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

Declaration of Sustainable Supply Chain Management

Supply Chain Composition and Management Framework

Supply Chain Composition and Overview

Winbond is one of the leading global memory manufacturers. In the supply chain, Winbond undertakes upstream IC/IP design requirements, produces 12-inch wafers at Winbond, and outsources backend packaging and testing to complete the memory manufacturing process. In 2024, Winbond's operational scope included Winbond and Nuvoton. Our primary operational sites are in Taiwan, with additional locations in Mainland China, Japan, South
Korea, and Israel. Nuvoton's major operational sites are mainly in Taiwan and Japan, with business locations in Mainland China, Japan, South Korea, Israel, the United States, Germany, India, and Singapore to meet customer service needs. To ensure timely product delivery, suppliers trading with Winbond and Nuvoton also come from around the world, including Japan, the United States, South Korea, Belgium, and Germany, with a total of 1,117
suppliers for Winbond and 791 suppliers for Nuvoton. According to procurement categories and applications, the main categories include raw materials, outsourcing, backend packaging and testing, machinery and equipment, spare parts, maintenance services, plant engineering, and others (such as transportation and logistics, waste disposal, waste removal, information equipment and software, and general affairs).

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

Winbond's new supplier selection mechanism includes quality system evaluations (covering quality, delivery, service, technology, supplier quality systems), RBA Code of Conduct, and corporate sustainability development standards. Additionally, Winbond is a member of the Ministry of Economic Affairs' International Trade Administration's Internal Compliance Program (ICP), and during the traceability stage, it closely monitors the sanction lists updated by the United Nations Security Council and Taiwan's Ministry of Justice to effectively maintain supply chain security and safety.
Suppliers that comply with the previously noted stages must subsequently provide third-party quality system certification, Process/Product Change Notice (PCN) management principles, and complete the hazardous substance management questionnaire. Outsourcing suppliers of safety products must also provide international safety certification and complete the "Safety Product Outsourcing Safety Control Measures Audit Questionnaire." In 2024, all nine new suppliers of Winbond Group (including 4 for Winbond, 3 for Nuvoton, and 2 for Nuvoton Japan)achieved 100% compliance with environmental, social, and economic standards evaluation.

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."

Regular Evaluation of Qualified Suppliers

Winbond conducts annual systematic assessments of qualified suppliers, categorized into suppliers and OSAT (Outsourced Semiconductor Assembly and Test) suppliers. The evaluation covers quality (product/technology), delivery, service, and price. Suppliers are categorized into three levels: A, B, and C (Excellent, Good, Under Review), while OSAT suppliers are categorized into four levels: Excellent, Grade A, Grade B, and Grade C. These classifications serve as the basis for tiered management and continuous improvement measures.
To encourage all suppliers to actively implement initiatives that contribute to sustainable development, Winbond officially incorporated supplier sustainability performance into regular evaluations of all suppliers in 2024, with a weighting of 5%. The weighting is scheduled to increase to 15% in 2025 to further strengthen supplier commitment to corporate sustainability. The evaluation covers participation in Winbond's sustainability activities, development of sustainability goals, and achievement of energy-saving and carbon reduction targets. To ensure fairness in the evaluation process, Winbond also deducts points for suppliers subject to disciplinary actions in the areas of environment, social, or governance.Suppliers who fail to meet the evaluation standards are required to submit a corrective action plan within one month. Those who still fail to meet the corrective requirements will have their partnership terminated.
In 2024, all qualified suppliers achieved B grade (suppliers) or Grade A (OSAT suppliers) or above, with no terminations due to major sustainability deficiencies. Looking ahead, Winbond will continue to maintain active communication and promotion with suppliers, closely monitor disciplinary actions announced through official government channels, and track developments in suppliers' operational management to ensure that all supply activities are conducted in full compliance. In addition, Winbond will establish a reward mechanism to recognize and reward suppliers who demonstrate excellence in sustainable performance.
 

Mechanism to Incentivize Suppliers with Strong ESG Performance:

1. Awards and public recognition are presented during supplier forums or contractor conferences.

2. The Sustainable Supply Chain Team conducts ESG performance evaluations, audits, and provides capacity-building support for suppliers/contractors. The results are integrated into procurement decision-making processes through positive procurement incentives (e.g., preferential selection, increased order volume).

Example: If a supplier can demonstrate that 100% of waste generated during production is recycled or treated through circular methods, Winbond will increase the procurement volume under equal quality and cost conditions.

Qualified Supplier Audit and Improvement

In order to effectively control the operation of all qualified suppliers, Winbond's supplier audit team conducts annual key audits of all qualified suppliers. First of all, in terms of written audit, the audit content includes the effective holding of various certificates such as "quality management" and "green audit". On-site audits focus on the core items outlined in the RBA 8.0 Audit Manual, and comprehensively incorporate "sustainability reviews" into their execution. In 2024, there are 63 audits, including 19 raw material suppliers, 15 OSAT suppliers and 29 waste disposal suppliers. In 2024, additional
sustainability criteria were integrated into the audit scope to further reinforce the importance that suppliers place on sustainability practices.
According to the audit records, the performance of suppliers is in line with Winbond's requirements, and no qualified supplier will be disqualified as a supplier due to noncompliance with environmental and safety and health, labor and ethics, product and technical quality, and sustainability management system.

To foster sustainable collaboration with suppliers in product/technical services, management, and operations, Winbond compiled 146 improvement suggestions from 63 audits conducted in 2024. 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.