Our Focuses｜Sustainable Supply Chain｜Supply Chain Composition and Management Framework

Declaration of Sustainable Supply Chain Management

Supply chain is the relationship between a company and its suppliers, including aspects such as materials, equipment, and services. Winbond, continuously established partnerships and work with suppliers to achieve ESG goals and promote sustainable development. This effort further enhances business ethics, environmental protection, social care, and transparency in governance structure.

Sustainable Supply Chain Management Framework

Sustainable Supply Chain Management Strategy and Policy

Under the ESG Committee (comprising the Chairman and Independent Directors), Winbond has established a Sustainable Supply Chain Task Force. The convener of the Task Force is the Technology Executive from the Supply Chain Management Center. Designated personnel from various departments form this Task Force, which reports its work plans and interim results to the ESG Committee twice a year. These plans and results are executed only after being approved by the committee. Additionally, the Task Force reports its progress to the ESG Office four times a year to ensure the achievement of sustainability goals.

The responsibilities of the Sustainable Supply Chain Task Force include integrating existing supplier management frameworks, such as the Responsible Business Alliance (RBA), Hazardous Substance Free (HSF) policy, traditional supplier management metrics (quality, price, delivery time, and process technology capabilities), and Authorized Economic Operator (AEO) certification. The Task Force aims to enhance and implement sustainable supply chain management practices, focusing on promoting supplier and contractor sustainability (environmentally friendly practices, social responsibility, and good governance), managing green product production operations, and maintaining internal green logistics systems.

In terms of supply risk management, the Task Force incorporates responsible procurement, due diligence, and on-site supplier audits. These efforts are organized into Winbond’s three main sustainable supply chain management frameworks: practicing responsible procurement, enhancing the overall resilience of the supply chain, and promoting the reduction of supply chain carbon emissions.
 

 

1

Responsible Procurement

• Sourcing and Assessment of New Suppliers 
• Winbond's Corporate Social Responsibility (CSR) and Integrity Policies
• WINBOND SUPPLIER CODE OF CONDUCT
• Hazardous Substance Free (HSF)
• Non Use for Conflict Minerals
• Regular supplier evaluations

 

2

Strengthening Supply Chain Resilience

• Authorized Economic Operator(AEO)
• Sustainable risk Due Diligence in the supply chain
• Supplier on-site audits, coaching, improvement, and enhancement
• ESG co-learning workshops
• Sustainable Supply Chain Upgrade⁺ Forums
• Various supplier negotiation and communication activities

 

3

Low Carbon Supply Chain

• Sustainable Procurement Work (Local Procurement, Green Procurement, Circular Procurement)
• Resource Usage Survey of Tier-one Suppliers in Sustainable Supply Chain Management
• Promotion of Carbon Emission Management among Suppliers/Contractors
• Management of Green Product Production Operations
• Internal Green Logistics System Management
• Matching Government Carbon Reduction Subsidies and Guidance
• ESG Education and Training for Supply Chain Management Staff

Supply Chain Composition and Management Framework

Supply Chain Composition and Overview

As one of the global key memory manufacturers, Winbond operates along the industry chain, catering to upstream IC/IP design demands, engaging in 12-inch wafer manufacturing, and outsourcing to packaging and testing facilities to complete memory production. In 2023, Winbond’s most important operating location is Taiwan, while the other important locations distributed across China, Japan, Korea, and Israel. In 2023, Winbond engaged with a total of 1,027 suppliers for various transactions, categorized by procurement type and application area, including raw materials, outsourced semiconductor assembly and testing vendors, machinery and equipment suppliers, factory engineering, parts, maintenance and repair, and others (transport logistics, waste disposal merchants, waste removal merchants, information equipment and software, as well as miscellaneous affairs). 

In order to meet the global supply demands, key (critical) suppliers are from Japan, the United States, South Korea, Belgium, and Germany. There were no significant changes in activities, value chains, or other business relationships compared to the previous reporting period. Additionally, Winbond conducted annual supply chain sustainable risk assessments for suppliers directly related to product composition to ensure stable operations and minimize risks.

Winbond Supplier Management Cycle

With the aim of achieving sustainable supply chain development in mind, building a solid long-term relationships with Winbond suppliers is the foundation of a stable management system. Winbond has designed the sustainable supply chain management system based on systematic Plan-Do-Check-Act (PDCA) procedures. These procedures allow us to trace and select new suppliers, regularly evaluate qualified suppliers, and finally track and improve any deficiency. Winbond has proactively implemented SDG 17.16 “Enhance the Global Partnership for Sustainable Development”, applying strict internal quality standards to the raw materials provided by suppliers. Externally, Winbond has carried out regular supplier evaluations, on-site audits, deficiency identification, and improvement, discovering new ways to improve the operational and manufacturing operations with the suppliers. Through methods such as regular tracking, discussing improvements, and other methods to refine the business operations, Winbond is dedicated to collaborating with its suppliers in embodying the principles of sustainable supply chain development.

Sourcing and Assessment of New Suppliers

For domestic new suppliers, during the traceability and evaluation stage, Winbond first utilizes business registration public information, the Market Observation Post System, Transparent Footprints, and our country's sanction information (including E: Environmental Protection Administration’s regulated pollution sources and sanction information, S: Ministry of Labor's business units violating labor laws, G: Financial Supervisory Commission’s sanction cases). These resources are used to establish a traceability and screening mechanism for new suppliers. Those who pass the initial screening proceed to the second evaluation stage. For international new suppliers, traceability and confirmation of sanctions lists are required before proceeding to the next evaluation step.

Winbond’s selection system for new suppliers includes evaluation items such as a quality system questionnaire (including quality, delivery time, services, technologies, and the supplier’s quality management system), which based on RBA Code of Conduct. Additionally, suppliers are required to provide third-party certification of its quality management system and its management guidelines for Process/Product Change Notices (PCN) and fill out a questionnaire on its hazardous substance management questionnaire. Suppliers who are responsible for outsourced work on security products are additionally required to provide an international safety certificate and fill out the “Questionnaire on Safety Control Measures for Outsourced Work on Security Products.”In order to track and trace the supplying status, suppliers should disclosure their site honestly and exactly in fulfilling vendor information.

• In 2023, 9 new suppliers have passed the selection.

Winbond Supplier Code of Conduct Commitment Letter

To ensure a safe working environment in the supply chain, protect employees' dignity and respect, implement environmental responsibility, and adhere to ethical conduct, Winbond Electronics and its subsidiaries have developed the Winbond Electronics Supplier Code of Conduct in accordance with the Responsible Business Alliance (RBA, formerly EICC) Code of Conduct. Winbond requires suppliers to comply with this code and adhere to the laws and regulations of the countries and regions in which they operate. Suppliers are also encouraged to require their suppliers, contractors, and service providers to acknowledge and adopt this code.

The code consists of five sections:

• Sections A, B, and C outline standards for labor, health and safety, and the environment, respectively.
• Section D covers business ethics standards.
• Section E details the elements necessary for a proper management system to enforce the code.
   

The formulation of this code draws on several international guidelines and standards: Eco-Management and Audit Scheme (EMAS) for environmental management and audit systems. OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, UN Universal Declaration of Human Rights, ILO Declaration of Fundamental Principles and Rights at Work, and ILO Fundamental Conventions for human rights assessments. Social Accountability International (SAI, SA8000) and the United Nations Convention against Corruption for governance. These references collectively inform the comprehensive "Winbond Electronics Supplier Code of Conduct."
 

• Winbond Supplier Code of Conduct

   

Regular Evaluation of Qualified Suppliers

To effectively maintain the operational capability of suppliers and the quality of product technical services, Winbond categorizes assessment targets based on the division of labor in product manufacturing, further distinguishing between suppliers and outsourced partners (packaging, testing). The evaluation criteria encompass various aspects such as quality (product/technology), delivery time, service, and pricing. Based on the evaluation results, the management mechanisms for suppliers and outsourcers are categorized into two groups. For suppliers, the management mechanisms are categorized as Level A, Level B, or Level C; while for packaging and testing outsourcers, that are categorized as superior, Level A, Level B, or Level C. These classifications serve as the basis for different management and improvement approaches. Moreover, suppliers should respond to Winbond within 1 month and provide further planning for improving. Winbond will track the improved status according to suppliers' planning. 

To positively encourage suppliers and outsourced partners to actively engage in initiatives that contribute to sustainable development, Winbond has formally included sustainability performance in its regular evaluations starting in 2023. Sustainability now carries a weight of 5% in these evaluations. This includes positive aspects such as participation in Winbond's sustainability (ESG) initiatives, setting of energy conservation and carbon reduction targets, the development of measures to achieve green energy goals, and the negative statement - including major environmental protection, industrial safety accidents, and labor disputes as deduction points for consideration to balance the fairness in the evaluation. At the same time, Winbond has taken two major approaches for highlight the importance of ESG evaluation. Firstly, for those whose ESG score does not exceed 2.5%, it will be included in the evaluated watch list. Second, in the future, for those who do not obtain ESG scores, the procurement ratio will be further reviewed and included in the list of key on-site audits for the next year.

In the near future, Winbond plans to adjust the weight of sustainability aspects on a rolling basis in response to stakeholder requirements, including governmental regulations, customer demands, and community initiatives. This approach not only encourages suppliers of all types to view sustainability performance as part of their competitive edge but also supports the long-term transformation and sustainable development of the entire supply chain.
 

Qualified Supplier Audit and Improvement

To ensure effective oversight of all qualified suppliers' operations, the Winbond supplier audit team conducts targeted sampling audits annually. The written audits cover various certification aspects such as "Quality Management" and "Green Review." On-site visits and audits focus on the core elements outlined in the RBA 7.1.2 audit manual, specifically addressing "Social Responsibility Audits." In 2023, a total of 31 audits were conducted, including 19 raw material suppliers and 12 packaging and testing outsourcers. Notably, audit outcomes across these three key areas aligned with Winbond's standards, with no disqualifications due to significant environmental, social, or governance issues among qualified suppliers.

To foster sustainable collaboration with suppliers in product/technical services, management, and operations, Winbond compiled 151 improvement suggestions from 31 audits conducted in 2023. Suggestions include process control, environmental health and safety management, supplier management, quality management, and management systems. Through proactive engagement with the Winbond supplier audit team, suppliers proactively identified potential risks in their daily operations, thereby implementing preventive measures to meet audit requirements and effectively enhanced their sustainability capabilities. Specifically, the results of suppliers' sustainable due diligence will be officially included in the on-site audit and upgraded formal ones to a sustainability audit.