The following discussion covers items for and a comparison between the fiscal years ended December 31, 2025 and 2024. For the discussion covering items for the fiscal year ended December 31, 2023 and a comparison between the fiscal years ended December 31, 2024 and 2023, please refer to “Item 5” of our annual report on Form 20-F for the fiscal year ended December 31, 2024 filed with the U.S. SEC. Overview We manufacture a variety of semiconductors based on designs provided by our customers. Our business model is commonly called a “dedicated semiconductor foundry.” As a leader of the foundry segment, our net revenue and net income attributable to shareholders of the parent were NT$2,894,308 million and NT$1,158,380 million in 2024, and NT$3,809,054 million (US$121,423 million) and NT$1,697,604 million (US$54,116 million) in 2025, respectively. Please see “ – Year-to-Year Comparisons – Net Revenue” for a discussion of the changes in net revenue from 2024 to 2025. The principal source of our revenue is wafer fabrication, which accounted for approximately 86% of our net revenue in 2025. The rest of our net revenue was mainly derived from packaging and testing services, mask making, design, and royalty income. Factors that significantly impact our revenue include: •worldwide demand and capacity supply for semiconductor products; •pricing; •production capacity; •technology development; and •fluctuation in foreign currency exchange rates. While the above factors are significant factors, four of which are elaborated as follows: Pricing. We establish pricing levels for specific periods of time with our customers, some of which are subject to adjustment during the course of that period to take into account market conditions and other factors. We believe that customers find value in our flexible manufacturing capabilities, focus on customer service and timely delivery of high yield products, and this value is reflected in our pricing. Our pricing enables us to continue to invest significantly in research and development to deliver ever-improving products to our customers, and sustain healthy financial conditions to expand capacity and support customers’ growth. Production Capacity. We currently own and operate our semiconductor manufacturing facilities. In 2025, our annual capacity (in 12-inch equivalent wafers) exceeded 17 million wafers, compared to approximately 17 million wafers in 2024. Technology Development. Our operation utilizes a variety of process technologies, ranging from mature process technologies of 0.25 micron or above circuit resolutions to advanced process technologies of 3-nanometer circuit resolutions. The table below presents a breakdown of wafer revenue by circuit resolution during the periods indicated: 27 Year ended December 31, 2023 2024 2025 Resolution Percentage of total wafer revenue(1) Percentage of total wafer revenue(1) Percentage of total wafer revenue(1) 3-nanometer 6% 18% 24% 5-nanometer 33% 34% 36% 7-nanometer 19% 17% 14% 16-nanometer 10% 8% 7% 20-nanometer 1% 0% 0% 28-nanometer 10% 7% 7% 40/45-nanometer 6% 4% 3% 65-nanometer 6% 4% 4% 90-nanometer 1% 1% 1% 0.11/0.13 micron 2% 2% 1% 0.15/0.18 micron 5% 4% 3% ≥0.25 micron 1% 1% 0% Total 100% 100% 100% (1)The figure represents wafer revenue from a certain technology as a percentage of the total wafer revenue. In 2025, the 3-nanometer, 5-nanometer and 7-nanometer revenues represented 24%, 36% and 14% of total wafer revenue, respectively. Advanced technologies (7-nanometer and below) accounted for 74% of total wafer revenue, up from 69% in 2024. In 2024, the 3-nanometer, 5-nanometer and 7-nanometer revenues represented 18%, 34% and 17% of total wafer revenue, respectively. Advanced technologies (7-nanometer and below) accounted for 69% of total wafer revenue, up from 58% in 2023. Foreign Currency Exchange Rate. Substantially all of our sales are denominated in U.S. dollars while we publish our financial statements in NT dollars. As a result, fluctuations in exchange rates of the NT dollar against the U.S. dollar would have a significant impact on our reported revenue. The NT dollar appreciation in 2025 had an unfavorable effect on our revenue, with weighted average exchange rates of the NT dollar per U.S. dollar appreciating from NT$32.13 in 2024 to NT$31.11 in 2025. Critical Accounting Policies, Judgments and Key Sources of Estimation and Uncertainty Summarized below are our accounting policies that we believe are important to the portrayal of our financial results and also involve the need for management to make estimates about the effect of matters that are uncertain in nature. Actual results may differ from these estimates, judgments and assumptions. Certain accounting policies are particularly critical because of their significance to our reported financial results and the possibility that future events may differ significantly from the conditions and assumptions underlying the estimates used and judgments made by us in preparing our financial statements. The following discussion should be read in conjunction with the consolidated financial statements and related notes, which are included in this annual report. Critical Accounting Policies and Judgments Revenue Recognition. We recognize revenue when performance obligations are satisfied. Our performance obligations are satisfied when customers obtain control of the promised goods, which is generally when the goods are delivered to our customers’ specified locations. Commencement of Depreciation Related to Property, Plant and Equipment Classified as Equipment under Installation and Construction in Progress (“EUI” and “CIP”). Commencement of depreciation related to EUI/CIP involves determining when the assets are available for their intended use. The criteria we use to determine whether EUI/ 28 CIP are available for their intended use involves subjective judgments and assumptions about the conditions necessary for the assets to be capable of operating in the intended manner. Critical Accounting Policies and Key Sources of Estimation and Uncertainty Estimation of Sales Returns and Allowances. Sales returns and other allowances is estimated and recorded based on historical experience and in consideration of different contractual terms. The amount is deducted from revenue in the same period the related revenue is recorded. We periodically review the reasonableness of the estimates. However, because of the inherent nature of estimates, actual returns and allowances could be different from our estimates. If the actual returns are greater than our estimated amount, we could be required to record an additional liability, which would have a negative impact on our recorded revenue and gross margin. For further information, please refer to note 22 to the consolidated financial statements. Inventory Valuation. Inventories are stated at the lower of cost or net realizable value for finished goods, work-in- progress, raw materials, supplies and spare parts. Inventory write-downs are made on an item-by-item basis, except where it may be appropriate to group similar or related items. A significant amount of our manufacturing costs is fixed because our extensive manufacturing facilities (which provide us large production capacity) require substantial investment to construct and are largely fixed-cost assets once they become operational. When the capacity utilization increases, the fixed manufacturing costs are spread over a larger amount of output, which would lower the inventory cost per unit. We evaluate our ending inventory based on standard cost under normal capacity utilization, and reduce the carrying value of our inventory when the actual capacity utilization is higher than normal capacity utilization. No adjustment is made to the carrying value of inventory when the actual capacity utilization is at or lower than normal capacity utilization. Normal capacity utilization is established based on historic loadings compared to total available capacity in our wafer manufacturing fabs. We also evaluate our ending inventory and reduce the carrying value of inventory for normal waste, obsolescence and unmarketable items by an amount that is the difference between the cost of the inventory and the net realizable value. The net realizable value of the inventory is determined mainly based on assumptions of future demand within a specific time horizon, which is generally 180 days or less. Impairment of Tangible Assets, Right-of-Use Assets and Intangible Assets Other than Goodwill. We assess the impairment of tangible assets (property, plant and equipment), right-of-use assets and intangible assets other than goodwill whenever triggering events or changes in circumstances indicate that the asset may be impaired and the carrying value may not be recoverable. Indicators we consider important which could trigger an impairment review include, but are not limited to, the following: •significant underperformance relative to historical or projected future operating results; •significant changes in the manner of our use of the acquired assets or our overall business strategy; and •significant unfavorable industry or economic trends. When we determine that the carrying value of tangible assets, right-of-use assets and intangible assets other than goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment for tangible assets, right-of-use assets and intangible assets other than goodwill based on projected future cash flow. If the tangible assets, right-of-use assets or intangible assets other than goodwill are determined to be impaired, we recognize an impairment loss through a charge to our operating results to the extent the recoverable amount, measured at the present value of discounted cash flows attributable to the assets, is less than their carrying value. Such cash flow analysis includes assumptions about expected future economic and market conditions, the applicable discount rate, and the future revenue generation from the use or disposition of the assets. We also perform a periodic review to identify assets that are no longer used and are not expected to be used in future periods and record an impairment charge to the extent that the carrying amount of the tangible assets, right-of-use assets and intangible assets other than goodwill exceeds the recoverable amount. If the recoverable amount subsequently increases, the impairment loss previously recognized will be reversed to the extent of the increase in the recoverable amount, provided that the increased carrying amount does not 29 exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. In the process of evaluating the potential impairment of tangible assets, right-of-use assets and intangible assets other than goodwill, we are required to review for impairment groups of assets related to the lowest level of identifiable independent cash flows. We determine the independent cash flows that can be related to specific asset groups. In addition, we determine the remaining useful lives of assets and the expected future revenue and expenses associated with the assets. Any change in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future periods. Our projection for future cash flow is generally lower during periods of reduced earnings. As a result, an impairment charge is more likely to occur during a period when our operating results are already otherwise depressed. For further information, including impairment losses recognized in 2024 and 2025, please refer to note 15, note 16 and note 17 to the consolidated financial statements. Realization of Deferred Income Tax Assets. When we have temporary differences in the amount of tax expenses recorded for tax purposes and financial reporting purposes, we may be able to reduce the amount of tax that we would otherwise be required to pay in future periods. We generally recognize deferred tax assets to the extent that it is probable that sufficient taxable income will be available in the future to utilize such assets. The income tax benefit or expense is recorded when there is a net change in our total deferred tax assets and liabilities in a period. The ultimate realization of the deferred tax assets depends upon the generation of future taxable income during the periods in which the temporary differences may be utilized. Specifically, the realization of deferred income tax assets is impacted by our expected future revenue growth and profitability, tax holidays, the surtax imposed on unappropriated earnings and the amount of tax credits that can be utilized within the statutory period. In determining the amount of deferred tax assets as of December 31, 2025, we considered past performance, the general outlook of the semiconductor industry, business conditions, future taxable income and prudent and feasible tax planning strategies. Because the determination of the amount of deferred tax assets that can be realized is based, in part, on our forecast of future profitability, it is inherently uncertain and subjective. Changes in market conditions and our assumptions may cause the actual future profitability to differ materially from our current expectation, which may require us to increase or decrease the deferred tax assets that we have recorded. For further information, including the amount of deferred tax assets as of the end of 2024 and 2025, please refer to note 26 to the consolidated financial statements. 30 Results of Operations The following table sets forth, for the periods indicated, certain financial data from our consolidated statements of profit or loss and other comprehensive income, expressed in each case as a percentage of net revenue: For the year ended December 31, 2023 2024 2025 Net revenue 100.0% 100.0% 100.0% Cost of revenue (45.6)% (43.9)% (40.1)% Gross profit 54.4% 56.1% 59.9% Operating expenses Research and development (8.5)% (7.1)% (6.5)% General and administrative (2.8)% (2.9)% (2.2)% Marketing (0.5)% (0.4)% (0.4)% Total operating expenses (11.8)% (10.4)% (9.1)% Other operating income and expenses, net 0.0% 0.0% 0.0% Income from operations 42.6% 45.7% 50.8% Non-operating income and expenses 2.7% 2.9% 2.8% Income before income tax 45.3% 48.6% 53.6% Income tax expense (5.9)% (8.6)% (9.1)% Net income 39.4% 40.0% 44.5% Other comprehensive income (loss) for the year, net of income tax (0.4%) 2.5% (1.5%) Total comprehensive income for the year 39.0% 42.5% 43.0% Net income attributable to shareholders of the parent 39.4% 40.0% 44.6% Net income attributable to non-controlling interests 0.0% 0.0% (0.1%) Year-to-Year Comparisons Net Revenue and Gross Margin For the year ended December 31, 2023 2024 % Change in NT$ from 2023 2025 % Change in NT$ from 2024 NT$ NT$ NT$ US$ (in millions, except for percentages and wafer shipment) Net revenue 2,161,736 2,894,308 33.9% 3,809,054 121,423 31.6% Cost of revenue (986,625) (1,269,954) 28.7% (1,527,760) (48,701) 20.3% Gross profit 1,175,111 1,624,354 38.2% 2,281,294 72,722 40.4% Gross margin percentage 54.4% 56.1% — 59.9% 59.9% — Wafer (12-inch equivalent) shipment(1) 12,002 12,910 — 15,022 15,022 — (1)In thousands. Net Revenue Our net revenue in 2025 increased by 31.6% from 2024, which was mainly attributed to an increase in ASP due to a higher proportion of advanced technology (7-nanometer and below) revenue and an increase in wafer shipments, partially 31 offset by an appreciation of the NT dollar against the U.S. dollar. We shipped approximately 15 million 12-inch equivalent wafers in 2025 compared to 13 million in 2024. Gross Margin Our gross margin fluctuates with the level of capacity utilization, price change, cost improvement, product mix and exchange rate, among other factors. Furthermore, our gross margin would be negatively impacted in the year when a new technology is introduced. In 2025, our gross margin increased to 59.9% of net revenue from 56.1% in 2024, mainly attributable to higher capacity utilization and cost improvement, partially offset by unfavorable foreign exchange rate. Operating Expenses For the year ended December 31, 2023 2024 % Change in NT$ from 2023 2025 % Change in NT$ from 2024 NT$ NT$ NT$ US$ (in millions, except percentages) Research and development 182,370 204,182 12.0% 246,427 7,855 20.7% General and administrative 60,873 83,745 37.6% 82,304 2,624 (1.7%) Marketing 10,591 13,144 24.1% 16,918 539 28.7% Total operating expenses 253,834 301,071 18.6% 345,649 11,018 14.8% Percentage of net revenue 11.8% 10.4% — 9.1% 9.1% — Other operating income and expenses, net 189 (1,230) (750.8%) 447 14 — Income from operations 921,466 1,322,053 43.5% 1,936,092 61,718 46.4% Operating Margin 42.6% 45.7% — 50.8% 50.8% — Operating expenses increased by NT$44,578 million in 2025, or 14.8%, from 2024. Research and Development Expenses We remain strongly committed to being the leader in advanced process technologies development. We believe that continuing investment in process technologies is essential for us to remain competitive in the markets we serve. Research and development expenses increased by NT$42,245 million in 2025, or 20.7%, from 2024. The increases were mainly attributed to a higher level of research activities for 10-angstrom, 14-angstrom, and 16-angstrom process technologies, as we continued to advance to smaller processing nodes. We plan to continue our investment in technology research and development in 2026. General and Administrative and Marketing Expenses General and administrative and marketing expenses in 2025 increased by NT$2,333 million, or 2.4%, compared to 2024, mainly reflecting higher employee profit sharing expenses due to higher net income. Other Operating Income and Expenses, Net Net other operating income and expenses in 2025 increased by NT$1,677 million from 2024 to a net gain of NT$447 million (US$14 million), mainly due to lower loss on disposal of property, plant and equipment and reversal of impairment losses in 2025. 32 Non-Operating Income and Expenses For the year ended December 31, 2023 2024 % Change in NT$ from 2023 2025 % Change in NT$ from 2024 NT$ NT$ NT$ US$ (in millions, except percentages) Share of profits of associates 4,800 4,881 1.7% 5,489 175 12.5% Interest income 60,293 87,213 44.6% 105,739 3,371 21.2% Other income 480 567 18.1% 592 19 4.4% Foreign exchange gain (loss), net (2,686) 10,001 — 13,831 441 38.3% Finance costs (11,999) (10,495) (12.5)% (12,371) (395) 17.9% Other gains and losses, net 6,962 (8,380) (220.4)% (7,717) (246) (7.9)% Net non-operating income 57,850 83,787 44.8% 105,563 3,365 26.0% Non-operating income and expenses in 2025 increased by NT$21,776 million, or 26.0%, from 2024, mainly due to higher interest income of NT$18,526 million compared to 2024. Income Tax Expense For the year ended December 31, 2023 2024 % Change in NT$ from 2023 2025 % Change in NT$ from 2024 NT$ NT$ NT$ US$ (in millions, except percentages) Income tax expense (128,288) (248,316) 93.6% (346,530) (11,047) 39.6% Net income 851,028 1,157,524 36.0% 1,695,125 54,036 46.4% Net income attributable to shareholders of the parent 851,740 1,158,380 36.0% 1,697,604 54,116 46.5% Net margin attributable to shareholders of the parent 39.4% 40.0% — 44.6% 44.6% — Income tax expenses increased by NT$98,214 million in 2025, or 39.6%, from 2024. The increase was mainly attributed to higher taxable income in 2025. Liquidity and Capital Resources Our sources of liquidity include cash flow from operations, cash and cash equivalents, current marketable securities, and issuances of corporate bonds. Our primary source of liquidity is cash flow from operations. Cash flow from operations for 2025 was NT$2,274,976 million (US$72,521 million), reflecting an increase of NT$448,799 million from 2024. Our cash, cash equivalents and current marketable securities increased to NT$3,068,595 million (US$97,820 million) as of December 31, 2025, compared to NT$2,422,019 million as of December 31, 2024. The current marketable securities primarily consisted of fixed income securities. In 2025, we issued NT dollar-denominated corporate bonds totaling NT$86,900 million (US$2,770 million). For further information, please refer to note 18 and note 31 to the consolidated financial statements. 33 We believe that our cash generated from operations, cash and cash equivalents, current marketable securities, and ability to access capital market will be sufficient to fund our working capital needs, capital expenditures, debt repayments, dividend payments and other business requirements associated with existing operations over the next 12 months. For the year ended December 31, 2023 2024 2025 NT$ NT$ NT$ US$ (in millions) Net cash generated by operating activities 1,241,967 1,826,177 2,274,976 72,521 Net cash used in investing activities (906,120) (864,843) (1,144,394) (36,481) Net cash used in financing activities (204,894) (346,301) (440,345) (14,037) Effect of exchange rate changes on cash and cash equivalents (8,339) 47,166 (50,008) (1,594) Net increase in cash and cash equivalents 122,614 662,199 640,229 20,409 Cash and cash equivalents increased by NT$640,229 million in 2025, following an increase of NT$662,199 million in 2024. Operating Activities In 2025, we generated NT$2,274,976 million (US$72,521 million) net cash from operating activities, as compared to NT$1,826,177 million in 2024. The net cash generated from operating activities was primarily from NT$2,041,655 million in income before income tax and NT$688,096 million in non-cash depreciation and amortization expenses, partially offset by income tax payment, net changes in working capital and others of NT$454,775 million. The higher depreciation and amortization expenses in 2025 were mainly attributed to continuing investment in production capacity for advanced technologies. In 2024, we generated NT$1,826,177 million net cash from operating activities, as compared to NT$1,241,967 million in 2023. The net cash generated from operating activities was primarily from NT$1,405,840 million in income before income tax and NT$662,796 million in non-cash depreciation and amortization expenses, partially offset by income tax payment, net changes in working capital and others of NT$242,459 million. The higher depreciation and amortization expenses in 2024 were mainly attributed to continuing investment in production capacity for advanced technologies. Investing Activities In 2025, net cash used in investing activities was NT$1,144,394 million (US$36,481 million), as compared to NT$864,843 million in 2024. The primary use of cash in investing activities in 2025 was for capital expenditures of NT$1,272,411 million. In 2024, net cash used in investing activities was NT$864,843 million, as compared to NT$906,120 million in 2023. The primary use of cash in investing activities in 2024 was for capital expenditures of NT$956,007 million. Our capital expenditures for 2025 were primarily related to: •installing and expanding capacity, mainly for 2-nanometer, 3-nanometer and 5-nanometer nodes, including building/facility expansion for Fab 20, Fab 21 and Fab 22; •expanding capacity for specialty technologies and advanced packaging, including building/facility expansion for Fab 23 and Fab 24; and •investing in research and development projects for new process technologies. See “Item 3. Key Information – Risk Factors – Risks Relating to Our Business” section for the risks associated with the inability of raising the requisite funding for our expansion programs. Please also see “Item 4. Information on The Company – Capacity Management and Technology Upgrade Plans” for discussion of our capacity management and capital expenditures. 34 Financing Activities In 2025, net cash used in financing activities was NT$440,345 million (US$14,037 million), as compared to net cash used of NT$346,301 million in 2024. The net cash used in financing activities in 2025 was mainly due to cash dividend payments, partially offset by the proceeds from issuance of corporate bonds. In 2024, net cash used in financing activities was NT$346,301 million, as compared to net cash used of NT$204,894 million in 2023. The net cash used in financing activities in 2024 was mainly due to cash dividend payments, partially offset by the proceeds from issuance of corporate bonds. As of December 31, 2025, our short-term loans were nil and our aggregate long-term debts were NT$1,032,988 million (US$32,929 million), of which NT$136,926 million (US$4,365 million) was classified as current. The long-term debt mainly included NT dollar- and U.S. dollar-denominated corporate bonds with fixed interest rates ranging from 0.41% to 4.63% and remaining maturity ranging from less than one year to 35 years. Cash Requirements The following table sets forth information on our material contractually obligated payments (including principals and interests) for the periods indicated as of December 31, 2025: Payments Due by Period Contractual Obligations Total Less than1 Year 1-3 Years 3-5 Years More than 5 Years (in NT$ millions) Long-Term Debt(1) 1,229,859 156,822 321,847 238,883 512,307 Capital Leases(2) 39,470 4,381 6,574 5,805 22,710 Temporary Receipts(3) 189,858 146,559 43,299 — — Capital Purchase or Other Purchase Obligations(4) 1,534,575 1,220,393 314,181 1 — Total Contractual Cash Obligations 2,993,762 1,528,155 685,901 244,689 535,017 (1)Represents corporate bonds payable and long-term bank loans. See note 18 and note 19 to our consolidated financial statements for further information regarding interest rates and future repayment of long-term debts. (2)Capital lease obligations are described in note 16, note 31 and note 33 to our consolidated financial statements. (3)Represents advance temporary receipts from customer. See “Item 4. Information on The Company — Markets and Customers” and note 22 to our consolidated financial statements for further information. (4)Represents commitments for construction or purchase of equipment, raw material and other property or services. These commitments were not recorded on our statement of financial position as of December 31, 2025, as we had not received related goods or taken title of the property. During 2025, we used derivative financial instruments to partially hedge the currency exchange rate risk related to non-NT dollar-denominated assets and liabilities and interest rate risk related to our fixed income investments. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk” for a further discussion about currency exchange rate risk, interest rate risk, and derivative financial instruments we used to hedge such risks. See also note 5 to the consolidated financial statements for our accounting policy of derivative financial instruments, and note 8, note 11 and note 33 to the consolidated financial statements for additional details regarding our derivative financial instruments transactions. We provided letters of credit and entrusted financial institutions to provide performance guarantees. See note 36 to our consolidated financial statements for further information. Significant amount of capital is required to build, expand, and upgrade our production facilities and equipment. Our capital expenditures for 2026 are expected to be between US$52 billion and US$56 billion, which, depending on market conditions, may be adjusted later. 35 Taxation The corporate income tax rate in R.O.C. is 20%. The R.O.C. Controlled Foreign Company (“CFC”) rules enacted in 2016 have been implemented since January 1, 2023, pursuant to which, certain profits retained at a CFC located in a low- tax jurisdiction would be taxable at its parent company in Taiwan. On the other hand, effective from January 1, 2023, the R.O.C. Statute for Industrial Innovation was amended such that eligible companies that develop innovative technologies domestically and possess leading position in global supply chain may claim investment tax credit of 25% on qualified R&D expenditure and 5% on procurement of machinery/equipment for advanced processes. We are eligible for these new incentives pursuant to the R.O.C. Statute for Industrial Innovation. The alternative minimum tax (“AMT”) imposed under the R.O.C. AMT Act is a supplemental income tax which applies if the amount of regular income tax calculated pursuant to the R.O.C. Income Tax Act and relevant laws and regulations is below the amount of basic tax prescribed under the R.O.C. AMT Act. The taxable income for calculating AMT includes most income that is exempt from income tax under various legislations, such as tax holidays. The prevailing AMT rate for business entities is 12%. Off Balance Sheet Arrangements There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Recent Accounting Pronouncements Please refer to note 4 to the consolidated financial statements. Summary Financial Information of the Obligor Group The debt securities issued by TSMC Arizona under an indenture (the “Indenture”), dated as of October 18, 2021, among TSMC Arizona, as the issuer, TSMC, as guarantor, and Citibank, N.A., as trustee, are unconditionally and irrevocably guaranteed as to payment of principal, interest and premium, if any, by TSMC. TSMC Arizona and TSMC are referred to collectively as the Obligor Group. Each guarantee provided under the Indenture is referred to as a Guarantee and collectively, the Guarantees. TSMC Arizona is a corporation incorporated under the laws of the State of Arizona and a wholly-owned subsidiary of TSMC. As of December 31, 2025, the debt securities issued by TSMC Arizona are: (i) US$1.25 billion aggregate principal amount of the 1.750% Guaranteed Notes due 2026, (ii) US$1.25 billion aggregate principal amount of the 2.500% Guaranteed Notes due 2031, (iii) US$1 billion aggregate principal amount of the 3.125% Guaranteed Notes due 2041, (iv) US$1 billion aggregate principal amount of the 3.250% Guaranteed Notes due 2051, (v) US$1 billion aggregate principal amount of the 3.875% Guaranteed Notes due 2027, (vi) US$500 million aggregate principal amount of the 4.125% Guaranteed Notes due 2029, (vii) US$1 billion aggregate principal amount of the 4.250% Guaranteed Notes due 2032, and (viii) US$1 billion aggregate principal amount of the 4.500% Guaranteed Notes due 2052. Under the terms of the Indenture and the Guarantees, TSMC fully, unconditionally and irrevocably guarantees to each holder the full and prompt payment of the principal of, and premium (if any) and interest on, such debt securities (including any Additional Amounts, as defined in the Indenture, payable in respect thereof) when and as the same shall become due and payable as provided in such debt securities. TSMC (i) agrees that its obligations under the Guarantees will be enforceable irrespective of any invalidity, irregularity or unenforceability of the debt securities or the Indenture and (ii) waives its right to require the trustee to pursue or exhaust its legal or equitable remedies against the issuer prior to exercising its rights under the Guarantees. Moreover, if at any time any amount paid under a debt security or the Indenture is rescinded or must otherwise be restored, the rights of the holders of the debt securities under the Guarantees will be reinstated with respect to such payments as though such payment had not been made. The Guarantees (i) constitute senior unsecured obligations of TSMC, (ii) at all times rank at least equally with all other present and future senior unsecured obligations of TSMC, except as may be required by mandatory provisions of law, (iii) are senior in right of payment to all future subordinated obligations of TSMC and (iv) are effectively subordinated to secured obligations of TSMC, to the extent of the assets serving as security therefor. TSMC will be released from and relieved of its obligations under a Guarantee in the event (i) of repayment in full of the relevant series of debt securities, or (ii) that there is a Legal Defeasance (as defined in the Indenture) of the relevant 36 series of debt securities, in each case provided that the transaction is otherwise carried out pursuant to and in accordance with all other applicable provisions of the Indenture. The following summarized financial information is presented for the Obligor Group on a combined basis after elimination of intercompany transactions between entities in the combined group and amounts related to investments in any subsidiary that is a non-guarantor. This information is not intended to present the financial position or results of operations of the combined group of companies in accordance with U.S. GAAP or IFRSs. Statement of Profit or Loss for Obligor Group For the year endedDecember 31, 2025 NT$ US$ (in millions) Net sales – external 849,497 27,080 Net sales – to subsidiaries outside of the Obligor Group 2,933,088 93,500 Total net sales 3,782,585 120,580 Gross profit 2,233,467 71,198 Income from operations 1,910,312 60,896 Net income 1,653,325 52,704 Net income attributable to Obligor Group 1,653,325 52,704 Statement of Financial Position for Obligor Group As ofDecember 31, 2025 NT$ US$ (in millions) Assets Current assets – external 1,799,046 57,349 Current assets – due from subsidiaries outside of the Obligor Group 211,315 6,736 Total current assets 2,010,361 64,085 Non-current assets – external 3,717,812 118,515 Non-current assets – due from subsidiaries outside of the Obligor Group 1,810,696 57,721 Total non-current assets 5,528,508 176,236 Total assets 7,538,869 240,321 Liabilities Current liabilities – external 1,330,733 42,421 Current liabilities – due to subsidiaries outside the Obligor Group 90,726 2,892 Total current liabilities 1,421,459 45,313 Non-current liabilities – external 738,818 23,551 Non-current liabilities – due to subsidiaries outside of the Obligor Group 23,553 751 Total non-current liabilities 762,371 24,302 Total liabilities 2,183,830 69,615 Climate Change Related Issues The manufacturing, assembling and testing of our products require the use of chemicals and materials that are subject to environmental, climate related, health and safety laws and regulations issued worldwide as well as international accords such as the Paris Agreement. The Climate Change Response Act of the R.O.C., effective since 2015 and amended in 37 February 2023, set a goal of reaching net-zero emissions in Taiwan by 2050 and established a carbon fee system to collect carbon fees. For emitters with direct and indirect emissions exceeding a certain threshold, carbon fees are levied starting from 2025. As our emissions from each fab in Taiwan exceed the current regulatory threshold, we will start to pay carbon fees from 2026 (for the 2025 fees), which will result in increased manufacturing costs for us. Also, the R.O.C. legislative authority is regularly reviewing various environmental issues to develop laws and regulations relating to environmental protection and climate change. The impact of such laws and regulations is currently indeterminable. Please see detailed risk factors related to the impact of climate change regulations and international accords in “Item 3. Key Information – Risk Factors – Risks Relating to Our Business. ” Please also see our compliance record with Taiwan and international environmental and climate-related laws and regulations in “Item 4. Information on The Company – Environmental and Climate Related Laws and Regulations.”