Pursuant to the framework of Task Force on Climate-related Financial Disclosures (TCFD), PSMC's climate risk management framework is based on the four major areas of governance, strategy, risk management, indicators and targets. This framework aides us in the identification of potential risks and related opportunities topics derived from climate change, to assess the actual impact and the degree of influence of climate issues on the Company's business.

The Board of Directors of PSMC serves as the highest climate governance unit, responsible for overseeing the achievement of climate change strategies and goals, and ensuring the consistency of the organization's operational development direction and goals. In order to improve the evaluation and implementation effectiveness of climate change strategies and plans, the Audit Committee is responsible for managing, integrating and organizing ESG issues and climate-related risks and opportunities, confirming the overall strategic direction and goals of the organization, and setting up the "Sustainability Development Committee" and the "Risk Management Committee" under its jurisdiction. The "Sustainability Development Committee" is responsible for formulating various climate change strategies. The four strategic implementation teams under the committee will assist each business unit in implementing the climate change strategy response plan and review the compliance and appropriateness of the response strategies and goals. The "Risk Management Committee" is responsible for identifying and analyzing the organization's climate-related risks, effectively controlling the potential risks faced by the organization on climate change, and ensuring that risk management can be implemented in the daily operations of each business unit through the four strategic implementation teams. The "Sustainability Development Committee" and the "Risk Management Committee" regularly report the strategic implementation of climate risks and opportunities of each department to the Audit Committee to facilitate it to track the development progress of each strategy and adjust the implementation plan in a timely manner.

PSMC uses a risk assessment, form key operating units of each department, based on the risk identification results, the three aspects of potential impact degree, vulnerability and probability of occurrence are considered, and key encountered risks at the occurrence stages are sorted. At the same time, PSMC corresponding risk control strategies are also developed, and must be reviewed at least every two years, and judge whether adjustment is needed according to the inspection results. In addition, through "establishing emergency response measures", when a risk disaster occurs, the heads of the responsible departments will carry out noti¬fication work in accordance with the factory disaster emergency response measures, and the crisis management team will coordinate the crisis handling and subsequent recovery work to maintain the company's continuous operations.

PSMC has identified 12 climate risks and 12 climate opportunities by considering the domestic and international climate change development trends and its own current operating conditions, and the relevant departments of authority have jointly evaluated the level of impact of climate related risks and opportunities. The evaluation covers the entire value chain of PSMC. Based on the level of impact, vulnerability, control, and probability of occurrence that each risk and opportunity, and the characteristics of the scale for short-middle-long term period has on PSMC, we identified the key issues that we should prioritize and address for climate change after an internal investigation, and formulated the strategies and targets in order to implement climate change management.

Climate Risk  

Climate Opportunity  

Internal Carbon Pricing (ICP)

To strengthen climate risk management, implement sustainable development strategies, and respond to international trends and national regulatory requirements, PSMC has launched an Internal Carbon Pricing (ICP) mechanism introduction plan starting from 2024. By incorporating carbon costs into internal financial and investment assessment processes, ICP shall help the company improve energy usage efficiency, preemptively address the risk of rising carbon costs, and make more accurate and forward-looking low-carbon investment decisions. At the same time, this mechanism can also help optimize medium- and long-term financial planning, making resource allocation more aligned with low-carbon transformation needs and strengthening overall operational resilience.

PSMC has completed the inventory and verification of greenhouse gas (GHG) categories 1, 2, and 3, and based on categories 1 and 2, it plans to apply the ICP system. Starting from 2024, the company plans to prioritize the use of implicit prices as an ICP mechanism ($2,580TWD/tCO2e), which will incorporate the impact of carbon emission costs on overall economic benefits into investment project assessments, equipment replacement, and energy improvement schemes, among other decision-making processes. The goal is to enhance capital allocation efficiency and strengthen the depth and accuracy of cost-benefit analysis.

PSMC conducts greenhouse gas inventory every year in accordance with the ISO 14064-1 procedure. All operational locations are verifi¬ed by a third-party impartial inspection unit to fully understand the overall greenhouse gas emission sources and emissions. These veri¬fications also serve as a major basis for formulating and implementing all reduction targets and action plans. In 2025, PSMC continued to promote a variety of energy conservation and carbon reduction measures, for annual reduction performance of 1.43%. Not only does this mean surpassing the annual 1% reduction target, but also, we have achieved the target of a 10% absolute reduction in direct emissions with 2020 as the baseline year.
Total 2025 Scope 1 and 2 greenhouse gas emissions were 2.91% less than the year prior. This was primarily due to continued enhancement to the efficiency of tail gas treatment facilities and replacement of outdated equipment. As the 2025 greenhouse gas inventory shows, PSMC’s overall emission hot spots center on fluorinated greenhouse gases used in Scope 1 manufacturing, as well as Scope 2 externally purchased electricity. Those two categories account for at least 95% of total emissions. Because of this, and in response to the government policy for carbon fee incentives to encourage substantive reductions, PSMC has set reducing fluorinated greenhouse gases and reducing purchasing of external electricity as major implementation areas for our follow-on greenhouse gas reduction plan. We have also introduced the core measure of autonomous reduction plans. These reduction plans have already passed review by the competent authority, and received eligibility to apply priority carbon fee rates.

Note1: The greenhouse gas emission coefficient mainly refers to the Ministry of Environment announced the greenhouse gas emission coefficient on February 5, 2014. The electricity carbon emission coefficient is calculated using 0.474kg CO2e/kWh as Scope 2 (this calculation method is based on the Market Coefficient Method for statistics).

Note2: The source of the Global Warming Potential (GWP) used in this table is the "IPCC Fifth Assessment Report (2013)" edition.

Note3: Greenhouse gas types include nitrous oxide (N2O), methane (CH4), carbon dioxide (CO2), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).

Note4: Method used for aggregating greenhouse gas volumes: Operational controlling rights method.

Note5: Standards, methodologies, assumptions and/or calculation tools used: The energy consumption is derived from the measured values of the chargeable receipts, and the checklist does not have any estimated values.

Note6: The emission coverage of Scope 1 and Scope 2 is 100%.

Note7: Setting 2020 as our greenhouse gas emissions baseline year (with total emissions of 673,345 tCO2e); with consideration given to the principal of keeping reduction targets consistent with the greenhouse gas inventory; and in accordance with the greenhouse gas guidelines (2019 version) in the United Nations Framework Convention on Climate Change; and responding to the reductions and controls promoted by the Taiwan Semiconductor Industry Association, if, in the future, there are major restructurings of our organizational boundaries, adjustments to our operating activities, updates to emission factors, or material errors, the baseline year emissions will be recalculated, in order to maintain consistency.

PSMC also follows the procedures of ISO 14064-1:2018 to conduct Scope 3 inventory and obtain third-party external verifi¬cation. The total emissions of greenhouse gas Scope 3 in 2025 was 233,246 tCO2e, increased compared to the previous year, not achieving the annual reduction target of 1%. The main reason is the update of carbon emission coefficients. The inventory results show that in Scope 3, fuel and energy-related activities and purchased goods and services are the main emission hotspots. PSMC will continue to negotiate with value chain partners to expand the influence of its climate strategy and create opportunities for cooperation.

For quantities of fluorinated greenhouse gases used in manufacturing, PSMC continues implementing source management and assessing the feasibility of substitutes. We are also vigorously enhancing the treatment efficiency of tail gas treatment facilities and replacing outdated equipment. In 2025, all departments continued to implement multiple substantive reduction measures, including replacing outdated tail gas treatment equipment, expanding the scope of manufacturing tail gas treatment, and introducing high-efficiency tail gas treatment equipment in new machines. Given the ongoing implementation of the aforementioned reduction plans, 2025 fluorinated gas reductions reached 427,267 tCO2e, or 13,184 tCO2e more than the 414,083 tCO2e reduction in 2024. This shows that the reduction measures are having a noticeable effect.

To analyze energy consumption and improve efficiency, PSMC has fully implemented the ISO 50001 Energy Management System and engages third-party verification bodies to conduct regular audits and re-certifications to ensure the effectiveness of the management system. The validity period of obtained ISO 50001 certificates for all of Fabs is from November20, 2025 to December 26, 2027. In addition, PSMC has set an annual energy saving target of 1% or more, and provides incentives through the proposed improvement system and CIP competition to encourage employees to take the initiative to propose recommendations around energy savings, climate response measures, productivity improvements, and work efficiency. At the same time, PSMC is committed to continuously carry out and improve the following tasks and promote management plans based on this to achieve the mission of environmental sustainability:

• Provide energy improvement resources and enforce energy laws
• Enhance equipment energy management and reduce energy consumption in order to achieve energy saving targets
• Continue to carry out energy reduction measures to optimize energy use efficiency
• Increase the procurement of equipment with energy-saving labels and introduce energy-saving design products and processes
• Establish appropriate energy strategies and engage all employees to promote sustainable business operations
• Provide employees with education and training related to energy systems and energy efficiency to enhance their awareness of energy conservation and equip them with the ability to discover and continuously improve energy efficiency

PSMC's energy usage is mainly composed of purchased electricity, accounting for approximately 87.06% of the overall energy consumption. The usage statistics of various energy resources are as follows:

According to the Ministry of Economic Affairs' "Energy User Energy Saving Targets and Implementation Plans," PSMC set an annual energy saving target of 1.5%. By 2025, the company had implemented approximately 127 energy-saving measures, reducing energy consumption by 83,530.46 GJ and 10,602.92 tCO2e. The overall plant energy saving rate was 1.57%, achieving the established target. A summary of the energy-saving projects is shown in the table below:

At the invitation of Miaoli County Government, PSMC takes part in the “Big Leading the Medium and Small” Low-Carbon and Smart Transformation for Manufacturers initiative (initiative number 2024-Chi-Chuang-Yueh-Tzu No. C0033). We invited ten suppliers to join with us in implementing the Project to Introduce Low-Carbon and Reduced Emission Technologies into PSMC Supply Chain Semiconductor Manufacturing. The plan includes ongoing implementation of ISO 50001 energy management systems and related energy-conservation measures, as well as guiding suppliers to jointly implement ten energy conservation improvements. Accumulated carbon reductions reached 1,330 tCO2e.
During the plan period, we implemented 39 energy conservation and carbon reduction measures, covering major audit items such as manufacturing equipment; factory facilities; greenhouse gas (GHG) treatment and water conservation systems; GHG reduction and elimination enhancements; introducing AI into fab chiller systems; compressed air system operating optimizations; and supply chain carbon-reduction efforts. We also completed TAFT certification in accordance with the project schedule. All told, implementing the project resulted in carbon reductions of 64,477 tCO2e.

Since 2022, PSMC has been collaborating with Professor Zhang Guohao of Tsinghua University to develop an intelligent control system for air compressor units using AI technology. This system can monitor and predict equipment health status in real time, improve the accuracy of maintenance operations, avoid abnormal energy consumption caused by efficiency degradation, and effectively reduce overall system energy consumption through flexible scheduling of multiple air compressor units and optimization model construction.

PSMC has established a fundamental energy-saving plan, which includes measures such as automatically shutting off 70% of lighting when the area is unoccupied, adjusting lighting to match factory working hours, and replacing frequently used lighting tubes with LED alternatives. PSMC aims to achieve its energy-saving objectives by implementing these basic measures and working in tandem with its employees.

In 2022, PSMC established a Green Energy Team responsible for green electricity procurement and the planning and implementation of solar photovoltaic system installation to enhance energy self-sufficiency and reduce greenhouse gas emissions. In 2025, the P5 fab completed the installation of a 0.5MW in-house solar photovoltaic system, bringing the total installed capacity of the entire plant area to 1MWp. In 2025, the plant will generate 1.28 million kWh of electricity and obtain 1,282 green electricity certi¬ficates. It will also purchase 26,354 MWh of green electricity and obtain 26,354 green electricity certifi¬cates, for a total of 27,634 MWh of green electricity used and 27,636 renewable energy certi¬ficates obtained.

To assess the environmental impact of 12-inch and 8-inch wafer foundry products across the raw material acquisition and manufacturing stages, PSMC has identified key environmental impact hotspots at each stage. This helps in formulating strategies for performance improvement and enhancing communication with customers. In 2025, PSMC conducted a comprehensive product life cycle assessment (LCA) for its 12-inch and 8-inch fabs, following the requirements of ISO 14040 and ISO 14044, using LCA SimaPro 10.2.0.1 software. The LCA assessment covers two stages: the raw material stage, and the manufacturing stage. The system boundary is defined as Cradle to Gate (from raw material to the customer’s gate). The results of the product life cycle environmental impact assessment are illustrated in the figure below.

The assessment results provide R&D developers with an understanding of the sensitivity to the potential impacts of various design decisions, including material selection, packaging use, and the relevance of manufacturing to the use of renewable energy for that manufacturing. During the manufacturing stage, it probably should be made to reduce the use of materials, minimize the number of equipment used, and maximize the utilization of production equipment. In addition, potential environmental impacts during the manufacturing phase, PSMC will continue to through increase the use of renewable energy, reduce process waste, and improve production yield process improvement to reduce material use in the raw material stage, and also reduce the environmental impact of raw material transportation.

PSMC produces advanced, energy-saving and environmentally friendly products for customers and continues to promote new process technologies to reduce chip power consumption and save resources. To achieve its "Net-Zero Emissions by 2050" goal, PSMC has calculated its product carbon footprint using SimaPro 10.2.0.1 in accordance with ISO 14067 standards. The life cycle impact assessment methodology follows the IPCC 100-year greenhouse gas emission assessment method (IPCC 2021 GWP 100), which calculates a product’s CO2 e emission from raw material through to the manufacturing phase (“cradle to gate”). The inventory results have passed third-party verification in 2025. This will enhance the quality and reliability of inventory data, and in the future improvement actions will continue to be proposed based on the carbon tracking results.