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Supply Chain

Responsible Supply Chain Management

Fair-Trade Culture
  • Operate a compliance risk management system based on internal regulations such as the LX Code of Ethics, Code of Practice, and Fair-Trade Compliance Guidelines
  • Established the Fair-Trade Compliance Guidelines in 2018 and implement regular revision
  • Send a “request letter to comply with fair trade” under the name of the CEO to express the CEO's will to comply with compliance and encourage members to participate
  • Send out the ‘Fair Trade Newsletter’ (monthly) to enhance employees’ understanding and awareness of compliance, covering major content and trends of the fair-trade system and cases of violations of laws and regulations

Code of Ethics (Chapter 3. Fair Transactions)

All business transactions are based on the principles of fair competition, with equal opportunity guaranteed to all entities. We build trust and cooperative relationships through fair and transparent transactions. Such relationships are built based on long-term mutual growth.

  • 1

    Equal Opportunities

    • 1)

      We offer equal opportunities to all qualified companies seeking to become our business partners.

    • 2)

      We register and select all applicants in a systematic manner, following a fair and objective evaluation process.

  • 2

    Fair Transaction Process

    • 1)

      We conduct all business transactions under equal circumstances. The terms and procedures of the transaction are thoroughly discussed between the parties involved.

    • 2)

      We never engage in any form of unfair transaction taking advantage of any superior position.

    • 3)

      We exchange transaction information through appropriate procedures in a timely manner. Transaction results are evaluated on a regular basis and mutual cooperation measures are taken.

  • 3

    Pursuing Mutual Growth

    • 1)

      We support the long-term growth of our partner companies by enhancing their competitiveness through technological and managerial assistance. We share the profits derived from business innovations.

    • 2)

      We pursue mutual efforts and cooperate with our partner companies in promoting a healthy business environment and maintaining fair business processes.

Fair Trade Compliance Guidelines

  • Chapter 1

    Application Scope

  • Chapter 2

    Purpose

  • Chapter 3

    Basic Principle

  • Chapter 4

    Duty of the Organization Leader

  • Chapter 5

    Liability in case of Violations

Supplier Code of Conducts_link
  • Established and disclosed ‘LX Semicon Supplier Code of Conduct’ based on the RBA Code of Conduct for responsible supply chain management

Supplier ESG Assessment

Supplier Risk Identification
  • Define risk types considering semiconductor industry characteristics and evaluate supplier competitiveness based on LX Semicon’s management standards

    Conduct Supplier credit ratings for financial risk management, and evaluations on capability & ESG management(biannual)

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    Items that can take a significant toll on the supply chain and require immediate action

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    Items requiring continuous monitoring to respond to internal processes or prevent recurrence

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    Items affecting positively to facilitate mutual communication

Risk Types

Category Details
Finance Risks of bankruptcy of others based on information such as profitability, debt, and cash flow
Operation Risks of supply and demand disruptions and quality defects associated with technology, manufacturing, logistics, quality, etc.
Commercial Risk management regarding contracts, payment, etc.
ESG Compliance risks related to environment, labor, safety and health, and ethics
Geopolitics Risks of supply chain issues and supply disruption due to disputes
Supplier ESG Assessment
  • Conduct online ESG assessments to measure suppliers’ ESG risk management

    Suppliers demonstrate an overall higher ESG level than the benchmark group, and no negative environmental or social impacts were found

Supplier ESG Assessment Process

  • Selecting Target Companies

    • Target partner selection
  • Conducting ESG Assessment

    • Online evaluation system(annually)
  • Assessment Result Management

    • Derivation of evaluation grade/scores for each item
    • Implementation of supplier improvement recommendations, etc.

ESG Assessment Item

Category Details
Environment Environmental management system, GHG, water/effluent, waste, air quality
Human Rights·Labor Human rights/labor standards and practices, workplace safety and health, human rights/labor within supply chain
Ethics·Governance Ethical management, ESG management/information disclosure, corporate governance
Product·Service Responsibility Responsible management of chemical and hazardous substance, raw material sourcing, use of renewable energy, etc.
Supplier Pilot ESG Due Diligence
  • Conducted pilot ESG due diligence after selecting key suppliers based on the results of the 2023 supplier ESG Assessment and the size of the transaction
  • The ESG risks identified through on-site verification are clearly explained to partners and mutually identified for the need for improvement

    No supplier has identified significant risks that need immediate improvement, but many tasks need improvement in various areas such as human rights, labor, safetyand Health, ethics, etc.

    Provide consulting for ESG-related opinions and questions and answers by partner companies to discuss improvement directions

Category Improvement Tasks (Examples)
ESG System
  • Systematic management of non-financial risks through establishment of ESG management decision-making system and documentation of ESG information
  • Top management’s commitment to ESG Management
  • Periodic executive-level review of ESG-related issues or performance
Governance
  • Establishment of a principle of non-punishment for whistleblowers
  • Disclosure of the whistleblowing handling process
  • Implementation of regular ethics training for employees (anti-corruption, fair transaction, etc.)
  • Creating an environment where boards can hold management accountable and fulfill their oversight duties
Social
  • Establishment of a subcontractor (in-house contractor) exclusion principle for hazardous/dangerous tasks
  • Training for changed process to prevent disaster
  • Provision of safety and health information for foreign workers
  • Conducting regular fire safety drills and inspections of fire facilities
  • Introduction of expanded employee benefits to retain talent
Environment
  • Demonstration of CEO commitment to environmental practices
  • Promotion of public disclosure of environmental management policies
  • Regular checks for environmental compliance
  • Ongoing monitoring for environmental regulations

Conflict Mineral Management

Responsible Mineral Sourcing Policy
Category Details
Responsible Mineral Sourcing Policy
  • Participation in the international community’s efforts to stop using conflict minerals and disclosure of management policies
Conflict Minerals Management Policy
  • 1.

    Supplier management/monitoring in order to prevent the inflow of conflict minerals into the company’s supply chain

  • 2.

    Inspection of the use of conflict minerals by each partner company and request for the submission of a confirmation of non-use of conflict minerals

Supplier Code of Conduct (Article 6)
  • 1.

    Establishment of a policy to prevent the use of raw materials procured illegaly, with negative environmental impact or by unethical methods

  • 2.

    Conflict minerals provisions should be included in the supply chain policy, and establishment of a system to ensure that the minerals used in raw materials, parts, and products supplied to LX Semicon (tantalum, tin, tungsten, gold: hereinafter 3TG) do not directly or indirectly provide financial resources or benefits to armed forces that seriously violate human rights in the Democratic Republic of the Congo or neighboring countries

  • 3.

    Efforts to check the origin and supply chain of 3TG minerals in raw materials, parts, and products supplied to LX Semicon

  • 4.

    Cooperate in providing relevant data such as the origin of 3TG minerals, information on smelters and refiners, and others upon request from LX Semicon and LX Semicon customers

  • Conflict Minerals Management Policy

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    • Manage the non-use of conflict minerals (tin, tantalum, tungsten, and gold) that are mined and distributed unethically, including human rights abuses and environmental degradation

      Manage conflict minerals based on our ‘Responsible Minerals Sourcing Policy’

      Strengthen supplier monitoring and management to prevent the entry of conflict minerals into the supply chain

      Implementing inquiries about the use of conflict minerals, requesting and verifying submissions of non-use confirmations from suppliers

    Conflict Mineral Management Process
    • STEP 1

      Inspection on the status of conflict minerals

      Verify the use of certified smelters

    • STEP 2

      Supplier CMRT application/ review

      Require the submission of CMRT and the Pledge Against Conflict Minerals and examine them

    • STEP 3

      Creation of LX Semicon CMRT

      Generate a CMRT that encompasses all of our products

    • STEP 4

      Stakeholder response

      Provide additional data as per stakeholder requests