Wafer Works is committed to establishing long-term partnerships with suppliers to ensure supply chain stability. By signing contracts, we secure a better and more stable source of raw materials, thereby enhancing the Company's competitiveness. Additionally, through the establishment of an integrated system, we conduct supplier evaluations considering factors such as "price," "quality," "delivery time," and "sustainable development." This evaluation process ensures that suppliers abide by regulatory and environmental requirements. These measures help us select the most suitable domestic suppliers, strengthening supply chain management and contributing to the sustainable development of the supply chain.
Supply Chain Interaction
By actively investing manpower and resources in the investigation and verification of raw material suppliers, Wafer Works has developed comprehensive supply chain management guidelines and measures to lead suppliers in mutual growth. This includes supplier management, supplier evaluation, supplier audits, and green material requirements, guiding suppliers to meet green supply chain requirements and mitigate supply chain risks.
When introducing new suppliers for critical and important raw materials, Wafer Works requires suppliers to sign the "Supplier Evaluation Form" and "RBA Code of Conduct". Additionally, they must provide a "Third-party Quality System Certificate," "Supplier Process/Product Change Notice (PCN) Management Principles," and sign the "Commitment to Prohibit the Use of Hazardous Substances" and "Declaration of Non-Use of Conflict Minerals" before collaboration can commence.
To effectively manage harmful substance data internally, we incorporate environmental principles into our supplier management mechanism. Since 2018, Wafer Works, by referencing RoHS regulations and customer requirements for prohibited substance control, has mandated that all suppliers of critical and important materials use raw materials and packages that observe environmental regulations and refrain from using metals produced in countries with conflict minerals. We collaborate with supplier partners to seek and develop greener products that are of superior quality and environmentally sustainable.
Furthermore, Wafer Works contributes to local socio-economic development through procurement practices. To ensure compliance with our requirements, Wafer Works regularly assesses the compliance of suppliers handling critical materials (those directly exposed to the product) and important materials (those posing a risk of appearance difference during manufacturing). This evaluation follows the guidelines of the qualified supplier evaluation and assessment. If any non-compliance issues arise, suppliers are mandated to rectify them promptly.
In Response to the Climate Change Response Act, Wafer Works has engaged with suppliers in the field of greenhouse gas verification by reviewing the current status of suppliers' ISO 14064-1:2018 certifications. For those suppliers who have not yet obtained the certification, the Company has initiated guidance and support programs to assist them in compliance.
Supply Chain Organization Structure
The upstream and downstream relationships of Wafer Works in its supply chain are illustrated below. The Company's suppliers mainly consist of raw material suppliers, equipment engineering suppliers, waste disposal firms, on-site contractors (such as security and cleaning personnel), as well as land, sea, and air freight forwarders. These partnerships are predominantly long-term, and we maintain good procurement relationships with our suppliers unless significant changes in demand or supply necessitate seeking new suppliers or adjusting procurement proportions.
The Structure and Management Policies of Critical and Important Raw Material Suppliers:
Supplier Management
In terms of risk management measures, the company has established a comprehensive natural disaster response plan to address potential extreme weather events, earthquakes, and other natural disasters to ensure business continuity. To reduce risks in the supply chain, Wafer Works implements a diversification strategy to minimize reliance on single regions or materials and enhance adaptability. Through material monitoring, the company sets safety stock levels and follows internal management procedures to coordinate material allocation in case of emergencies.
Currently, Wafer Works predominantly sources materials from Taiwan. To facilitate comprehensive business operations, we partner with procurement entities to actively promote ESG and green procurement initiatives, fostering material localization to bolster the growth of local suppliers. This strategy not only cuts down on unnecessary air and sea freight expenses but also diminishes the carbon footprint associated with material transportation.
Wafer Works also implements environmental protection mechanisms. In addition to pallets and PP buffer materials being recycled and reused by warehouse personnel, measures such as using recycled materials for packaging corner paper and recycling shipping boxes have been undertaken to reduce costs and minimize resource waste.
Percentage of Pallets, PP Buffer Materials, and Shipping Boxes Recycled in 2024.
Wafer Works views suppliers as important partners in co-creating value. Together with our brand customers, we aim to influence the supply chain to uphold business ethics and social responsibility, thereby reducing environmental resource consumption and impact. This enhances our ability to create value for the overall economy, environment, and society (including people and human rights), fostering industry growth and sustainable development.
Below is the regional distribution of Wafer Works' suppliers to mitigate concentration risk. We employ a multi-region strategy to develop suppliers:
The Structure and Management Policies of Critical and Important Raw Material Suppliers:
2024 Supplier Distribution by Region (%)
 |
 |
Supplier Management
Wafer Works carries out evaluations of new suppliers based on comprehensive supplier selection, assessment, and sample approval processes to ensure that selected suppliers and materials meet requirements. Upstream suppliers must comply with RoHS standards, national regulations regarding occupational safety qualifications, and ISO certifications. They must label shipments containing hazardous materials, properly recycle containers and loading tools, and adhere to fair trade principles. We are committed to ensuring that trading partners fulfil environmental, occupational safety, and human rights requirements. Failure to comply with regulations will result in rejection and inclusion in the vendor evaluation process.
Furthermore, in response to the increasing emphasis on international human rights issues in recent years, when purchasing materials, parts, or products containing metal components, suppliers are required to thoroughly investigate compliance with "conflict-free metals" to ensure that purchased raw materials are obtained through legal channels. We ensure that the working environment is safe, employees' rights are protected and respected, pollution prevention is implemented in processes and products, and social responsibilities are fulfilled.
To ensure legal waste management practices, annual on-site audits are performed for all waste disposal providers to verify their proper handling of the waste entrusted to them.Wafer Works is committed to refining and implementing its supply chain management policies. Looking ahead, the company will continue to collaborate closely with its suppliers to promote sustainable development strategies and further optimize existing supply chain management practices.
Supplier Management Vision
Wafer Works envisions strengthening product quality through collaboration with suppliers, balancing the effectiveness of supplier management and quality costs, and thereby enhancing customer service efficiency and satisfaction. This aims to build a win-win partnership within the supply chain with customers and suppliers.
Supplier management follows a process of retaining high-performing suppliers and phasing out underperformers. After a supplier is approved, a cross-functional team comprising engineering, procurement, and quality assurance departments conducts annual evaluations based on document submissions, material quality, lead time control, and overall performance. According to the internal supplier audit plan, once any instability is detected, the supplier will be urged to initiate continuous improvement.
 |
 |
Supplier Evaluation and Audit
According to the "Qualified Supplier Evaluation and Assessment Regulations," Wafer Works conducts assessments of suppliers in terms of quality, delivery, pricing, cooperation, and sustainability every six months. Additionally, annual supplier audits are carried out to ensure that supplier performance meets the required standards. In the 2024 annual supplier evaluation, a total of 103 critical and important material suppliers were evaluated.
The results showed that 100% of the suppliers were graded B or above, matching expectations. Suppliers who fell short of the target were required to implement continuous improvement activities, with their progress monitored, and were included in the next year's audit plan. In 2023, three suppliers were listed for improvement tracking and all completed
verification audits in 2024, meeting expectations. For the first half of 2024, three suppliers were rated below B, mainly due to quality issues. They were requested to peruse and sign the assessment report and provide improvement plans, with follow-up reviews completed by the Quality Assurance department in October 2023. In the second half of 2024, no suppliers received a grade below B, reaching the set target.
2024 Supplier Evaluation Results
Green Product
To uphold sustainable development and fulfill social responsibility, Wafer Works has established a green material management mechanism. In accordance with the "Green Product-Related Substance Management Guidelines," relevant regulations such as RoHS , REACH/SVHC, and customer requirements, suppliers are requested each year to provide third-party laboratory test reports, commitments, or warranty letters to confirm that the related materials conform to RoHS and REACH/SVHC. The test results for heavy metals, and other harmful chemicals are all found to be "Not detected," ensuring that the company's products are safe for both humans and the environment.
Wafer Works consistently promotes green procurement, mandating suppliers of raw materials and packaging materials to provide certificates guaranteeing that their products do not contain environmentally harmful substances. Additionally, they are requested to provide test reports to ensure compliance with customer requirements and relevant regulations, as well as to confirm that materials from conflict areas are not used. Suppliers of raw materials and packaging materials are also obligated to provide commitments pledging not to use any materials from conflict areas. Wafer Works has drawn up the "Green Product-Related Substance Management Guidelines," which cover supplier management, raw materials, packaging material inspection, product verification, internal audits, and customer inquiries. Regarding regulations or directives governing harmful substances, such as RoHS and SONY SS-00259, which customers are concerned about, the official instructions are disseminated to company employees through the Knowledge Management System (KMS).
Wafer Works undertakes product compliance assessments in accordance with regulations or directives to ensure that all relevant substances are regulated and compliant with RoHS , REACH/SVHC, and customer requirements. This effort aims to meet the standards for green products and minimize the impact of products on the natural environment.
Green Product-Related Substance Management Procedure
Green Procurement
Using products with environmental labels can reduce resource consumption, minimize environmental pollution, and lessen the impact on the planet. As a responsible global citizen, Wafer Works actively advocates for the procurement of green products to fulfill its corporate social responsibility, preserve the Earth's environment, and enforce green product policies.
Furthermore, material suppliers are required to submit inspection reports batch by batch or on a periodic basis to prove compliance with diverse international environmental regulations on prohibited and restricted substances and to fulfill customer requirements, thereby endorsing the principles and dedication of green supply chain management.
Conflict Minerals
Wafer Works has incorporated the prohibition of "conflict minerals" into its supplier management policy. As a global citizen, we declare and pledge not to accept metals sourced from conflict areas. Furthermore, suppliers are obliged to commit to not using metals from such conflict areas in their products, thus leveraging market mechanisms to eliminate such practices.
Human Rights Related Issues
Wafer Works Corporation requires suppliers to sign the Supplier Evaluation Form and the Wafer Works Supplier Code of Conduct. Suppliers must also complete a self-assessment questionnaire as requested by the Company to ensure that they do not employ forced labor (including bonded labor, involuntary prison labor, or slavery), and do not engage in discriminatory practices in recruitment or employment activities (such as promotion and compensation) based on race, color, age, gender, sexual orientation, disability, pregnancy, religion, political affiliation, union membership, or marital status. Additionally, suppliers must not violate child labor laws or corporate social responsibility standards. In the event of any deviations found at a supplier's operational site, the Company will initiate corresponding corrective actions.
Supplier Management Procedures
