,746 31 2,472,228,595 31 2,389,717,699 34 EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT Capital stock (Note 19) 259,323,701 3 259,325,245 3 259,326,155 4 Capital surplus (Notes 19 and 26) 72,290,839 1 73,445,601 1 73,326,265 1 Retained earnings (Note 19) Appropriated as legal capital reserve 311,146,899 4 311,146,899 4 311,146,899 4 Appropriated as special capital reserve - - 87,284,496 1 - - Unappropriated earnings 5,739,966,200 61 4,705,070,165 59 4,119,740,394 59 6,051,113,099 65 5,103,501,560 64 4,430,887,293 63 Others (Notes 19 and 26) 49,790,695 - (16,676,412) - (182,465,738) (3) Equity attributable to shareholders of the parent 6,432,518,334 69 5,419,595,994 68 4,581,073,975 65 NON - CONTROLLING INTERESTS 41,952,647 - 41,199,289 1 35,557,875 1 Total equity 6,474,470,981 69 5,460,795,283 69 4,616,631,850 66 TOTAL $9,375,654,727 100 $7,933,023,878 100 $7,006,349,549 100 The accompanying notes are an integral part of the consolidated financial statements.- 4 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Three Months Ended June 30 For the Six Months Ended June 30 2026 2025 2026 2025 Amount % Amount % Amount % Amount % NET REVENUE (Notes 20, 31 and 37) $1,270,380,250 100 $933,791,869 100 $2,404,483,690 100 $1,773,045,533 100 COST OF REVENUE (Notes 12, 27, 31 and 34) 410,069,555 32 386,422,631 41 792,877,574 33 732,281,219 41 GROSS PROFIT 860,310,695 68 547,369,238 59 1,611,606,116 67 1,040,764,314 59 OPERATING EXPENSES (Notes 27 and 31) Research and development 73,146,138 6 61,279,719 7 140,902,823 6 117,827,212 7 General and administrative 21,366,992 2 18,955,373 2 43,200,642 2 43,839,121 3 Marketing 4,468,953 - 4,273,247 - 8,884,275 - 8,028,062 - Total operating expenses 98,982,083 8 84,508,339 9 192,987,740 8 169,694,395 10 OTHER OPERATING INCOME AND EXPENSES, NET (Notes 14, 27 and 34) 5,274,039 - 562,739 - 6,950,417 - (565,473) - INCOME FROM OPERATIONS (Note 37) 766,602,651 60 463,423,638 50 1,425,568,793 59 870,504,446 49 NON-OPERATING INCOME AND EXPENSES Share of profits of associates 1,438,471 - 1,220,948 - 3,123,375 - 2,589,255 - Interest income (Note 21) 30,044,721 3 25,191,998 3 58,906,984 2 50,051,310 3 Other income 1,846,711 - 412,043 - 1,971,050 - 463,552 - Foreign exchange gain (loss), net (Note 35) 419,968 - (4,782,532) (1) 6,598,890 - (1,244,213) - Finance costs (Note 22) (3,085,049) - (3,691,095) - (5,801,911) - (6,368,369) - Other gains and losses, net (Notes 13 and 23) 65,162,613 5 11,260,204 1 59,862,592 3 7,934,635 - Total non-operating income and expenses 95,827,435 8 29,611,566 3 124,660,980 5 53,426,170 3 INCOME BEFORE INCOME TAX 862,430,086 68 493,035,204 53 1,550,229,773 64 923,930,616 52 INCOME TAX EXPENSE (Notes 4 and 24) 155,649,163 12 95,541,780 10 270,647,546 11 165,704,531 9 NET INCOME 706,780,923 56 397,493,424 43 1,279,582,227 53 758,226,085 43 OTHER COMPREHENSIVE INCOME (LOSS) (Note 19) Items that will not be reclassified subsequently to profit or loss Unrealized gain on investments in equity instruments at fair value through other comprehensive income 25,874,210 2 1,982,348 - 28,425,661 1 1,608,828 - Loss on hedging instruments - - (31,030) - - - (31,030) - Share of other comprehensive income (loss) of associates (12,480) - (27,249) - 75,934 - (95,903) - 25,861,730 2 1,924,069 - 28,501,595 1 1,481,895 - Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations (7,864,761) (1) (256,492,873) (28) 45,093,416 2 (226,272,181) (13) Unrealized gain (loss) on investments in debt instruments at fair value through other comprehensive income (117,250) - 812,218 - (1,971,730) - 2,865,452 - Loss on hedging instruments (21,314) - (20,105) - (42,405) - (41,173) - Share of other comprehensive loss of associates (571,807) - (725,190) - (298,627) - (638,946) - (8,575,132) (1) (256,425,950) (28) 42,780,654 2 (224,086,848) (13) Other comprehensive income (loss), net of income tax 17,286,598 1 (254,501,881) (28) 71,282,249 3 (222,604,953) (13) TOTAL COMPREHENSIVE INCOME $724,067,521 57 $142,991,543 15 $1,350,864,476 56 $535,621,132 30 (Continued) - 5 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) For the Three Months Ended June 30 For the Six Months Ended June 30 2026 2025 2026 2025 Amount % Amount % Amount % Amount % NET INCOME ATTRIBUTABLE TO Shareholders of the parent $706,561,938 56 $398,273,102 43 $1,279,041,690 53 $759,837,230 43 Non-controlling interests 218,985 - (779,678) - 540,537 - (1,611,145) - $706,780,923 56 $397,493,424 43 $1,279,582,227 53 $758,226,085 43 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO Shareholders of the parent $724,359,648 57 $146,202,878 15 $1,350,950,974 56 $538,015,970 30 Non-controlling interests (292,127) - (3,211,335) - (86,498) - (2,394,838) - $724,067,521 57 $142,991,543 15 $1,350,864,476 56 $535,621,132 30 EARNINGS PER SHARE (NT$, Note 25) Basic earnings per share $27.25 $15.36 $49.33 $29.31 Diluted earnings per share $27.25 $15.36 $49.32 $29.30 The accompanying notes are an integral part of the consolidated financial statements. (Concluded) - 6 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) Equity Attributable to Shareholders of the Parent Others Capital Stock - Common Stock Retained Earnings ForeignCurrencyTranslationReserve UnrealizedGain (Loss) onFinancialAssets at FairValue ThroughOtherComprehensiveIncome Gain (Loss) onHedgingInstruments Unearned Stock-BasedEmployeeCompensation Shares Legal Capital Special Capital Unappropriated Total Total Non-controllingInterests TotalEquity (In Thousands) Amount Capital Surplus Reserve Reserve Earnings Total BALANCE, JANUARY 1, 2025 25,932,733 $259,327,332 $73,260,765 $311,146,899 $- $3,606,105,124 $3,917,252,023 $40,262,995 $(1,160,176) $1,310,307 $(1,708,079) $38,705,047 $4,288,545,167 $35,030,698 $4,323,575,865 Appropriations of earnings Cash dividends to shareholders - - - - - (246,360,378) (246,360,378) - - - - - (246,360,378) - (246,360,378) Total - - - - - (246,360,378) (246,360,378) - - - - - (246,360,378) - (246,360,378) Net income - - - - - 759,837,230 759,837,230 - - - - - 759,837,230 (1,611,145) 758,226,085 Other comprehensive income (loss), net of income tax - - - - - (35) (35) (226,127,300) 4,360,969 (54,894) - (221,821,225) (221,821,260) (783,693) (222,604,953) Total comprehensive income (loss) - - - - - 759,837,195 759,837,195 (226,127,300) 4,360,969 (54,894) - (221,821,225) 538,015,970 (2,394,838) 535,621,132 Employee restricted shares retired (118) (1,177) 1,177 - - 2,459 2,459 - - - - - 2,459 - 2,459 Share-based payment arrangements - - - - - - - - - - 797,188 797,188 797,188 - 797,188 Disposal of investments in equity instruments at fair value through other comprehensive income - - - - - 155,994 155,994 - (155,994) - - (155,994) - - - Basis adjustment for gain on hedging instruments - - - - - - - - - 9,246 - 9,246 9,246 - 9,246 Adjustments to share of changes in equities of associates - - 79,432 - - - - - - - - - 79,432 - 79,432 From share of changes in equities of subsidiaries - - (15,109) - - - - - - - - - (15,109) 8,146 (6,963) Increase in non-controlling interests - - - - - - - - - - - - - 2,913,869 2,913,869 BALANCE, JUNE 30, 2025 25,932,615 $259,326,155 $73,326,265 $311,146,899 $- $4,119,740,394 $4,430,887,293 $(185,864,305) $3,044,799 $1,264,659 $(910,891) $(182,465,738) $4,581,073,975 $35,557,875 $4,616,631,850 BALANCE, JANUARY 1, 2026 25,932,524 $259,325,245 $73,445,601 $311,146,899 $87,284,496 $4,705,070,165 $5,103,501,560 $(21,019,144) $3,591,483 $1,228,250 $(477,001) $(16,676,412) $5,419,595,994 $41,199,289 $5,460,795,283 Appropriations of earnings Special capital reserve - - - - (87,284,496) 87,284,496 - - - - - - - - - Cash dividends to shareholders - - - - - (337,121,738) (337,121,738) - - - - - (337,121,738) - (337,121,738) Total - - - - (87,284,496) (249,837,242) (337,121,738) - - - - - (337,121,738) - (337,121,738) Net income - - - - - 1,279,041,690 1,279,041,690 - - - - - 1,279,041,690 540,537 1,279,582,227 Other comprehensive income (loss), net of income tax - - - - - - - 45,426,050 26,514,792 (31,558) - 71,909,284 71,909,284 (627,035) 71,282,249 Total comprehensive income (loss) - - - - - 1,279,041,690 1,279,041,690 45,426,050 26,514,792 (31,558) - 71,909,284 1,350,950,974 (86,498) 1,350,864,476 Disposal of investments accounted for using equity method - - (1,393,789) - - (87,379) (87,379) - 98,746 (11,367) - 87,379 (1,393,789) - (1,393,789) Employee restricted shares retired (154) (1,544) 1,544 - - 5,334 5,334 - - - - - 5,334 - 5,334 Share-based payment arrangements - - (62,128) - - - - - - - 245,093 245,093 182,965 - 182,965 Disposal of investments in equity instruments at fair value through other comprehensive income - - - - - 5,773,632 5,773,632 - (5,774,189) - - (5,774,189) (557) 557 - Basis adjustment for loss on hedging instruments - - - - - - - - - (460) - (460) (460) - (460) Adjustments to share of changes in equities of associates - - 299,611 - - - - - - - - - 299,611 - 299,611 Increase in non-controlling interests - - - - - - - - - - - - - 839,299 839,299 BALANCE, JUNE 30, 2026 25,932,370 $259,323,701 $72,290,839 $311,146,899 $- $5,739,966,200 $6,051,113,099 $24,406,906 $24,430,832 $1,184,865 $(231,908) $49,790,695 $6,432,518,334 $41,952,647 $6,474,470,981 The accompanying notes are an integral part of the consolidated financial statements.- 7 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) Six Months Ended June 30 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax $1,550,229,773 $923,930,616 Adjustments for Depreciation expense 359,541,458 359,012,194 Amortization expense 4,447,147 4,184,797 Expected credit losses recognized (reversal) on investments in debt instruments 51,743 (25,220) Finance costs 5,801,911 6,368,369 Share of profits of associates (3,123,375) (2,589,255) Interest income (58,906,984) (50,051,310) Share-based compensation 237,026 799,647 Loss (gain) on disposal or retirement of property, plant and equipment, net (175,957) 1,235,418 Loss (gain) on disposal or retirement of intangible assets, net (224,968) 2,071 Impairment loss on property, plant and equipment - 1,670,522 Gain on financial instruments at fair value through profit or loss, net (301,612) (204,315) Loss on disposal of investments in debt instruments at fair value through other comprehensive income, net 49,766 82,845 Gain on disposal of investments accounted for using equity method, net (63,202,285) - Loss from disposal of subsidiary - 167,986 Gain on foreign exchange, net (4,354,953) (17,895,105) Dividend income (1,971,050) (463,552) Others 254,365 583,464 Changes in operating assets and liabilities Financial instruments at fair value through profit or loss 3,810,341 (1,796,243) Notes and accounts receivable, net (156,710,924) 37,276,056 Receivables from related parties (2,421,039) (873,319) Other receivables from related parties 265,882 (10,235) Inventories (97,415,057) (16,324,906) Other financial assets (857,463) (9,975,826) Other current assets (23,877,386) 3,428,197 Other noncurrent assets (16,151,482) (2,609,468) Accounts payable 26,338,485 10,694,614 Payables to related parties (42,993) (149,463) Salary and bonus payable 6,087,882 (1,436,516) Accrued profit sharing bonus to employees and compensation to directors 70,327,983 45,663,663 Accrued expenses and other current liabilities (28,028,952) (29,100,990) Other noncurrent liabilities 102,502,167 (7,848,202) Net defined benefit liability (118,595) (2,225,254) Cash generated from operations 1,672,060,854 1,251,521,280 Income taxes paid (189,719,612) (128,883,523) Net cash generated by operating activities 1,482,341,242 1,122,637,757 (Continued) - 8 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) Six Months Ended June 30 2026 2025 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of Financial instruments at fair value through profit or loss $(744,405) $(128,359) Financial assets at fair value through other comprehensive income (57,792,544) (37,351,763) Financial assets at amortized cost (145,731,439) (95,249,939) Hedging financial instruments - (631,620) Property, plant and equipment (846,764,746) (628,052,531) Right-of-use assets (9,441,034) - Intangible assets (3,876,352) (4,616,458) Proceeds from disposal or redemption of Financial instruments at fair value through profit or loss 15,238 - Financial assets at fair value through other comprehensive income 46,790,889 49,745,299 Financial assets at amortized cost 90,183,179 77,925,126 Investments accounted for using equity method 24,301,349 - Property, plant and equipment 1,992,188 245,283 Intangible assets 235,417 - Derecognition of derivative financial instruments (4,344,665) - Proceeds from return of capital of investments in equity instruments at fair value through other comprehensive income 186,812 4,976 Derecognition of hedging financial instruments 16,726 574,700 Interest received 52,546,142 50,443,657 Proceeds from government grants - property, plant and equipment 590,398 67,128,197 Other dividends received 310,283 438,461 Dividends received from investments accounted for using equity method 1,855,845 747,006 Increase in prepayments for leases (18,979) (17,174) Refundable deposits paid (295,764) (282,366) Refundable deposits refunded 321,288 396,772 Net cash used in investing activities (849,664,174) (518,680,733) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in hedging financial liabilities - bank loans (274,342) 430,085 Proceeds from issuance of bonds 35,600,000 33,300,000 Repayment of bonds (54,861,100) (13,400,000) Proceeds from long-term bank loans 11,950,000 5,395,000 Repayment of long-term bank loans (651,389) (1,438,333) Payments for transaction costs attributable to the issuance of bonds (36,448) (34,820) Repayment of the principal portion of lease liabilities (2,249,689) (1,645,424) Interest paid (9,889,408) (9,738,700) Guarantee deposits received 8,561 1,000 Guarantee deposits refunded (6,569) (41,853) Cash dividends (285,258,060) (220,418,821) Increase in non-controlling interests 1,104,611 3,225,673 Net cash used in financing activities (304,563,833) (204,366,193) (Continued) - 9 - Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) Six Months Ended June 30 2026 2025 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS $38,248,576 $(162,693,534) NET INCREASE IN CASH AND CASH EQUIVALENTS 366,361,811 236,897,297 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,767,856,402 2,127,627,043 CASH AND CASH EQUIVALENTS, END OF PERIOD $3,134,218,213 $2,364,524,340 The accompanying notes are an integral part of the consolidated financial statements. (Concluded) - 10 -Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) 1. GENERALTaiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, sales, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. On September 5, 1994, TSMC s shares were listed on the Taiwan Stock Exchange (TWSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu Science Park, Taiwan. The principal operating activities of TSMC s subsidiaries are described in Note 4.2. THE AUTHORIZATION OF FINANCIAL STATEMENTSThe accompanying consolidated financial statements were approved and authorized for issuance by the Board of Directors on August 11, 2026.3.APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTINGSTANDARDSa.Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, IFRS Accounting Standards ) endorsed and issued into effect by the Financial Supervisory Commission (FSC)The initial application of the amendments to the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have a material impact on the accounting policies of TSMC and its subsidiaries (collectively as the Company ).b.The IFRS Accounting Standards issued by International Accounting Standards Board (IASB) and endorsed by the FSC with effective date starting 2027 New, Amended and Revised Standards and Interpretations Effective Date Issued by IASB IFRS 18 Presentation and Disclosure in Financial Statements January 1, 2027 (Note) Note Domestic entities are required to apply IFRS 18 starting January 1, 2028, with the option for early adoption.- 11 -IFRS 18 Presentation and Disclosure in Financial Statements and consequential amendmentsIFRS 18 will supersede IAS 1 Presentation of Financial Statements . The main changes comprise Items of income and expenses included in the statement of profit or loss shall be classified into the operating, investing, financing, income taxes and discontinued operations categories. The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss. Provides guidance to enhance the requirements of aggregation and disaggregation The Company shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Company shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Company labels items as other only if it cannot find a more informative label.In addition, a consequential amendment has been made to IAS 7 Statement of Cash Flows , requiring the Company to use operating profit or loss as the starting point when presenting cash flows from operating activities under the indirect method.Except for the above impact, as of the date the accompanying consolidated financial statements were issued, the Company continues in evaluating other impacts of the above amended standards and on its financial position and financial performance from the initial adoption of the aforementioned standards or interpretations and related applicable period. The related impact will be disclosed when the Company completes its evaluation.c.The IFRS Accounting Standards issued by IASB, but not yet endorsed and issued into effect by the FSC New, Amended and Revised Standards and Interpretations Effective Date Issued by IASB Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture To be determined by IASB 4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATIONExcept for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2025.For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.Statement of ComplianceThe accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34, Interim Financial Reporting, endorsed and issued into effect by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements - 12 -prepared under the IFRS Accounting Standards endorsed and issued into effect by the FSC (collectively, the Taiwan-IFRS Accounting Standards ).Basis of Consolidation The basis of preparation and the basis for the consolidated financial statementsThe basis of preparation and the basis for the consolidated financial statements applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2025.The subsidiaries in the consolidated financial statementsThe detail information of the subsidiaries at the end of reporting period was as follows Establishment Percentage of Ownership Name of Investor Name of Investee Main Businesses and Products and Operating Location June 30,2026 December 31,2025 June 30,2025 Note TSMC TSMC North America Sales and marketing of integrated circuits and other semiconductor devices San Jose, California, U.S.A. 100% 100% 100% - TSMC Europe B.V. (TSMC Europe) Customer service and supporting activities Amsterdam, the Netherlands 100% 100% 100% a) TSMC Japan Limited (TSMC Japan) Customer service and supporting activities Yokohama, Japan 100% 100% 100% a) TSMC Design Technology Japan, Inc. (TSMC JDC) Engineering support activities Yokohama, Japan 100% 100% 100% a) TSMC Japan 3DIC R D Center, Inc. (TSMC 3DIC) Engineering support activities Yokohama, Japan 100% 100% 100% a) TSMC Korea Limited (TSMC Korea) Customer service and supporting activities Seoul, Korea 100% 100% 100% a) TSMC Partners, Ltd. (TSMC Partners) Investing in companies involved in the semiconductor design and manufacturing, and other investment activities Tortola, British Virgin Islands 100% 100% 100% - TSMC Global Ltd. (TSMC Global) Investment activities Tortola, British Virgin Islands 100% 100% 100% - TSMC China Company Limited (TSMC China) Manufacturing, sales, testing and computer-aided design of integrated circuits and other semiconductor devices Shanghai, China 100% 100% 100% - TSMC Nanjing Company Limited (TSMC Nanjing) Manufacturing, sales, testing and computer-aided design of integrated circuits and other semiconductor devices Nanjing, China 100% 100% 100% - VisEra Technologies Company Ltd. (VisEra Tech) Research, design, development, manufacturing, sales, packaging and test of color filter Hsinchu, Taiwan 67% 67% 67% - TSMC Arizona Corporation (TSMC Arizona) Manufacturing, sales and testing of integrated circuits and other semiconductor devices Phoenix, Arizona, U.S.A. 100% 100% 100% - Japan Advanced Semiconductor Manufacturing, Inc. (JASM) Manufacturing, sales and testing of integrated circuits and other semiconductor devices Kumamoto, Japan 73% 73% 73% - European Semiconductor Manufacturing Company (ESMC) GmbH (ESMC) Manufacturing, sales and testing of integrated circuits and other semiconductor devices Dresden, Germany 70% 70% 70% - Emerging Fund, L.P. (Emerging Fund) Investing in technology start-up companies Cayman Islands 99.9% 99.9% 99.9% b) TSMC Partners TSMC Development, Inc. (TSMC Development) Investing in companies involved in semiconductor manufacturing Delaware, U.S.A. 100% 100% 100% - TSMC Technology, Inc. (TSMC Technology) Engineering support activities Delaware, U.S.A. 100% 100% 100% a) TSMC Design Technology Canada Inc. (TSMC Canada) Engineering support activities Ontario, Canada 100% 100% 100% a) TSMC Development TSMC Washington, LLC (TSMC Washington) Manufacturing, sales and testing of integrated circuits and other semiconductor devices Washington, U.S.A. 100% 100% 100% - Note a This is an immaterial subsidiary for which the consolidated financial statements are neither reviewed nor audited by the Company s independent auditors.Note b This is an immaterial subsidiary for which the consolidated financial statements for the year ended, are audited by the Company s independent auditors.- 13 -Retirement BenefitsPension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year.TaxationIncome tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. 5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTYThe same material accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Company s consolidated financial statements for the year ended December 31, 2025.6. CASH AND CASH EQUIVALENTS June 30,2026 December 31,2025 June 30,2025 Cash and deposits in banks $3,119,195,029 $2,761,829,868 $2,333,623,182 Money market funds 13,063,599 2,056,733 28,123,554 Commercial paper 1,205,116 - - Government bonds Agency bonds 754,469 2,627,142 1,728,061 Repurchase agreements - 1,342,659 1,049,543 $3,134,218,213 $2,767,856,402 $2,364,524,340 Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts of cash and were subject to an insignificant risk of changes in value.7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS June 30,2026 December 31,2025 June 30,2025 Financial assets Convertible preferred stocks $13,813,964 $13,608,819 $12,617,717 Mutual funds 1,966,322 1,297,533 1,097,164 Convertible bonds 223,426 - - Forward exchange contracts 2,949 100,200 1,765,904 Simple agreement for future equity - 125,776 116,616 $16,006,661 $15,132,328 $15,597,401 Current $226,375 $100,200 $1,765,904 Noncurrent 15,780,286 15,032,128 13,831,497 $16,006,661 $15,132,328 $15,597,401 Financial liabilities Forward exchange contracts $2,452,333 $3,083,883 $220,702 - 14 -The Company entered into forward exchange contracts to manage exposures due to fluctuations of foreign exchange rates. These forward exchange contracts did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for these forward exchange contracts.Outstanding forward exchange contracts consisted of the following Contract Amount Maturity Date (In Thousands) June 30, 2026 Sell US$ July 2026 to September 2026 US$6,720,500 December 31, 2025 Sell US$ January 2026 to March 2026 US$9,234,000 Sell JPY January 2026 JPY6,095,977 June 30, 2025 Sell US$ July 2025 to September 2025 US$4,220,500 Sell JPY July 2025 JPY39,505,545 8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME June 30,2026 December 31,2025 June 30,2025 Investments in debt instruments at FVTOCI Corporate bonds $104,967,103 $88,636,098 $80,137,883 Agency mortgage-backed securities 50,118,652 49,150,771 46,016,814 Government bonds Agency bonds 27,707,810 25,437,560 23,173,091 Asset-backed securities 7,888,500 8,512,188 9,019,262 190,682,065 171,736,617 158,347,050 Investments in equity instruments at FVTOCI Publicly traded stocks 79,117,839 3,956,073 5,290,690 Non-publicly traded equity investments 11,534,379 8,797,170 7,605,736 90,652,218 12,753,243 12,896,426 $281,334,283 $184,489,860 $171,243,476 Current $193,182,690 $175,692,690 $163,637,740 Noncurrent 88,151,593 8,797,170 7,605,736 $281,334,283 $184,489,860 $171,243,476 These investments in equity instruments are held for medium to long-term purposes and therefore are accounted for as financial assets at FVTOCI. For dividends recognized from these investments, please refer to consolidated statements of cash flows. All of the dividends are mainly from investments held at the end of the reporting period.- 15 -For the six months ended June 30, 2026 and 2025, as the Company adjusted its investment portfolio, equity investments designated at FVTOCI were divested for NT$7,931,592 thousand and NT$284,890 thousand, respectively. The related other equity-unrealized gain loss on financial assets at FVTOCI of NT$5,773,632 thousand and NT$155,994 thousand were transferred to increase retained earnings, respectively.As of June 30, 2026 and 2025, the cumulative loss allowance for expected credit loss of NT$50,362 thousand and NT$41,888 thousand was recognized under investments in debt instruments at FVTOCI, respectively. Refer to Note 30 for information relating to the credit risk management and expected credit loss.9. FINANCIAL ASSETS AT AMORTIZED COST June 30,2026 December 31,2025 June 30,2025 Corporate bonds $273,881,621 $231,374,019 $176,321,657 Commercial paper 18,281,520 - 6,209,030 Government bonds Agency bonds 4,282,693 4,213,491 3,901,492 Less Allowance for impairment loss (182,532) (134,187) (103,426) $296,263,302 $235,453,323 $186,328,753 Current $190,385,845 $124,945,519 $104,501,262 Noncurrent 105,877,457 110,507,804 81,827,491 $296,263,302 $235,453,323 $186,328,753 Refer to Note 30 for information relating to credit risk management and expected credit loss for financial assets at amortized cost.10. HEDGING FINANCIAL INSTRUMENTS June 30,2026 December 31,2025 June 30,2025 Financial liabilities - current Fair value hedges Interest rate futures contracts $2,563 $817 $2,384 Fair value hedgeThe Company entered into interest rate futures contracts, which are used to partially hedge against the fair value changes caused by interest rate fluctuation in the Company s fixed income investments. The hedge ratio is adjusted in response to the changes in the financial market and capped at 100%.On the basis of economic relationships, the value of the interest rate futures contracts and the value of the hedged financial assets change in opposite directions in response to movements in interest rates.- 16 -The reasons that may cause hedge ineffectiveness in these hedging relationships are mainly from the credit risk of the hedged financial assets, which are not reflected in the fair value of the interest rate futures contracts. No other sources of ineffectiveness have emerged from these hedging relationships during the hedging period. Amount of hedge ineffectiveness recognized in profit or loss is classified under other gains and losses, net.The following tables summarize the information relating to the hedges of interest rate risks.June 30, 2026 Hedging Instruments Contract Amount(US$ in Thousands) Maturity Interest rate futures contracts - US Treasury futures US$16,100 September 2026 Hedged Items Asset Carrying Amount Accumulated Amount ofFair Value Hedge Adjustments Financial assets at FVTOCI $883,461 $ 2,563 December 31, 2025 Hedging Instruments Contract Amount(US$ in Thousands) Maturity Interest rate futures contracts - US Treasury futures US$23,700 March 2026 Hedged Items Asset Carrying Amount Accumulated Amount ofFair Value Hedge Adjustments Financial assets at FVTOCI $711,878 $ 817 June 30, 2025 Hedging Instruments Contract Amount(US$ in Thousands) Maturity Interest rate futures contracts - US Treasury futures US$7,600 September 2025 Hedged Items Asset Carrying Amount Accumulated Amount ofFair Value Hedge Adjustments Financial assets at FVTOCI $766,126 $ 2,384 - 17 -The effect for the six months ended June 30, 2026 and 2025 is detailed below Change in Value Used for Calculating Hedge Ineffectiveness Six Months Ended June 30 Hedging Instruments Hedged Items 2026 2025 Hedging Instruments Interest rate futures contracts - US Treasury futures $15,006 $(39,615) Hedged Items Financial assets at FVTOCI (15,006) 39,615 $- $- Cash flow hedgeThe Company has designated the bank deposits denominated in foreign currency to partially hedge foreign exchange rate risks associated with certain highly probable forecast transactions (capital expenditures). The hedge ratio is adjusted in response to the changes in the financial market and capped at 100%. The foreign currency deposits have maturities of 12 months or less.On the basis of economic relationships, the Company expects that the value of the foreign currency deposits will move in opposite directions to the value of hedged transactions in response to foreign exchange rates movements.The reasons that may cause hedge ineffectiveness in these hedging relationships are mainly driven by the effect of the counterparty s own credit risk on the fair value of foreign currency deposits. No other sources of ineffectiveness have emerged from these hedging relationships during the hedging period. Refer to Note 19 (d) for gain or loss arising from changes in the fair value of hedging instruments and hedged item affects profit or loss, and the amount transferred to initial carrying amount of hedged items.The effect for the six months ended June 30, 2025 is detailed below Hedging Instruments Hedged Items Change in Value Used forCalculating HedgeIneffectiveness Six Months Ended June 30 2026 2025 Hedging Instruments Foreign currency deposits $- $(31,030) Hedged Items Forecast transaction (capital expenditures) $- $31,030 - 18 -Hedges of net investments in foreign operationsTSMC has designated the bank loans denominated in foreign currency as a hedge of net investments in foreign operations to manage its foreign currency risk arising from investment in overseas subsidiaries.The reasons that may cause hedge ineffectiveness in these hedging relationships are mainly driven by the material difference between the notional amount of bank loans denominated in foreign currency and the net investment in foreign operations. No other sources of ineffectiveness have emerged from these hedging relationships during the hedging period. Refer to Note 19 (d) for gain or loss arising from changes in the fair value of hedging instruments.The effect for the six months ended June 30, 2026 and 2025 is detailed below Change in Value Used for Calculating Hedge Ineffectiveness Six Months Ended June 30 Hedging Instruments Hedged Items 2026 2025 Hedging Instruments Bank loans $(274,342) $430,085 Hedged Items Net investments in foreign operations $274,342 $(430,085) 11. NOTES AND ACCOUNTS RECEIVABLE, NET June 30,2026 December 31,2025 June 30,2025 At amortized cost Notes and accounts receivable $426,303,540 $271,835,077 $226,439,255 Less Loss allowance (607,667) (478,617) (399,415) 425,695,873 271,356,460 226,039,840 At FVTOCI 10,066,604 7,695,093 7,367,339 $435,762,477 $279,051,553 $233,407,179 The Company signed a contract with the bank to sell certain accounts receivable without recourse and transaction cost required. These accounts receivable are classified as at FVTOCI because they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.In principle, the payment term granted to customers is due 30 days from the invoice date or 15 days from the end of the month when the invoice is issued. Aside from recognizing impairment loss for credit-impaired accounts receivable, the Company recognizes loss allowance based on the expected credit loss ratio of customers by different risk levels with consideration of factors of historical loss ratios and customers financial conditions, competitiveness and business outlook. For accounts receivable past due over 90 days without collaterals or guarantees, the Company recognizes loss allowance at full amount.- 19 -Aging analysis of notes and accounts receivable June 30,2026 December 31,2025 June 30,2025 Not past due $424,027,929 $263,766,991 $219,476,668 Past due Past due within 30 days 12,342,214 15,762,377 14,329,911 Past due over 31 days 1 802 15 Less Loss allowance (607,667) (478,617) (399,415) $435,762,477 $279,051,553 $233,407,179 All of the Company s accounts receivable classified as at FVTOCI were not past due.Movements of the loss allowance for accounts receivable Six Months Ended June 30 2026 2025 Balance, beginning of period $478,617 $453,009 Provision (Reversal) 129,034 (53,527) Effect of exchange rate changes 16 (67) Balance, end of period $607,667 $399,415 For the six months ended June 30, 2026 and 2025, the changes in loss allowance were mainly due to the variations in the balance of accounts receivable across different risk levels.12. INVENTORIES June 30,2026 December 31,2025 June 30,2025 Finished goods $35,336,897 $29,412,948 $32,076,396 Work in process 283,877,389 188,014,421 198,740,785 Raw materials 40,004,493 45,863,351 47,907,755 Supplies and spare parts 26,305,763 24,818,765 25,468,780 $385,524,542 $288,109,485 $304,193,716 Write-down of inventories to net realizable value (excluding earthquake losses) and reversal of write-down of inventories resulting from the increase in net realizable value were included in the cost of revenue, which were as follows. Please refer to related earthquake losses in Note 34. Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Net inventory losses (reversal of write-down of inventories) $(1,038,801) $103,900 $1,596,001 $2,630,365 - 20 -13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHODAssociates consisted of the following Place of Carrying Amount % of Ownership and Voting Rights Held by the Company Name of Associate Principal Activities Incorporation and Operation June 30,2026 December 31,2025 June 30,2025 June 30,2026 December 31,2025 June 30,2025 Systems on Silicon Manufacturing Company Pte Ltd. (SSMC) Manufacturing and sales of integrated circuits and other semiconductor devices Singapore $11,562,140 $12,419,167 $10,699,204 39% 39% 39% Xintec Inc. (Xintec) Wafer level chip size packaging and wafer level post passivation interconnection service Taoyuan, Taiwan 4,530,659 4,495,255 4,109,929 41% 41% 41% Global Unichip Corporation (GUC) Researching, developing, manufacturing, testing and marketing of integrated circuits Hsinchu, Taiwan 2,033,572 2,952,582 2,753,078 35% 35% 35% Vanguard International Semiconductor Corporation (VIS) Manufacturing, sales, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing and design service of masks Hsinchu, Taiwan - 18,166,267 16,599,832 - 28% 28% $18,126,371 $38,033,271 $34,162,043 In May 2026, the Company disposed of 152,000 thousand common shares of VIS, resulting in a decrease in the Company s shareholding to 19% and the loss of significant influence over VIS. Accordingly, the investment has been reclassified as financial assets at FVTOCI since the date of disposal. The Company recognized a gain on disposal of NT$63,202,285 thousand in the second quarter of 2026. This included the remeasurement of its remaining interest in VIS to a fair value of NT$56,398,783 thousand on the disposal date, compared with its carrying amount, resulting in a non-cash remeasurement gain.The market prices of the associates ownership held by the Company in publicly traded stocks calculated base on the closing price are summarized as follows. The closing price represents the quoted price in active markets, the level 1 fair value measurement. Name of Associate June 30,2026 December 31,2025 June 30,2025 GUC $226,202,676 $99,211,700 $60,927,656 Xintec $31,882,271 $15,468,187 $16,414,084 VIS $- $46,667,928 $50,924,287 14. PROPERTY, PLANT AND EQUIPMENT June 30,2026 December 31,2025 June 30,2025 Assets used by the Company $4,301,710,305 $3,690,642,070 $3,384,953,044 Assets subject to operating leases 1,170,173 1,198,846 1,253,308 $4,302,880,478 $3,691,840,916 $3,386,206,352 - 21 -Assets used by the Company Land and Land Improvements Buildings Machinery and Equipment Office Equipment Equipment under Installation and Construction in Progress Total Cost Balance at January 1, 2026 $13,445,772 $1,191,861,820 $6,236,677,716 $124,264,120 $1,518,996,210 $9,085,245,638 Additions (deductions) 154,610 295,865,520 1,134,555,892 21,269,491 (489,033,285) 962,812,228 Disposals or retirements - (237,807) (79,885,117) (999,408) - (81,122,332) Reclassification - (18,647) - - - (18,647) Effect of exchange rate changes (51,154) 2,983,212 12,132,943 259,755 2,990,421 18,315,177 Balance at June 30, 2026 $13,549,228 $1,490,454,098 $7,303,481,434 $144,793,958 $1,032,953,346 $9,985,232,064 Accumulated depreciation and impairment Balance at January 1, 2026 $603,856 $511,294,326 $4,799,921,522 $82,783,864 $- $5,394,603,568 Additions 9,983 42,430,707 306,832,640 7,689,277 - 356,962,607 Disposals or retirements - (212,592) (77,596,803) (999,233) - (78,808,628) Effect of exchange rate changes 9,205 1,376,813 9,199,177 179,017 - 10,764,212 Balance at June 30, 2026 $623,044 $554,889,254 $5,038,356,536 $89,652,925 $- $5,683,521,759 Carrying amounts at January 1, 2026 $12,841,916 $680,567,494 $1,436,756,194 $41,480,256 $1,518,996,210 $3,690,642,070 Carrying amounts at June 30, 2026 $12,926,184 $935,564,844 $2,265,124,898 $55,141,033 $1,032,953,346 $4,301,710,305 Cost Balance at January 1, 2025 $13,054,161 $959,133,864 $5,852,202,689 $105,434,750 $1,080,284,237 $8,010,109,701 Additions (deductions) 121,919 248,872,681 339,781,756 14,465,762 (24,819,915) 578,422,203 Disposals or retirements - (96,094) (19,975,634) (873,885) - (20,945,613) Reclassification - (1,197,245) - - - (1,197,245) Effect of exchange rate changes (508,290) (32,289,583) (45,682,789) (1,620,552) (13,358,251) (93,459,465) Balance at June 30, 2025 $12,667,790 $1,174,423,623 $6,126,326,022 $117,406,075 $1,042,106,071 $8,472,929,581 Accumulated depreciation and impairment Balance at January 1, 2025 $608,531 $440,369,241 $4,262,882,850 $70,679,950 $790,740 $4,775,331,312 Additions 9,756 34,372,332 315,655,919 6,962,695 - 357,000,702 Disposals or retirements - (69,575) (18,535,834) (869,223) - (19,474,632) Reclassification - (129,702) - - - (129,702) Impairment losses - - 1,670,522 - - 1,670,522 Effect of exchange rate changes (67,973) (3,765,303) (22,007,529) (580,860) - (26,421,665) Balance at June 30, 2025 $550,314 $470,776,993 $4,539,665,928 $76,192,562 $790,740 $5,087,976,537 Carrying amounts at January 1, 2025 $12,445,630 $518,764,623 $1,589,319,839 $34,754,800 $1,079,493,497 $3,234,778,389 Carrying amounts at June 30, 2025 $12,117,476 $703,646,630 $1,586,660,094 $41,213,513 $1,041,315,331 $3,384,953,044 The significant part of the Company s buildings includes main plants, mechanical and electrical power equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20 years, 10 years and 10 years, respectively.- 22 -The Company assesses impairment and recognizes impairment losses or reversals based on the assets' usage status and expected usage plan. These are recorded under other operating income and expenses. For details regarding the impairment losses recognized in the first quarter of 2025 due to earthquake damage that rendered certain assets unusable, please refer to Note 34.Information about capitalized interest is set out in Note 22.15. LEASE ARRANGEMENTSa.Right-of-use assets June 30,2026 December 31,2025 June 30,2025 Carrying amounts Land $50,633,119 $39,873,344 $39,936,860 Buildings 4,229,012 4,005,321 3,874,921 Office equipment 33,074 40,245 46,137 $54,895,205 $43,918,910 $43,857,918 Six Months Ended June 30 2026 2025 Additions to right-of-use assets $14,020,217 $6,147,227 Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Depreciation of right-of-use assets Land $884,030 $728,775 $1,723,303 $1,419,125 Buildings 409,236 287,408 796,959 565,045 Office equipment 5,686 5,982 11,379 11,406 $1,298,952 $1,022,165 $2,531,641 $1,995,576 b.Lease liabilities June 30,2026 December 31,2025 June 30,2025 Carrying amounts Current portion (classified under accrued expenses and other current liabilities) $3,606,345 $3,833,015 $3,723,801 Noncurrent portion 33,276,056 31,594,992 31,363,997 $36,882,401 $35,428,007 $35,087,798 - 23 -Ranges of discount rates for lease liabilities are as follows June 30,2026 December 31,2025 June 30,2025 Land 0.39% 3.50% 0.39% 3.50% 0.39% 3.30% Buildings 0.40% 6.44% 0.40% 6.52% 0.40% 6.52% Office equipment 0.54% 7.13% 0.28% 6.46% 0.28% 6.46% c.Material terms of right-of-use assetsThe Company leases land and buildings mainly for the use of plants and offices with lease terms of 1 to 50 years. The lease contracts for land located in the R.O.C. specify that lease payments will be adjusted every 2 years on the basis of changes in announced land value prices. The Company does not have purchase options to acquire the leasehold land and buildings at the end of the lease terms.d.Other lease information Six Months Ended June 30 2026 2025 Total cash outflow for leases $11,953,537 $2,018,618 16. INTANGIBLE ASSETS Goodwill Technology License Fees Software and System Design Costs Patent and Others Total Cost Balance at January 1, 2026 $5,891,082 $29,702,421 $58,451,384 $13,337,085 $107,381,972 Additions - 591,864 2,871,412 116,521 3,579,797 Disposals or retirements - - (438,311) (61,777) (500,088) Effect of exchange rate changes 64,363 (1,234) 17,014 3,614 83,757 Balance at June 30, 2026 $5,955,445 $30,293,051 $60,901,499 $13,395,443 $110,545,438 Accumulated amortization and impairment Balance at January 1, 2026 $- $24,513,166 $45,879,452 $12,036,739 $82,429,357 Additions - 684,502 3,551,135 211,510 4,447,147 Disposals or retirements - - (427,862) - (427,862) Effect of exchange rate changes - (1,233) 20,227 2,974 21,968 Balance at June 30, 2026 $- $25,196,435 $49,022,952 $12,251,223 $86,470,610 Carrying amounts at January 1, 2026 $5,891,082 $5,189,255 $12,571,932 $1,300,346 $24,952,615 Carrying amounts at June 30, 2026 $5,955,445 $5,096,616 $11,878,547 $1,144,220 $24,074,828 (Continued) - 24 - Goodwill Technology License Fees Software and System Design Costs Patent and Others Total Cost Balance at January 1, 2025 $6,070,864 $28,566,518 $53,279,044 $13,133,519 $101,049,945 Additions - 88,794 2,848,922 295,787 3,233,503 Disposals or retirements - (82,471) (157,972) (53,741) (294,184) Effect of exchange rate changes (490,735) (3,562) (131,973) (14,418) (640,688) Balance at June 30, 2025 $5,580,129 $28,569,279 $55,838,021 $13,361,147 $103,348,576 Accumulated amortization and impairment Balance at January 1, 2025 $- $23,186,748 $40,100,685 $11,479,992 $74,767,425 Additions - 731,359 3,104,746 348,692 4,184,797 Disposals or retirements - (82,471) (155,901) - (238,372) Effect of exchange rate changes - (3,562) (63,193) (5,813) (72,568) Balance at June 30, 2025 $- $23,832,074 $42,986,337 $11,822,871 $78,641,282 Carrying amounts at January 1, 2025 $6,070,864 $5,379,770 $13,178,359 $1,653,527 $26,282,520 Carrying amounts at June 30, 2025 $5,580,129 $4,737,205 $12,851,684 $1,538,276 $24,707,294 (Concluded) The Company s goodwill has been tested for impairment at the end of the annual reporting period and the recoverable amount is determined based on the value in use. The value in use was calculated based on the cash flow forecast from the financial budgets covering the future five-year period, and the Company used annual discount rate of 9.5% in its test of impairment as of December 31, 2025 to reflect the relevant specific risk in the cash-generating unit.17. BONDS PAYABLE June 30,2026 December 31,2025 June 30,2025 Domestic unsecured bonds $554,836,000 $538,388,000 $491,208,000 Overseas unsecured bonds 427,701,200 455,938,000 451,887,000 Less Discounts on bonds payable (2,173,605) (2,292,509) (2,269,558) Less Current portion (165,326,879) (135,805,988) (92,290,586) $815,036,716 $856,227,503 $848,534,856 The Company issued domestic unsecured bonds for the six months ended June 30, 2026. The major terms are as follows - 25 - Issuance Tranche Issuance Period Total Issue Amount Coupon Rate Repayment and Interest Payment NT$ unsecured bonds 115-1 A March 2026 to March 2031 $12,600,000 1.72% Bullet repayment interest payable annually B March 2026 to March 2036 4,600,000 1.78% The same as above 115-2(Green bond) A May 2026 to May 2031 13,700,000 1.80% The same as above B May 2026 to May 2036 4,700,000 1.85% The same as above The Company issued domestic unsecured bonds during the period from July 1, 2026 to August 11, 2026, the major terms are as follows Issuance Tranche Issuance Period Total Issue Amount Coupon Rate Repayment and Interest Payment NT$ unsecured bonds 115-3(Green bond) A July 2026 to July 2031 $14,000,000 2.03% Bullet repayment interest payable annually B July 2026 to July 2036 4,500,000 2.10% The same as above The major terms of overseas unsecured bonds are as follows Issuance Period Total Issue Amount (US$ in Thousands) Coupon Rate Repayment and Interest Payment September 2020 to September 2025 US$1,000,000 0.75% Bullet repayment (callable at any time, in whole or in part, at the relevant redemption price according to relevant agreements) interest payable semi-annually September 2020 to September 2027 750,000 1.00% The same as above September 2020 to September 2030 1,250,000 1.375% The same as above April 2021 to April 2026 1,100,000 1.25% The same as above (Continued) - 26 - Issuance Period Total Issue Amount (US$ in Thousands) Coupon Rate Repayment and Interest Payment April 2021 to April 2028 900,000 1.75% Bullet repayment (callable at any time, in whole or in part, at the relevant redemption price according to relevant agreements) interest payable semi-annually April 2021 to April 2031 1,500,000 2.25% The same as above October 2021 to October 2026 1,250,000 1.75% The same as above October 2021 to October 2031 1,250,000 2.50% The same as above October 2021 to October 2041 1,000,000 3.125% The same as above October 2021 to October 2051 1,000,000 3.25% The same as above April 2022 to April 2027 1,000,000 3.875% The same as above April 2022 to April 2029 500,000 4.125% The same as above April 2022 to April 2032 1,000,000 4.25% The same as above April 2022 to April 2052 1,000,000 4.50% The same as above July 2022 to July 2027 400,000 4.375% The same as above July 2022 to July 2032 600,000 4.625% The same as above (Concluded) 18. LONG-TERM BANK LOANS June 30,2026 December 31,2025 June 30,2025 NT$ unsecured loans $1,049,444 $1,700,833 $2,972,500 JPY unsecured loans 50,260,500 39,253,500 34,087,300 Less Discounts on government grants - (115) (499) Less Current portion (2,082,986) (1,119,722) (1,923,055) $49,226,958 $39,834,496 $35,136,246 Loan content Annual interest rate 1.05% 1.78% 0.79% 1.78% 0.78% 1.78% Maturity date Due by December 2030 Due by December 2030 Due by December 2030 The long-term bank loans of the Company are used for plants setup, procurement of machinery and equipment, and operating capital. The partial long-term bank loans are with preferential interest rates subsidized by the government, and the loans are used to fund capital expenditure qualifying for the subsidy.- 27 -The Company is required to maintain certain financial covenants during the borrowing period, including the annual equity of the subsidiary receiving the loan not to fall below a specific amount its debt-to-equity ratio must not exceed a certain ratio and the ratio of the Company s annual debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) not to exceed a certain multiple.19. EQUITYa.Capital stock June 30,2026 December 31,2025 June 30,2025 Authorized shares (in thousands) 28,050,000 28,050,000 28,050,000 Authorized capital $280,500,000 $280,500,000 $280,500,000 Issued and paid shares (in thousands) 25,932,370 25,932,524 25,932,615 Issued capital $259,323,701 $259,325,245 $259,326,155 The par value of issued common shares is NT$10 per share. A holder of common shares has one vote for each common share and is entitled to receive dividends.The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock options.During the first quarter of 2026, the third quarter of 2025 and the first quarter of 2025, TSMC reclaimed 154 thousand, 91 thousand and 118 thousand employee restricted shares, respectively, that were unvested. On May 12, 2026, November 11, 2025 and May 13, 2025, TSMC s Board of Directors resolved to cancel the aforementioned shares. Subsequently, TSMC completed the registration for share cancellation. Refer to Note 26 for information on RSAs.As of June 30, 2026, TSMC s total issued and outstanding ADSs were 1,062,690 thousand units, representing 5,313,451 thousand common shares.b.Capital surplusThe categories of uses and the sources of capital surplus based on regulations were as follows June 30,2026 December 31,2025 June 30,2025 May be used to offset a deficit, distributed as cash dividends, or transferred to share capital Additional paid-in capital $26,726,501 $26,343,550 $25,586,161 From merger 22,800,434 22,800,434 22,800,434 From convertible bonds 8,891,257 8,891,257 8,891,257 From difference between the consideration received and the carrying amount of the subsidiaries net assets during actual disposal 8,411,566 8,411,566 8,411,566 Donations - donated by shareholders 11,280 11,280 11,275 (Continued) - 28 - June 30,2026 December 31,2025 June 30,2025 May only be used to offset a deficit From share of changes in equities of subsidiaries $4,093,999 $4,093,999 $4,093,849 From share of changes in equities of associates 271,072 1,365,250 1,251,828 Donations - unclaimed dividend 105,684 105,684 78,976 May not be used for any purpose Employee restricted shares 979,046 1,422,581 2,200,919 $72,290,839 $73,445,601 $73,326,265 (Concluded) If such capital surplus is distributed as transferred to share capital, it is limited to a certain percentage of the Company s paid-in capital each year.c.Retained earnings and dividend policyTSMC s Articles of Incorporation provide that, earnings distribution may be made on a quarterly basis after the close of each quarter. Distribution of earnings by way of cash dividends should be approved by TSMC s Board of Directors and reported to TSMC s shareholders in its meeting. When allocating earnings, TSMC shall first estimate and reserve the taxes to be paid, offset its losses, set aside a legal capital reserve at 10% of the remaining earnings (until the accumulated legal capital reserve equals TSMC s paid-in capital), then set aside a special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge. Any balance left over shall be allocated according to relevant laws and TSMC s Articles of Incorporation.TSMC s Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash dividend and or stock dividend. However, distribution of earnings shall be made preferably by way of cash dividend. Distribution of earnings may also be made by way of stock dividend, provided that the ratio for stock dividend shall not exceed 50% of the total distribution.The legal capital reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.Pursuant to existing regulations, the Company is required to set aside an additional special capital reserve equivalent to the net debit balance of the other components of stockholders equity, such as the accumulated balance of the foreign currency translation reserve, the effectiveness of hedges of net investments in foreign operations, unrealized valuation gain or loss from fair value through other comprehensive income financial assets, gain or loss from changes in fair value of hedging instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.- 29 -The appropriations of 2026, 2025 and 2024 quarterly earnings have been approved by TSMC s Board of Directors in its meeting, respectively. The appropriations and cash dividends per share were as follows Third Quarter Second Quarter First Quarter Resolution Date of TSMC s of 2026 of 2026 of 2026 Board of Directors in its November 11, August 11, May 12, meeting 2026 2026 2026 Special capital reserve $- $- $(16,199,411) Cash dividends to shareholders $- $181,526,591 $181,526,591 Cash dividends per share (NT$) $7.00 $7.00 Fourth Quarter Third Quarter Second Quarter First Quarter Resolution Date of TSMC s of 2025 of 2025 of 2025 of 2025 Board of Directors in its February 10, November 11, August 12, May 13, meeting 2026 2025 2025 2025 Special capital reserve $(71,085,085) $(94,270,352) $181,554,848 $- Cash dividends to shareholders $155,595,147 $155,595,147 $129,662,913 $129,663,078 Cash dividends per share (NT$) $6.00 $6.00 $5.00 $5.00 Fourth Quarter Third Quarter Second Quarter First Quarter Resolution Date of TSMC s of 2024 of 2024 of 2024 of 2024 Board of Directors in its February 12, November 12, August 13, May 10, meeting 2025 2024 2024 2024 Special capital reserve $- $- $- $(28,020,822) Cash dividends to shareholders $116,697,300 $116,697,300 $103,721,521 $103,734,517 Cash dividends per share (NT$) $4.50 $4.50 $4.00 $4.00 The quarterly cash dividends per share is affected by the subsequent number of outstanding ordinary shares, the information of the actual payout is available at the Market Observation Post System website.d.OthersChanges in others were as follows Six Months Ended June 30, 2026 Foreign Currency Translation Reserve Unrealized Gain (Loss) on Financial Assets at FVTOCI Gain (Loss) on Hedging Instruments Unearned Stock-Based Employee Compensation Total Balance, beginning of period $(21,019,144) $3,591,483 $1,228,250 $(477,001) $(16,676,412) Exchange differences arising on translation of foreign operations 45,999,019 - - - 45,999,019 Gain (loss) on hedging instruments designated as hedges of net investments in foreign operations (274,342) - - - (274,342) Unrealized gain (loss) on financial assets at FVTOCI Equity instruments - 28,421,434 - - 28,421,434 Debt instruments - (2,027,323) - - (2,027,323) Disposal of investments in equity instruments at FVTOCI - (5,774,189) - - (5,774,189) (Continued) - 30 - Six Months Ended June 30, 2026 Foreign Currency Translation Reserve Unrealized Gain (Loss) on Financial Assets at FVTOCI Gain (Loss) on Hedging Instruments Unearned Stock-Based Employee Compensation Total Cumulative unrealized gain (loss) of debt instruments at FVTOCI transferred to profit or loss due to disposal $- $49,766 $- $- $49,766 Loss allowance adjustments from debt instruments at FVTOCI - 5,828 - - 5,828 Gain (loss) arising on changes in the fair value of hedging instruments and hedged item affects profit or loss - - (42,405) - (42,405) Transferred to initial carrying amount of hedged items - - (460) - (460) Share-based payment expenses recognized - - - 245,093 245,093 Share of other comprehensive income (loss) of associates 95,624 65,087 10,847 - 171,558 Other comprehensive income transferred to profit or loss due to disposal of investments accounted for using equity method (394,251) - - (394,251) Disposal of investments accounted for using equity method - 98,746 (11,367) - 87,379 Balance, end of period $24,406,906 $24,430,832 $1,184,865 $(231,908) $49,790,695 (Concluded) Six Months Ended June 30, 2025 Foreign Currency Translation Reserve Unrealized Gain (Loss) on Financial Assets at FVTOCI Gain (Loss) on Hedging Instruments Unearned Stock-BasedEmployee Compensation Total Balance, beginning of period $40,262,995 $(1,160,176) $1,310,307 $(1,708,079) $38,705,047 Exchange differences arising on translation of foreign operations (225,918,439) - - - (225,918,439) Gain (loss) on hedging instruments designated as hedges of net investments in foreign operations 430,085 - - - 430,085 Unrealized gain (loss) on financial assets at FVTOCI Equity instruments - 1,608,693 - - 1,608,693 Debt instruments - 2,798,417 - - 2,798,417 Disposal of investments in equity instruments at FVTOCI - (155,994) - - (155,994) Cumulative unrealized gain (loss) of debt instruments at FVTOCI transferred to profit or loss due to disposal - 82,845 - - 82,845 Loss allowance adjustments from debt instruments at FVTOCI - (15,809) - - (15,809) Gain (loss) arising on changes in the fair value of hedging instruments and hedged item affects profit or loss - - (72,203) - (72,203) Transferred to initial carrying amount of hedged items - - 9,246 - 9,246 Share-based payment expenses recognized - - - 797,188 797,188 Share of other comprehensive income (loss) of associates (638,946) (113,177) 17,309 - (734,814) Balance, end of period $(185,864,305) $3,044,799 $1,264,659 $(910,891) $(182,465,738) The aforementioned other equity includes the changes in other equities of TSMC and TSMC s share of its subsidiaries and associates.- 31 -20. NET REVENUEa.Disaggregation of revenue from contracts with customers Three Months Ended June 30 Six Months Ended June 30 Product 2026 2025 2026 2025 Wafer $1,073,707,321 $795,434,048 $2,041,819,655 $1,509,462,975 Others 196,672,929 138,357,821 362,664,035 263,582,558 $1,270,380,250 $933,791,869 $2,404,483,690 $1,773,045,533 Three Months Ended June 30 Six Months Ended June 30 Geography 2026 2025 2026 2025 Taiwan $79,315,268 $73,556,401 $164,712,217 $140,049,911 United States 970,894,218 694,211,968 1,818,632,487 1,326,650,754 China 76,730,473 87,328,812 162,572,350 149,551,163 Japan 45,441,332 35,426,165 87,147,314 71,183,847 Europe, the Middle East and Africa 50,604,544 28,706,029 97,298,702 54,233,006 Others 47,394,415 14,562,494 74,120,620 31,376,852 $1,270,380,250 $933,791,869 $2,404,483,690 $1,773,045,533 The Company categorized the net revenue mainly based on the countries where the customers are headquartered. Three Months Ended June 30 Six Months Ended June 30 Platform 2026 2025 2026 2025 High Performance Computing $830,369,159 $561,155,353 $1,525,112,948 $1,054,378,499 Smartphone 283,278,967 249,959,546 577,400,811 483,570,934 Internet of Things 64,054,205 44,298,398 125,644,708 83,021,588 Automotive 53,662,812 43,029,218 100,250,425 86,057,463 Digital Consumer Electronics 12,655,440 14,997,583 24,698,471 26,550,049 Others 26,359,667 20,351,771 51,376,327 39,467,000 $1,270,380,250 $933,791,869 $2,404,483,690 $1,773,045,533 - 32 - Three Months Ended June 30 Six Months Ended June 30 Resolution 2026 2025 2026 2025 2-nanometer $31,934,248 $- $31,934,248 $- 3-nanometer 320,558,574 187,252,107 566,508,701 347,432,294 5-nanometer 350,112,503 289,669,221 701,309,302 544,077,476 7-nanometer 121,857,311 109,051,362 250,707,216 217,247,909 16-nanometer 68,235,397 56,317,381 132,571,277 103,654,228 20-nanometer 965,254 633,072 2,189,225 1,815,646 28-nanometer 67,295,079 54,583,088 136,733,694 107,326,777 40 45-nanometer 26,476,486 25,199,803 50,791,879 45,531,166 65-nanometer 38,817,949 27,827,833 77,080,049 54,378,791 90-nanometer-0.13 micron 17,692,493 17,878,199 34,637,728 35,285,959 0.15 micron and above 29,762,027 27,021,982 57,356,336 52,712,729 Wafer revenue $1,073,707,321 $795,434,048 $2,041,819,655 $1,509,462,975 b.Contract balances June 30,2026 December 31,2025 June 30,2025 January 1, 2025 Contract liabilities (classified under accrued expenses and other current liabilities) $55,852,048 $49,954,384 $56,799,375 $89,435,361 The changes in the contract liability balances primarily result from the timing difference between the satisfaction of performance obligation and the customer s payment.The Company recognized revenue from the beginning balance of contract liability, which amounted to NT$4,465,128 thousand and NT$9,527,546 thousand for the three months ended June 30, 2026 and 2025, respectively and NT$16,171,871 thousand and NT$53,183,111 thousand for the six months ended June 30, 2026 and 2025, respectively.c.Temporary receipts from customers June 30,2026 December 31,2025 June 30,2025 Current portion (classified under accrued expenses and other current liabilities) $141,853,142 $146,559,275 $155,973,239 Noncurrent portion (classified under other noncurrent liabilities) 92,372,004 43,298,936 65,942,034 $234,225,146 $189,858,211 $221,915,273 The Company s temporary receipts from customer are payments made by customers to the Company to retain the Company s capacity. When the terms and conditions set forth in the agreements are subsequently satisfied, the treatment of temporary receipts, either by refund or by accounts receivable offsetting, will be determined by mutual consent.- 33 -21. INTEREST INCOME Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Interest income Cash and cash equivalents $24,087,280 $20,969,288 $47,268,887 $41,229,036 Financial assets at amortized cost 2,970,344 2,462,521 5,782,487 5,109,422 Financial assets at FVTOCI 2,039,504 1,760,189 4,031,323 3,712,852 Government grants receivable and others 947,593 - 1,824,287 - $30,044,721 $25,191,998 $58,906,984 $50,051,310 22. FINANCE COSTS Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Interest expense Corporate bonds $5,214,781 $4,831,318 $10,305,539 $9,782,284 Others 304,844 219,646 592,416 410,901 Less Capitalized interest under property, plant and equipment (2,434,576) (1,359,869) (5,096,044) (3,824,816) $3,085,049 $3,691,095 $5,801,911 $6,368,369 Information about capitalized interest is as follows Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Capitalization rate 1.44%-3.34% 1.32%-3.34% 1.44%-3.34% 1.32%-3.34% 23. OTHER GAINS AND LOSSES, NET Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Loss on disposal of financial assets, net Investments in debt instruments at FVTOCI $(24,352) $(32,605) $(49,766) $(82,845) Gain on disposal of investments accounted for using equity method, net 63,202,285 - 63,202,285 - Loss on disposal of subsidiaries - - - (167,986) (Continued) - 34 - Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Gain (loss) on financial instruments at FVTPL, net $1,606,005 $11,143,784 $(3,508,729) $8,052,726 Reversal of (provision for) expected credit loss of financial assets Investments in debt instruments at FVTOCI (1,321) 4,372 (5,828) 15,809 Financial assets at amortized cost (33,139) 12,488 (45,915) 9,411 Other gains, net 413,135 132,165 270,545 107,520 $65,162,613 $11,260,204 $59,862,592 $7,934,635 (Concluded) 24. INCOME TAXa.Income tax expense recognized in profit or lossIncome tax expense consisted of the following Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Current income tax expense Current tax expense recognized in the current period $163,899,258 $108,759,971 $281,054,812 $179,026,001 Income tax adjustments on prior years (10,641,402) (14,158,210) (10,606,746) (13,878,570) Other income tax adjustments 100,169 91,171 191,109 187,709 153,358,025 94,692,932 270,639,175 165,335,140 Deferred income tax expense (benefit) The origination and reversal of temporary differences (1,971,499) 1,857,930 (433,083) 3,128,206 Operating loss carryforward 4,262,637 (1,009,082) 441,454 (2,758,815) 2,291,138 848,848 8,371 369,391 Income tax expense recognized in profit or loss $155,649,163 $95,541,780 $270,647,546 $165,704,531 b.Income tax examinationThe tax authorities have examined income tax returns of TSMC through 2024. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly.- 35 -25. EARNINGS PER SHARE Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Basic EPS $27.25 $15.36 $49.33 $29.31 Diluted EPS $27.25 $15.36 $49.32 $29.30 EPS is computed as follows Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Basic EPS Net income available to common shareholders of the parent $706,561,938 $398,273,102 $1,279,041,690 $759,837,230 Weighted average number of common shares outstanding used in the computation of basic EPS (in thousands) 25,930,549 25,928,255 25,930,160 25,927,526 Basic EPS (in dollars) $27.25 $15.36 $49.33 $29.31 Diluted EPS Net income available to common shareholders of the parent $706,561,938 $398,273,102 $1,279,041,690 $759,837,230 Weighted average number of common shares outstanding used in the computation of basic EPS (in thousands) 25,930,549 25,928,255 25,930,160 25,927,526 Effects of all dilutive potential common shares (in thousands) 1,222 622 1,384 1,245 Weighted average number of common shares used in the computation of diluted EPS (in thousands) 25,931,771 25,928,877 25,931,544 25,928,771 Diluted EPS (in dollars) $27.25 $15.36 $49.32 $29.30 26. SHARE-BASED PAYMENT ARRANGEMENTS a.Equity-settled share-based payment- RSAsThe RSAs in each year are as follows 2024 RSAs 2023 RSAs 2022 RSAs Resolution Date of TSMC s shareholders in its meeting June 4, 2024 June 6, 2023 June 8, 2022 Resolution Date of TSMC s Board of Directors in its meeting August 13, 2024 February 6, 2024 February 14, 2023 Issuance of stocks (in thousands) 2,353 2,960 2,110 Available for issuance (in thousands) 1,832 - - Eligible employees Executive officers Executive officers Executive officers Grant date Issuance date September 1, 2024 March 1, 2024 March 1, 2023 - 36 -Vesting conditions of the aforementioned arrangement are as follow 1)The RSAs granted to eligible employees can only be vested if the employee remains employed by the Company on the last date of each vesting period during the vesting period, the employee may not breach any agreement with the Company or violate the Company s work rules and certain employee performance metrics and TSMC s business performance metrics are met.2)The maximum percentage of granted RSAs that may be vested each year shall be as follows one-year anniversary of the grant 50% two-year anniversary of the grant 25% and three-year anniversary of the grant 25% provided that the actual percentage and number of the RSAs to be vested in each year will be calculated based on the achievement of TSMC s business performance metrics.3)For eligible executive officers of TSMC The maximum number of RSAs that may be vested in each year will be set as 110%, among which 100% will be subject to a calculation based on TSMC s relative Total Shareholder Return ( TSR , including capital gains and dividends) achievement to determine the number of RSAs to be vested this number will be further subject to a modifier to increase or decrease up to 10% based on the Compensation and People Development Committee s evaluation of TSMC s Environmental, Social, and Governance ( ESG ) achievements. The number of shares so calculated should be rounded down to the nearest integral. TSMC s TSR relative to theTSR of S P 500 IT Index Ratio of Shares to be Vested Above the Index by X percentage points 50% + X * 2.5%, with the maximum of 100% Equal to the Index 50% Below the Index by X percentage points 50% - X * 2.5%, with the minimum of 0% 4)Restrictions imposed on the employees rights in the RSAs before the vesting conditions are fulfilled During each vesting period, no employee granted RSAs, except for inheritance, may sell, pledge, transfer, give to another person, create any encumbrance on, or otherwise dispose of, any shares under the unvested RSAs. Before the vesting conditions are fulfilled, the attendance, proposal rights, speech rights, voting rights and etc. shall be exercised by the engaged trustee custodian on the employee s behalf. Any other shareholder rights including but not limited to the entitlement to any distribution regarding dividends, bonuses and capital reserve, and the subscription right of the new shares issued for any capital increase, are the same as those of holders of common shares of TSMC.- 37 -5)Details of granted RSAs in each year are as follows 2024 RSAs 2023 RSAs 2022 RSAs Number of Shares(In Thousands) Number of Shares(In Thousands) Number of Shares(In Thousands) Balance, beginning of period 1,160 1,480 527 Vested shares - (696) (495) Canceled shares (41) (81) (32) Balance, end of period 1,119 703 - Weighted-average fair value of RSAs (in dollars) $662.42 $364.43 $277.71 The RSAs in each year are measured at fair value at grant date by using the binomial tree approach. Relevant information is as follows 2024 RSAs 2023 RSAs 2022 RSAs September 1, 2024 March 1, 2024 March 1, 2023 Stock price at measurement date (in dollars) $944 $689 $511 Expected price volatility 25.51%-29.87% 24.77%-26.12% 29.34%-32.11% Expected life 1-3 years 1-3 years 1-3 years Risk-free interest rate 1.40% 1.16% 1.06% Refer to Note 27 for the compensation costs of the RSAs recognized by TSMC.b.Cash-settled share-based payment arrangementsThe cash-settled share-based payment arrangements in each year are as follows 2023 Plan 2022 Plan Resolution Date of TSMC s Board of Directors in its meeting February 6, 2024 February 14, 2023 Issuance of units (in thousands) (Note) 550 400 Grant date March 1, 2024 March 1, 2023 Note One unit of the right represents a right to the market value of one TSMC s common share when vested.The vesting conditions and the ratio of units to be vested for key management personnel of the plan are the same as the aforementioned RSAs.The fair value of compensation costs for the cash-settled share-based payment was measured by using binomial tree approach and will be measured at each reporting period until settlement. Relevant information is as follows - 38 - Six Months Ended June 30 2026 2025 2023 Plan 2023 Plan 2022 Plan Stock price at measurement date (in dollars) $2,340 $1,080 $1,080 Expected price volatility 24.34%-31.55% 25.92%-32.48% 25.92%-32.48% Residual life 1 year 1-2 years 1 year Risk-free interest rate 1.45% 1.33% 1.32% Refer to Note 27 for the compensation costs of the cash-settled share-based payment recognized by TSMC. As of June 30, 2026, December 31, 2025 and June 30, 2025, the liabilities under cash-settled share-based payment arrangement amounted to NT$223,588 thousand, NT$330,836 thousand and NT$117,847 thousand, respectively. 27. ADDITIONAL INFORMATION OF EXPENSES BY NATURE Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 a.Depreciation of property, plant and equipment and right-of-use assets Recognized in cost of revenue $183,848,441 $175,806,058 $335,219,243 $337,454,303 Recognized in operating expenses 12,353,434 10,190,757 24,275,005 21,541,975 Recognized in other operating income and expenses 26,978 10,452 47,210 15,916 $196,228,853 $186,007,267 $359,541,458 $359,012,194 b.Amortization of intangible assets Recognized in cost of revenue $1,330,278 $1,321,247 $2,593,654 $2,731,976 Recognized in operating expenses 979,037 729,398 1,853,493 1,452,821 $2,309,315 $2,050,645 $4,447,147 $4,184,797 c.Employee benefits expenses Post-employment benefits Defined contribution plans $1,879,819 $1,661,208 $3,638,271 $3,275,890 Defined benefit plans 58,328 64,229 116,646 126,286 1,938,147 1,725,437 3,754,917 3,402,176 Share-based payments Equity-settled 123,047 344,406 237,026 799,647 Cash-settled 73,075 17,627 360,249 87,589 196,122 362,033 597,275 887,236 Other employee benefits 125,808,414 93,369,582 243,886,330 179,467,144 $127,942,683 $95,457,052 $248,238,522 $183,756,556 (Continued) - 39 - Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Employee benefits expense summarized by function Recognized in cost of revenue $77,105,984 $57,897,171 $149,006,058 $105,903,936 Recognized in operating expenses 50,836,699 37,559,881 99,232,464 77,852,620 $127,942,683 $95,457,052 $248,238,522 $183,756,556 (Concluded) According to TSMC s Articles of Incorporation, TSMC shall allocate compensation to directors and profit sharing bonus to employees of TSMC not more than 0.3% and not less than 1% of annual profits during the period, respectively (among which not less than 30% as profit sharing bonuses to entry-level employees).TSMC accrued profit sharing bonus to employees based on a percentage of net income before income tax, profit sharing bonus to employees and compensation to directors during the period compensation to directors was expensed based on estimated amount payable. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate. Accrued profit sharing bonus to employees is illustrated below Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Profit sharing bonus to employees $35,998,500 $23,896,380 $70,347,290 $45,590,230 TSMC s accrued profit sharing bonus to employees and compensation to directors 2025 and 2024 are illustrated below Years Ended December 31 2025 2024 Profit sharing bonus to employees $103,072,958 $70,296,283 Compensation to directors $156,305 $358,989 There is no significant difference between the aforementioned amounts and the amounts charged against earnings of 2025 and 2024, respectively. The information about the appropriations of TSMC s profit sharing bonus to employees and compensation to directors is available at the Market Observation Post System website.28. GOVERNMENT GRANTSSubsidiaries such as TSMC Arizona, ESMC, JASM and TSMC Nanjing received subsidies from the governments of the United States, Germany, Japan and China, respectively, for local plant setup and operation, which were mainly used to subsidize the purchase costs of property, plant and equipment, as well as partial costs and expenses incurred from plant construction and production. For the six months ended June 30, 2026 and 2025, the Company received a total of NT$590,398 thousand and NT$67,128,197 thousand as government grants, respectively.- 40 -The aforementioned subsidiaries have signed grant agreements with the local governments. The agreements include the construction timelines and other conditions that must be complied with. TSMC Arizona is also eligible to apply for a 25% investment credit for its qualified investments. Effective January 1, 2026, the credit percentage has been increased to 35% of the qualified investment amount following amendments to relevant regulations.29. CASH FLOW INFORMATIONa.Non-cash transactions Six Months Ended June 30 2026 2025 Additions of property, plant and equipment $962,017,661 $578,422,202 Changes in other receivables 1,302,850 22,794,692 Exchange of assets (268,919) - Changes in payables to contractors and equipment suppliers (114,790,916) 18,923,594 Changes in accrued expenses and other current liabilities 3,600,114 11,767,889 Transferred to initial carrying amount of hedged items - (31,030) Capitalized interests (5,096,044) (3,824,816) Payments for acquisition of property, plant and equipment $846,764,746 $628,052,531 b.Reconciliation of liabilities arising from financing activities Non-cash Changes Balance as of January 1,2026 Financing Cash Flow Foreign Exchange Movement Other Changes(Note) Balance as of June 30,2026 Bonds payable $992,033,491 $(19,297,548) $7,443,111 $184,541 $980,363,595 Non-cash Changes Balance as ofJanuary 1,2025 Financing Cash Flow Foreign Exchange Movement Other Changes(Note) Balance as of June 30,2025 Bonds payable $983,752,385 $19,865,180 $(62,988,983) $196,860 $940,825,442 Note Other changes include amortization of bonds payable.- 41 -30. FINANCIAL INSTRUMENTSa.Categories of financial instruments June 30,2026 December 31,2025 June 30,2025 Financial assets FVTPL $16,006,661 $15,132,328 $15,597,401 FVTOCI (Note 1) 291,400,887 192,184,953 178,610,815 Amortized cost (Note 2) 3,991,113,420 3,368,760,773 2,888,647,577 $4,298,520,968 $3,576,078,054 $3,082,855,793 Financial liabilities FVTPL $2,452,333 $3,083,883 $220,702 Hedging financial liabilities 2,563 817 2,384 Amortized cost (Note 3) 2,233,981,763 1,974,710,221 1,923,984,698 $2,236,436,659 $1,977,794,921 $1,924,207,784 Note 1 Including notes and accounts receivable (net), equity and debt investments.Note 2 Including cash and cash equivalents, financial assets at amortized cost, notes and accounts receivable (including related parties), other receivables from related parties, other financial assets, refundable deposits and temporary payments (including those classified under other noncurrent assets).Note 3 Including accounts payable (including related parties), payables to contractors and equipment suppliers, cash dividends payable, accrued expenses and other current liabilities, bonds payable, long-term bank loans, guarantee deposits and other noncurrent liabilities.b.Financial risk management objectivesThe Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit risk and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.The plans for material treasury activities are reviewed by the Audit and Risk Committee and or Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Company must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.c.Market riskThe Company is exposed to the financial market risks, primarily changes in foreign currency exchange rates, interest rates and equity prices. A portion of these risks is hedged.Foreign currency riskSubstantially all the Company s sales are denominated in U.S. dollars and over half of its capital expenditures are denominated in currencies other than NT dollars, primarily in U.S. dollars, Japanese yen and Euros. As a result, any significant fluctuations to its disadvantage in the exchange rates of NT - 42 -dollar against such currencies, in particular a weakening of U.S. dollar against NT dollar, would have an adverse impact on the revenue and operating profit as expressed in NT dollars. The Company uses foreign currency derivative contracts, such as currency forwards or currency swaps, and non-derivative financial instruments, such as foreign currency bank loans and bank deposits, to protect against currency exchange rate risks associated with non-NT dollar-denominated monetary assets and liabilities, net investments in foreign operations, and certain forecasted transactions. These hedges reduce, but do not entirely eliminate, the effect of foreign currency exchange rate movements on the assets and liabilities.Based on a sensitivity analysis performed on the Company s total monetary assets and liabilities for the six months ended June 30, 2026 and 2025, a hypothetical adverse foreign currency exchange rate change of 10% would have decreased its net income by NT$1,429,244 thousand and NT$5,619,499 thousand, respectively, after taking into account hedges and offsetting positions.Interest rate riskThe Company is exposed to interest rate risks primarily in relation to its investment portfolio and outstanding debt. Changes in interest rates affect the interest earned on the Company s cash and cash equivalents and fixed income securities, the fair value of those securities, as well as the interest paid on its debt.The majority of the Company s fixed income investments are fixed-rate securities, which are classified as financial assets at FVTOCI or at amortized cost. For those fixed income investments classified as financial assets at FVTOCI, changes in their fair value are recognized through other comprehensive income for those classified as financial assets at amortized cost, changes in their fair value are not reflected in the carrying amount. Both classifications recognized in profit or loss if the assets are sold. Based on a sensitivity analysis performed on the Company s fixed income investments at the end of the reporting period, interest rates increase of 100 basis points (1.00%) across all maturities would have decreased the Company s other comprehensive income by NT$4,515,149 thousand and NT$3,865,424 thousand for the six months ended June 30, 2026 and 2025, respectively.The majority of the Company s debt is fixed-rate and measured at amortized cost and as such, changes in interest rates would not affect future cash flows or the carrying amount.The Company has entered and may in the future enter into interest rate derivatives to partially hedge the interest rate risk on its fixed income investments and anticipated debt issuance. However, these hedges can offset only a limited portion of the financial impact from movements in interest rates.Other price riskThe Company is exposed to convertible preferred stocks, equity instrument investments, and other investments price risk arising from financial assets at FVTPL and FVTOCI. Assuming a hypothetical decrease of 10% in prices of the investments mentioned above at the end of the reporting period, the net income would have decreased by NT$1,262,423 thousand and NT$1,106,520 thousand for the six months ended June 30, 2026 and 2025, respectively, and the other comprehensive income would have decreased by NT$7,252,177 thousand and NT$1,031,714 thousand for the six months ended June 30, 2026 and 2025, respectively.d.Credit risk managementCredit risk refers to the risk that a counterparty may default on its contractual obligations resulting in financial losses to the Company. The Company is exposed to credit risks from operating activities, primarily accounts receivable, and from investing activities, primarily bank deposits, fixed-income - 43 -investments and other financial instruments. Credit risk is managed separately for business related and financial related exposures. As of the end of the reporting period, the Company s maximum credit risk exposure is equal to the carrying amount of financial assets.Business related credit riskThe Company s accounts receivable are from its customers worldwide. The majority of the Company s outstanding accounts receivable are not covered by collaterals or guarantees. While the Company has procedures to monitor and manage credit risk exposure on accounts receivable, there is no assurance such procedures will effectively eliminate losses resulting from its credit risk. This risk is heightened during periods when economic conditions worsen.As of June 30, 2026, December 31, 2025 and June 30, 2025, the Company s ten largest customers accounted for 84%, 84% and 83% of accounts receivable, respectively. The Company considers the concentration of credit risk for the remaining accounts receivable not material.Financial credit riskThe Company mitigates its financial credit risk by selecting counterparties with investment grade credit ratings and by limiting the exposure to any single counterparty. The Company regularly monitors and reviews the limit applied to counterparties and adjusts the limit according to market conditions and the credit standing of the counterparties.The objective of the Company s investment policy is to achieve a return that will allow the Company to preserve principal and support liquidity requirements. The policy generally requires securities to be investment grade and limits the amount of credit exposure to any single issuer. The Company assesses whether there has been a significant increase in credit risk in the invested securities since initial recognition by reviewing changes in external credit ratings, financial market conditions and material information of the issuers.The Company assesses the 12-month expected credit loss and lifetime expected credit loss based on the probability of default and loss given default provided by external credit rating agencies. The current credit risk assessment policies are as follows Category Description Basis for Recognizing Expected Credit Loss Expected Credit Loss Ratio Performing Credit rating is investment grade on valuation date 12 months expected credit loss 0-0.1% Doubtful Credit rating is non-investment grade on valuation date Lifetime expected credit loss-not credit impaired - In default Credit rating is CC or below on valuation date Lifetime expected credit loss-credit impaired - Write-off There is evidence indicating that the debtor is in severe financial difficulty and the Company has no realistic prospect of recovery Amount is written off - For the six months ended June 30, 2026 and 2025, the expected credit loss increased NT$54,892 thousand and decreased NT$43,136 thousand, respectively. The changes were mainly due to adjusted investment portfolio and fluctuations in exchange rates.e.Liquidity risk managementThe objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business operations over the next 12 months. The Company manages its liquidity risk by maintaining - 44 -adequate cash and cash equivalents, financial assets at FVTOCI-current, financial assets at amortized cost-current and sufficient cost-efficient funding.The table below summarizes the maturity profile of the Company s financial liabilities based on contractual undiscounted payments, including principal and interest. Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total June 30, 2026 Non-derivative financial liabilities Accounts payable (including related parties) $110,625,817 $- $- $- $110,625,817 Payables to contractors and equipment suppliers 290,850,560 - - - 290,850,560 Accrued expenses and other current liabilities 362,537,091 - - - 362,537,091 Bonds payable 184,699,582 265,557,973 262,031,632 459,849,681 1,172,138,868 Long-term bank loans 4,084,168 18,715,107 30,895,569 - 53,694,844 Lease liabilities (including those classified under accrued expenses and other current liabilities) (Note) 4,211,100 6,862,715 5,991,018 23,894,625 40,959,458 Others - 87,346,861 4,890,624 7,841,849 100,079,334 957,008,318 378,482,656 303,808,843 491,586,155 2,130,885,972 Derivative financial instruments Forward exchange contracts Outflows 198,806,500 - - - 198,806,500 Inflows (196,733,450) - - - (196,733,450) 2,073,050 - - - 2,073,050 $959,081,368 $378,482,656 $303,808,843 $491,586,155 $2,132,959,022 Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total December 31, 2025 Non-derivative financial liabilities Accounts payable (including related parties) $84,330,325 $- $- $- $84,330,325 Payables to contractors and equipment suppliers 177,730,306 - - - 177,730,306 Accrued expenses and other current liabilities 344,034,962 - - - 344,034,962 Bonds payable 155,291,157 310,496,642 209,405,344 512,306,851 1,187,499,994 Long-term bank loans 1,530,435 11,349,870 29,477,805 - 42,358,110 Lease liabilities (including those classified under accrued expenses and other current liabilities) (Note) 4,381,382 6,573,701 5,804,479 22,709,939 39,469,501 Others - 35,208,665 6,060,461 8,333,478 49,602,604 767,298,567 363,628,878 250,748,089 543,350,268 1,925,025,802 Derivative financial instruments Forward exchange contracts Outflows 279,876,485 - - - 279,876,485 Inflows (276,880,302) - - - (276,880,302) 2,996,183 - - - 2,996,183 $770,294,750 $363,628,878 $250,748,089 $543,350,268 $1,928,021,985 - 45 - Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total June 30, 2025 Non-derivative financial liabilities Accounts payable (including related parties) $84,771,710 $- $- $- $84,771,710 Payables to contractors and equipment suppliers 161,416,417 - - - 161,416,417 Accrued expenses and other current liabilities 380,758,339 - - - 380,758,339 Bonds payable 110,351,218 353,568,731 149,283,960 514,258,504 1,127,462,413 Long-term bank loans 2,263,986 5,439,391 22,578,388 8,106,360 38,388,125 Lease liabilities (including those classified under accrued expenses and other current liabilities) (Note) 4,212,515 6,235,143 5,555,966 22,816,058 38,819,682 Others - 57,576,074 5,633,693 8,555,432 71,765,199 743,774,185 422,819,339 183,052,007 553,736,354 1,903,381,885 Derivative financial instruments Forward exchange contracts Outflows 131,012,725 - - - 131,012,725 Inflows (131,831,271) - - - (131,831,271) (818,546) - - - (818,546) $742,955,639 $422,819,339 $183,052,007 $553,736,354 $1,902,563,339 Note Information about the maturity analysis for lease liabilities more than 5 years 5-10 Years 10-15 Years 15-20 Years More Than 20 Years Total June 30, 2026 Lease liabilities $11,400,063 $7,846,043 $4,096,005 $552,514 $23,894,625 December 31, 2025 Lease liabilities $10,974,203 $7,513,615 $4,002,476 $219,645 $22,709,939 June 30, 2025 Lease liabilities $10,904,753 $7,502,665 $4,081,986 $326,654 $22,816,058 f.Fair value of financial instruments1)Fair value measurements recognized in the consolidated balance sheetsFair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) and Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). - 46 -The timing of transfers between levels within the fair value hierarchy is at the end of reporting period.2)Fair value of financial instruments that are measured at fair value on a recurring basisFair value hierarchyThe following table presents the Company s financial assets and liabilities measured at fair value on a recurring basis June 30, 2026 Level 1 Level 2 Level 3 Total Financial assets at FVTPL Convertible preferred stocks $- $- $13,813,964 $13,813,964 Mutual funds - - 1,966,322 1,966,322 Convertible bonds - - 223,426 223,426 Forward exchange contracts - 2,949 - 2,949 $- $2,949 $16,003,712 $16,006,661 Financial assets at FVTOCI Investments in debt instruments Corporate bonds $- $104,967,103 $- $104,967,103 Agency mortgage-backed securities - 50,118,652 - 50,118,652 Government bonds Agency bonds 27,470,168 237,642 - 27,707,810 Asset-backed securities - 7,888,500 - 7,888,500 Investments in equity instruments Publicly traded stocks 79,117,839 - - 79,117,839 Non-publicly traded equity investments - - 11,534,379 11,534,379 Notes and accounts receivable, net - 10,066,604 - 10,066,604 $106,588,007 $173,278,501 $11,534,379 $291,400,887 Financial liabilities at FVTPL Forward exchange contracts $- $2,452,333 $- $2,452,333 Hedging financial liabilities Fair value hedges Interest rate futures contracts $2,563 $- $- $2,563 December 31, 2025 Level 1 Level 2 Level 3 Total Financial assets at FVTPL Convertible preferred stocks $- $- $13,608,819 $13,608,819 Mutual funds - - 1,297,533 1,297,533 Simple agreement for future equity - - 125,776 125,776 Forward exchange contracts - 100,200 - 100,200 $- $100,200 $15,032,128 $15,132,328 (Continued) - 47 - December 31, 2025 Level 1 Level 2 Level 3 Total Financial assets at FVTOCI Investments in debt instruments Corporate bonds $- $88,636,098 $- $88,636,098 Agency mortgage-backed securities - 49,150,771 - 49,150,771 Government bonds Agency bonds 25,437,560 - - 25,437,560 Asset-backed securities - 8,512,188 - 8,512,188 Investments in equity instruments Non-publicly traded equity investments - - 8,797,170 8,797,170 Publicly traded stocks 3,956,073 - - 3,956,073 Notes and accounts receivable, net - 7,695,093 - 7,695,093 $29,393,633 $153,994,150 $8,797,170 $192,184,953 Financial liabilities at FVTPL Forward exchange contracts $- $3,083,883 $- $3,083,883 Hedging financial liabilities Fair value hedges Interest rate futures contracts $817 $- $- $817 (Concluded) June 30, 2025 Level 1 Level 2 Level 3 Total Financial assets at FVTPL Convertible preferred stocks $- $- $12,617,717 $12,617,717 Forward exchange contracts - 1,765,904 - 1,765,904 Mutual funds - - 1,097,164 1,097,164 Simple agreement for future equity - - 116,616 116,616 $- $1,765,904 $13,831,497 $15,597,401 Financial assets at FVTOCI Investments in debt instruments Corporate bonds $- $80,137,883 $- $80,137,883 Agency mortgage-backed securities - 46,016,814 - 46,016,814 Government bonds Agency bonds 23,072,157 100,934 - 23,173,091 Asset-backed securities - 9,019,262 - 9,019,262 Investments in equity instruments Non-publicly traded equity investments - - 7,605,736 7,605,736 Publicly traded stocks 5,290,690 - - 5,290,690 Notes and accounts receivable, net - 7,367,339 - 7,367,339 $28,362,847 $142,642,232 $7,605,736 $178,610,815 (Continued) - 48 - June 30, 2025 Level 1 Level 2 Level 3 Total Financial liabilities at FVTPL Forward exchange contracts $- $220,702 $- $220,702 Hedging financial liabilities Fair value hedges Interest rate futures contracts $2,384 $- $- $2,384 (Concluded) Reconciliation of Level 3 fair value measurements of financial assetsThe financial assets measured at Level 3 fair value were financial assets at FVTPL and equity investments classified as financial assets at FVTOCI. Reconciliations for the six months ended June 30, 2026 and 2025 are as follows Six Months Ended June 30 2026 2025 Balance, beginning of period $23,829,298 $23,022,726 Additions 1,313,195 386,930 Recognized in profit or loss 301,612 204,315 Recognized in other comprehensive income or loss 2,297,453 327,837 Disposals and proceeds from return of capital of investments (418,574) (4,976) Transfers out of level 3 (Note) (158,005) - Effect of exchange rate changes 373,112 (2,499,599) Balance, end of period $27,538,091 $21,437,233 Note The transfer from level 3 to level 1 is because quoted prices (unadjusted) in active markets data became available for the equity investments.Valuation techniques and assumptions used in Level 2 fair value measurementThe fair values of financial assets and financial liabilities are determined as follows The fair values of debt investments designated at FVTOCI are determined by market prices provided by third party pricing services, or measured using inputs that are observable either directly or indirectly. The fair values of forward exchange contracts are measured using forward rates and discount rates derived from quoted market prices. The fair value of accounts receivable classified as at FVTOCI is determined by the present value of future cash flows based on the discount rate that reflects the credit risk of counterparties.- 49 -Valuation techniques and assumptions used in Level 3 fair value measurementThe fair values of financial assets at FVTPL and non-publicly traded equity investments are mainly determined by using the asset approach, income approach or market approach. The asset approach takes into account the net asset value measured at the fair value. On June 30, 2026, December 31, 2025 and June 30, 2025, the Company uses unobservable inputs derived from discount for lack of marketability of 10%. When other inputs remain equal, the fair value will decrease by NT$72,498 thousand, NT$64,123 thousand and NT$55,189 thousand, respectively, if discounts for lack of marketability increase by 1%.The income approach utilizes discounted cash flows to determine the present value of the expected future economic benefits that will be derived from the investment. On June 30, 2026, December 31, 2025 and June 30, 2025, the Company mainly uses unobservable inputs, which include expected returns, discount rate of 9.4%, 8.9% and 9.0%, respectively, and discount for lack of marketability of 20%. With other inputs remain equal, if discount rate increases by 1%, the fair value will decrease by NT$1,486,895 thousand, NT$1,812,408 thousand and NT$510,947 thousand, respectively if discount for lack of marketability increases by 1%, the fair value will decrease by NT$118,417 thousand, NT$133,626 thousand and NT$136,055 thousand, respectively.For the remaining few investments, the market approach is used to arrive at their fair values, for which the recent financing activities of investees, the market transaction prices of the similar companies and market conditions are considered.3)Fair value of financial instruments that are not measured at fair valueExcept as detailed in the following table, the Company considers that the carrying amounts of financial instruments in the consolidated financial statements that are not measured at fair value approximate their fair values.Fair value hierarchyThe table below sets out the fair value hierarchy for the Company s financial assets and liabilities which are not required to be measured at fair value June 30, 2026 Carrying Fair Value Amount Level 1 Level 2 Total Financial assets Financial assets at amortized costs Corporate bonds $273,703,927 $- $273,692,247 $273,692,247 Government bonds Agency bonds 4,282,693 4,286,912 - 4,286,912 Commercial paper 18,276,682 - 18,271,332 18,271,332 $296,263,302 $4,286,912 $291,963,579 $296,250,491 Financial liabilities Financial liabilities at amortized costs Bonds payable $980,363,595 $- $925,119,959 $925,119,959 - 50 - December 31, 2025 Carrying Fair Value Amount Level 1 Level 2 Total Financial assets Financial assets at amortized costs Corporate bonds $231,239,832 $- $232,259,166 $232,259,166 Government bonds Agency bonds 4,213,491 4,284,607 - 4,284,607 $235,453,323 $4,284,607 $232,259,166 $236,543,773 Financial liabilities Financial liabilities at amortized costs Bonds payable $992,033,491 $- $939,475,287 $939,475,287 June 30, 2025 Carrying Fair Value Amount Level 1 Level 2 Total Financial assets Financial assets at amortized costs Corporate bonds $176,223,968 $- $177,126,610 $177,126,610 Commercial paper 6,203,293 - 6,209,445 6,209,445 Government bonds Agency bonds 3,901,492 3,950,111 - 3,950,111 $186,328,753 $3,950,111 $183,336,055 $187,286,166 Financial liabilities Financial liabilities at amortized costs Bonds payable $940,825,442 $- $876,591,412 $876,591,412 Valuation techniques and assumptions used in Level 2 fair value measurementThe fair values of financial assets and liabilities at amortized cost are determined by market prices provided by third party pricing services, or measured using inputs that are observable either directly or indirectly.31. RELATED PARTY TRANSACTIONSIntercompany balances and transactions between TSMC and its subsidiaries, which are related parties of TSMC, have been eliminated upon consolidation therefore, those items are not disclosed in this note. The following is a summary of significant transactions between the Company and other related parties - 51 -a.Related party name and categories Related Party Name Related Party Categories GUC and its subsidiaries (GUC) Associates VIS and its subsidiaries (VIS) Associates (Note) SSMC Associates Xintec Associates TSMC Charity Foundation Other related parties TSMC Education and Culture Foundation Other related parties Note VIS has ceased to be an associate since May 19, 2026. Please refer to Note 13 for the related assessment. The same basis also applies to the additional disclosures.b.Net revenue Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Item Related Party Categories Sales revenue Associates $11,277,014 $6,490,996 $23,981,480 $14,227,468 c.Purchases Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Related Party Categories Associates $1,493,363 $1,226,904 $2,993,215 $2,289,320 d.Receivables from related parties June 30,2026 December 31,2025 June 30,2025 Item Related Party Name Receivables from related parties GUC $3,640,053 $1,651,010 $1,047,087 VIS 1,409,539 945,224 1,128,563 Others 110,947 143,266 102,142 $5,160,539 $2,739,500 $2,277,792 Other receivables from related parties SSMC $928,792 $307 $338 Xintec 280,221 - 280,221 VIS - 267,808 2,287,413 $1,209,013 $268,115 $2,567,972 - 52 -e.Payables to related parties June 30,2026 December 31,2025 June 30,2025 Item Related Party Name Payables to related parties Xintec $1,146,005 $1,298,672 $788,255 SSMC 494,694 374,088 361,668 Others 95,038 105,970 126,615 $1,735,737 $1,778,730 $1,276,538 f.Others Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Item Related Party Categories Manufacturing expenses Associates $1,672,650 $1,215,870 $3,095,499 $2,278,294 The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, price and terms were determined in accordance with mutual agreements.The Company leased factory and office from associates. The lease terms and prices were both determined in accordance with mutual agreements. The rental expenses were paid to associates monthly the related expenses were both classified under manufacturing expenses.g.Compensation of key management personnelThe compensation to directors and other key management personnel were as follows Three Months Ended June 30 Six Months Ended June 30 2026 2025 2026 2025 Short-term employee benefits $2,793,708 $2,197,290 $5,081,203 $3,638,569 Post-employment benefits 862 959 1,581 1,960 Share-based payments 92,065 338,000 170,816 790,154 $2,886,635 $2,536,249 $5,253,600 $4,430,683 The compensation to directors and other key management personnel were determined by the Compensation and People Development Committee of TSMC in accordance with the individual performance and market trends.- 53 -32. PLEDGED ASSETSThe Company provided negotiable certificates of deposit and time deposits recorded in other financial assets as collateral mainly for court deposit and building lease agreements. As of June 30, 2026, December 31, 2025 and June 30, 2025, the aforementioned other financial assets amounted to NT$381,814 thousand, NT$129,385 thousand and NT$120,669 thousand, respectively.33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTSSignificant contingent liabilities and unrecognized commitments of the Company as of the end of the reporting period, excluding those disclosed in other notes, were as follows a.Under a technical cooperation agreement with Industrial Technology Research Institute, the R.O.C. Government or its designee approved by TSMC can use up to 35% of TSMC s capacity provided TSMC s outstanding commitments to its customers are not prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one year prior notice. As of the end of reporting period, the R.O.C. Government did not invoke such right.b.Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in Singapore. TSMC s equity interest in SSMC was 32%. Nevertheless, in September 2006, Philips spun-off its semiconductor subsidiary which was renamed as NXP B.V. Further, TSMC and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, TSMC and NXP B.V. currently own approximately 39% and 61% of the SSMC shares, respectively. TSMC and NXP B.V. are required, in the aggregate, to purchase at least 70% of SSMC s capacity, but TSMC alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. There was no default from the aforementioned commitment as of the end of reporting period.c.In February 2025, Longitude Licensing Ltd. and Marlin Semiconductor Limited (collectively, Marlin ) filed complaints with the U.S. International Trade Commission ( ITC ) and the U.S. District Court for the Eastern District of Texas alleging that TSMC and its customers infringe five U.S. patents. The ITC instituted an investigation on March 21, 2025 and the lawsuit in the Eastern District Court for Texas was statutorily stayed on April 23, 2025 pending the ITC investigation. Marlin dropped 3 of the 5 asserted patents in the ITC investigation before the evidentiary hearing in February 2026. The ITC investigation was terminated on August 6, 2026, following the parties' joint motion filed on July 13, 2026.d.TSMC entered into long-term purchase agreements of materials and supplies, manufacturing services and agreements of waste disposal with multiple suppliers. The relative minimum fulfillment quantity and price are specified in the agreements.e.TSMC entered into long-term purchase agreement of equipment and maintenance service. The relative fulfillment period, quantity and price are specified in the agreement.f.TSMC entered into long-term energy purchase agreements with multiple suppliers. The relative fulfillment period, quantity and price are specified in the agreements.g.Amounts available under unused letters of credit as of June 30, 2026, December 31, 2025 and June 30, 2025 were NT$1,077,232 thousand, NT$438,643 thousand and NT$435,852 thousand, respectively.- 54 -h.The Company entrusted financial institutions to provide performance guarantees mainly for import and export of goods, lease agreement and apply for subsidy. As of June 30, 2026, December 31, 2025 and June 30, 2025, the aforementioned guarantee amounted to NT$35,125,511 thousand, NT$23,375,215 thousand, and NT$16,695,014 thousand, respectively.34. SIGNIFICANT LOSS FROM DISASTERIn January 2025, several earthquakes struck Taiwan. The resulting damage was mostly to inventories, machinery and equipment. In the first quarter of 2025, the Company recognized related earthquake losses to be approximately NT$5.3 billion, net of insurance claim. Such losses were primarily included in the cost of revenue and other operating income and expenses in net amounts.On April 3, 2024, an earthquake struck Taiwan. The resulting damage was mostly to inventories, plant facilities and machinery and equipment. In the second quarter of 2024, the Company recognized related earthquake losses to be approximately NT$3 billion, net of insurance claim. Such losses were primarily included in the cost of revenue and other operating income and expenses in net amounts. The relevant insurance claims were finalized in the second quarter of 2026. The cumulative net impact of the earthquake, representing total losses net of insurance claims, resulted in a gain of approximately NT$4.3 billion.35. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIESThe following information was summarized according to the foreign currencies other than the functional currency of the Company. The exchange rates disclosed were used to translate the foreign currencies into the functional currency. The significant financial assets and liabilities denominated in foreign currencies were as follows Foreign Currencies(In Thousands) Exchange Rate (Note) Carrying Amount(In Thousands) June 30, 2026 Financial assets Monetary items USD $21,707,309 31.918 $692,853,878 EUR 2,654,898 36.489 96,874,562 JPY 198,453,684 0.1971 39,115,221 Financial liabilities Monetary items USD 15,806,554 31.918 504,513,586 EUR 2,488,826 36.489 90,814,783 JPY 191,712,415 0.1971 37,786,517 (Continued) - 55 - Foreign Currencies(In Thousands) Exchange Rate (Note) Carrying Amount(In Thousands) December 31, 2025 Financial assets Monetary items USD $20,847,509 31.444 $655,529,057 EUR 1,110,573 37.003 41,094,543 JPY 132,541,455 0.2013 26,680,595 Financial liabilities Monetary items USD 12,688,419 31.444 398,974,654 EUR 1,016,157 37.003 37,600,861 JPY 131,018,646 0.2013 26,374,053 June 30, 2025 Financial assets Monetary items USD 16,150,439 29.154 470,849,904 EUR 1,553,439 34.215 53,150,932 JPY 141,178,705 0.2017 28,475,745 Financial liabilities Monetary items USD 14,372,499 29.154 419,015,840 EUR 1,419,584 34.215 48,571,078 JPY 131,844,170 0.2017 26,592,969 (Concluded) Note Except as otherwise noted, exchange rate represents the number of NT dollar for which one foreign currency could be exchanged.Please refer to the consolidated statements of comprehensive income for the total of realized and unrealized foreign exchange gain and loss for the three months and the six months ended June 30, 2026 and 2025, respectively. Since there were varieties of foreign currency transactions and functional currencies within the subsidiaries of the Company, the Company was unable to disclose foreign exchange gain (loss) towards each foreign currency with significant impact.36. ADDITIONAL DISCLOSURESFollowing are the additional disclosures required by the Securities and Futures Bureau for TSMC a.Financings provided See Table 1 attached - 56 -b.Endorsement guarantee provided See Table 2 attached c.Significant marketable securities held (excluding investments in subsidiaries and associates) See Table 3 attached d.Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital See Table 4 attached e.Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital See Table 5 attached f.Others The business relationship between the parent and the subsidiaries and significant transactions between them See Table 6 attached g.Names, locations, and related information of investees over which TSMC exercises significant influence (excluding information on investment in mainland China) See Table 7 attached h.Information on investment in mainland China1)The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee See Table 8 attached.2)Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports See Table 6 attached.37. OPERATING SEGMENTS INFORMATIONTSMC s chief operating decision makers periodically review operating results, focusing on operating income generated by foundry segment. Operating results are used for resource allocation and or performance assessment. As a result, the Company has only one operating segment, the foundry segment. The foundry segment engages mainly in the manufacturing, sales, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks.The basis for the measurement of income from operations is the same as that for the preparation of financial statements. Please refer to the consolidated statements of comprehensive income for the related segment revenue and operating results.- 57 -TABLE 1Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries FINANCINGS PROVIDED FOR THE SIX MONTHS ENDED JUNE 30, 2026(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) No. Financing Company Counterparty Financial Statement Account Related Party Maximum Balance for the Period (Foreign Currencies in Thousands) (Note 3) Ending Balance (Foreign Currencies in Thousands) (Note 3) Amount Actually Drawn(Foreign Currencies in Thousands) Interest Rate Nature for Financing Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company(Notes 1 and 2) Financing Company s Total Financing Amount Limits (Notes 1 and 2) Item Value 1 TSMC China TSMC Nanjing Other receivables from related parties Yes $15,972,180 $- $- - The need for short-term financing $- Operating capital $- - $- $134,102,630 $134,102,630 (RMB3,400,000) 2 TSMC Development TSMC Washington Other receivables from related parties Yes 3,830,160 3,830,160 2,872,620 - The need for short-term financing - Operating capital - - - 34,650,975 34,650,975 (US$ 120,000) (US$ 120,000) (US$ 90,000) Note 1 The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. Note 2 The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. Note 3 The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. - 58 -TABLE 2Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries ENDORSEMENTS GUARANTEES PROVIDEDFOR THE SIX MONTHS ENDED JUNE 30, 2026(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) No. Endorsement Guarantee Provider Guaranteed Party Limits on Endorsement Guarantee Amount Provided to Each Guaranteed Party(Note 1) Maximum Balance for the Period(Foreign Currencies in Thousands)(Note 2) Ending Balance(Foreign Currencies in Thousands)(Note 2) Amount Actually Drawn(US$ in Thousands) Amount of Endorsement Guarantee Collateralized by Properties Ratio of Accumulated Endorsement Guarantee to Net Equity per Latest Financial Statements Maximum Endorsement Guarantee Amount Allowable(Notes 1 and 2) GuaranteeProvided byParent Company GuaranteeProvided byA Subsidiary GuaranteeProvided to Subsidiaries in Mainland China Name Nature of Relationship 0 TSMC TSMC North America Subsidiary $2,573,007,334 $2,656,002 $2,656,002 $2,656,002 $- 0.04% $2,573,007,334 Yes No No (US$ 83,213) (US$ 83,213) (US$ 83,213) TSMC Global Subsidiary 2,573,007,334 207,467,000 172,357,200 172,357,200 - 2.68% 2,573,007,334 Yes No No (US$ 6,500,000) (US$ 5,400,000) (US$ 5,400,000) TSMC Arizona Subsidiary 2,573,007,334 478,480,695 478,480,695 349,217,008 - 7.44% 2,573,007,334 Yes No No (US$ 14,990,936) (US$ 14,990,936) (US$ 10,941,068) Note 1 TSMC's individual endorsement guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent (40%) of TSMC s net worth. Note 2 The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. - 59 -TABLE 3Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries MARKETABLE SECURITIES HELDJune 30, 2026(Amounts in Thousands of New Taiwan Dollars) Held Company Name Marketable Securities Type and Name Relationship with the Company Financial Statement Account June 30, 2026 Note Shares Units(In Thousands) Carrying Value Percentage ofOwnership (%) Fair Value TSMC Publicly traded stocks VIS - Financial assets at fair value through other comprehensive income 354,709 $76,617,214 19 $76,617,214 - 60 -TABLE 4Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITALFOR THE SIX MONTHS ENDED JUNE 30, 2026(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) Company Name Related Party Nature of Relationships Transaction Details Abnormal Transaction Notes Accounts Payable or Receivable Note Purchases Sales Amount(Foreign Currencies in Thousands) % to Total Payment Terms Unit Price Payment Terms Ending Balance(Foreign Currencies in Thousands) % to Total TSMC TSMC North America Subsidiary Sales $1,869,330,193 79 Net 30 days from invoice date (Note) - - $341,618,903 83 JASM Subsidiary Sales 1,228,688 - Net 30 days from the end of the month of when invoice is issued - - 727,010 - TSMC Arizona Subsidiary Sales 167,791 - Net 30 days from the end of the month of when invoice is issued - - 42,023 - GUC Associate Sales 4,181,760 - Net 30 days from invoice date - - 578,210 - VIS Associate Sales 966,094 - Net 30 days from the end of the month of when invoice is issued - - 1,409,539 - SSMC Associate Sales 151,613 - Net 30 days from the end of the month of when invoice is issued - - 80,296 - TSMC Arizona Subsidiary Purchases 84,003,238 43 Net 30 days from the end of the month of when invoice is issued - - (15,468,597) 12 TSMC Nanjing Subsidiary Purchases 42,332,694 22 Net 30 days from the end of the month of when invoice is issued - - (7,120,538) 6 TSMC China Subsidiary Purchases 13,916,721 7 Net 30 days from the end of the month of when invoice is issued - - (2,456,679) 2 TSMC Washington Indirect subsidiary Purchases 4,078,253 2 Net 30 days from the end of the month of when invoice is issued - - (824,830) 1 SSMC Associate Purchases 2,670,818 1 Net 30 days from the end of the month of when invoice is issued - - (494,694) - VIS Associate Purchases 322,397 - Net 30 days from the end of the month of when invoice is issued - - - - TSMC North America GUC Associate of TSMC Sales 18,573,443 1 Net 30 days from invoice date - - 3,061,843 1 (US$587,836) (US$95,928) VisEra Tech Xintec Associate of TSMC Sales 108,570 2 Net 60 days from the end of the month of when invoice is issued - - 30,651 3 Note The tenor is determined by the payment terms granted to its clients by TSMC North America.- 61 -TABLE 5Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL June 30, 2026(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) Company Name Related Party Nature of Relationships Ending Balance(Foreign Currencies in Thousands) Turnover Days (Note 1) Overdue Amounts Received in Subsequent Period Allowance forBad Debts Amount Action Taken TSMC TSMC North America Subsidiary $345,736,055 27 $- - $- $- JASM Subsidiary 728,553 Note 2 - - - - VisEra Tech Subsidiary 645,492 Note 2 - - - - VIS Associate 1,409,539 Note 2 - - - - SSMC Associate 1,009,088 Note 2 - - - - GUC Associate 578,210 21 - - - - Xintec Associate 280,221 Note 2 - - - - TSMC North America GUC Associate of TSMC 3,061,843 21 - - - - (US$ 95,928) TSMC Europe TSMC Parent company 105,456 Note 2 - - - - (EUR2,890) TSMC 3DIC TSMC Parent company 137,912 Note 2 - - - - (JPY 699,706) TSMC China TSMC Parent company 2,456,679 30 - - - - (RMB522,955) TSMC Nanjing TSMC Parent company 7,120,538 21 - - - - (RMB1,515,752) TSMC Arizona TSMC Parent company 15,468,597 27 - - - - (US$ 484,636) TSMC Technology TSMC The ultimate parent of the Company 1,203,679 Note 2 - - - - (US$ 37,712) TSMC Development TSMC Washington Subsidiary 2,872,620 Note 2 - - - - (US$ 90,000) TSMC Washington TSMC The ultimate parent of the Company 824,830 31 - - - - (US$ 25,842) Note 1 The calculation of turnover days excludes other receivables from related parties.Note 2 The ending balance is primarily consisted of royalty receivables and other receivables, which is not applicable for the calculation of turnover days.- 62 -TABLE 6Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONSFOR THE SIX MONTHS ENDED JUNE 30, 2026(Amounts in Thousands of New Taiwan Dollars) No. Company Name Counterparty Nature of Relationship(Note 1) Intercompany Transactions Financial Statements Item Amount Terms(Note 2) Percentage of Consolidated Net Revenue or Total Assets 0 TSMC TSMC North America 1 Sales revenue $1,869,330,193 78% Receivables from related parties 341,618,903 4% Accrued expenses and other current liabilities 90,866,471 1% Other noncurrent liabilities 70,388,765 1% TSMC Nanjing 1 Purchases 42,332,694 2% TSMC Arizona 1 Purchases 84,003,238 3% Note 1 No. 1 represents the transactions from parent company to subsidiary.Note 2 The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.- 63 -TABLE 7Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)FOR THE SIX MONTHS ENDED JUNE 30, 2026(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) Investor Company Investee Company Location Main Businesses and Products Original Investment Amount Balance as of June 30, 2026 Net Income (Losses) of the Investee(Foreign Currencies in Thousands) Share of Profits Losses of Investee(Note 1)(Foreign Currencies in Thousands) Note June 30, 2026(ForeignCurrencies inThousands) December 31, 2025(ForeignCurrencies inThousands) Shares (In Thousands) Percentage of Ownership Carrying Value (Foreign Currencies in Thousands) TSMC TSMC Global Tortola, British Virgin Islands Investment activities $1,450,615,659 $1,178,213,709 46 100 $1,677,893,275 $33,132,695 $33,132,695 Subsidiary TSMC Arizona Phoenix, Arizona, U.S.A. Manufacturing, sales and testing of integrated circuits and other semiconductor devices 759,561,260 672,616,510 24,000 100 773,143,379 36,066,488 31,151,259 Subsidiary TSMC Partners Tortola, British Virgin Islands Investing in companies involved in the semiconductor design and manufacturing, and other investment activities 31,456,130 31,456,130 988,268 100 81,785,287 1,399,096 1,399,096 Subsidiary JASM Kumamoto, Japan Manufacturing, sales and testing of integrated circuits and other semiconductor devices 68,384,148 68,384,148 3,011 73 48,387,662 1,678,303 1,219,287 Subsidiary ESMC Dresden, Germany Manufacturing, sales and testing of integrated circuits and other semiconductor devices 40,800,257 38,221,667 823 70 41,000,885 (693,548) (485,483) Subsidiary VisEra Tech Hsinchu, Taiwan Research, design, development, manufacturing, sales, packaging and test of color filter 4,224,082 4,224,082 213,619 67 11,921,725 936,147 590,325 Subsidiary SSMC Singapore Manufacturing and sales of integrated circuits and other semiconductor devices 5,120,028 5,120,028 314 39 11,562,140 2,104,527 804,791 Associate TSMC North America San Jose, California, U.S.A. Sales and marketing of integrated circuits and other semiconductor devices 333,718 333,718 11,000 100 9,335,002 428,084 428,084 Subsidiary Emerging Fund Cayman Islands Investing in technology start-up companies 3,632,533 3,014,372 - 99.9 8,684,735 153,355 153,202 Subsidiary Xintec Taoyuan, Taiwan Wafer level chip size packaging and wafer level post passivation interconnection service 1,988,317 1,988,317 111,282 41 4,530,659 780,742 320,171 Associate GUC Hsinchu, Taiwan Researching, developing, manufacturing, testing and marketing of integrated circuits 386,568 386,568 46,688 35 2,033,572 3,201,497 1,115,364 Associate TSMC 3DIC Yokohama, Japan Engineering support activities 1,144,356 1,144,356 49 100 1,535,765 65,823 65,823 Subsidiary TSMC Europe Amsterdam, the Netherlands Customer service and supporting activities 15,749 15,749 - 100 791,630 35,291 35,291 Subsidiary TSMC JDC Yokohama, Japan Engineering support activities 410,680 410,680 15 100 449,206 25,350 25,350 Subsidiary TSMC Japan Yokohama, Japan Customer service and supporting activities 83,760 83,760 6 100 130,838 4,457 4,458 Subsidiary TSMC Korea Seoul, Korea Customer service and supporting activities 13,656 13,656 80 100 42,726 744 744 Subsidiary VIS Hsinchu, Taiwan Manufacturing, sales, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing and design service of masks - 13,919,430 354,709 19 - 3,211,180 883,049 - TSMC Partners TSMC Development Delaware, U.S.A. Investing in companies involved in semiconductor manufacturing 18,733,913 18,733,913 - 100 39,314,962 262,505 Note 2 Subsidiary (US$ 586,939) (US$ 586,939) (US$ 1,231,749) (US$ 8,306) TSMC Technology Delaware, U.S.A. Engineering support activities 455,853 455,853 - 100 2,163,719 220,929 Note 2 Subsidiary (US$ 14,282) (US$ 14,282) (US$ 67,790) (US$ 6,992) TSMC Canada Ontario, Canada Engineering support activities 73,411 73,411 2,300 100 490,300 29,628 Note 2 Subsidiary (US$ 2,300) (US$ 2,300) (US$ 15,361) (US$ 938) TSMC Development TSMC Washington Washington, U.S.A. Manufacturing, sales and testing of integrated circuits and other semiconductor devices - - 293,637 100 4,679,596 39,047 Note 2 Subsidiary (US$ 146,613) (US$ 1,234) Note 1 The share of profits losses of investee includes the effect of unrealized gross profit on intercompany transactions.Note 2 The share of profits losses of the investee company is not reflected herein as such amount is already included in the share of profits losses of the investor company. - 64 -TABLE 8Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries INFORMATION ON INVESTMENT IN MAINLAND CHINAFOR THE SIX MONTHS ENDED JUNE 30, 2026(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) Investee Company Main Businesses and Products Total Amount of Paid-in Capital (RMB in Thousands) Method of Investment Accumulated Outflow of Investment from Taiwan as of January 1, 2026 (US$ in Thousands) Investment Flows Accumulated Outflow of Investment from Taiwan as of June 30, 2026 (US$ in Thousands) Net Income (Losses) of the Investee Company Percentage of Ownership Share of Profits Losses Carrying Amount as of Balance as of June 30, 2026 Accumulated Inward Remittance of Earnings as of June 30, 2026 Outflow(US$ in Thousands) Inflow TSMC China Manufacturing, sales, testing and computer-aided design of integrated circuits and other semiconductor devices $18,939,667 (Note 1) $18,939,667 $- $- $18,939,667 $5,806,078 100% $5,836,350 $133,901,613 $- (RMB 4,502,080) (US$ 596,000) (US$ 596,000) (Note 2) TSMC Nanjing Manufacturing, sales, testing and computer-aided design of integrated circuits and other semiconductor devices 30,521,412 (Note 1) 30,521,412 - - 30,521,412 14,977,998 100% 14,904,706 167,292,306 - (RMB 6,650,119) (US$ 1,000,000) (US$ 1,000,000) (Note 2) Accumulated Investment in Mainland China as of June 30, 2026 (US$ in Thousands) Investment Amounts Authorized byInvestment Commission, MOEA(US$ in Thousands) Upper Limit on Investment $ 49,461,079 $ 119,412,667 $ 3,884,682,589 US$ 1,596,000 US$ 3,596,000 (Note 3) Note 1 TSMC directly invested US$596,000 thousand in TSMC China and US$1,000,000 thousands in TSMC Nanjing.Note 2 Amount was recognized based on the reviewed financial statements.Note 3 The upper limit on investment in mainland China is determined by sixty percent (60%) of the Company's consolidated net worth.