Supply Chain
Governance
Sustainable Supply Chain Response Structure
Strategy
Grievance Handling Process for Supplier
LX Semicon actively collects feedback from its suppliers and uses it to address systemic issues and promote fairness in operations, thereby laying the foundation for mutual growth. Suggestions and feedback covering various operational aspects, such as supply chain management (SCM), quality risk mitigation, and technological capability enhancement, are received from partners, and practical improvement measures are carried out based on these inputs.
Supplier Code of Conduct
Supplier Code of Conduct
LX Semicon makes dedicated efforts to manage its partners while considering various global supply chain initiatives and customer ESG requirements. To establish a responsible supply chain, the company has enacted and publicly disclosed the “LX Semicon Partner Code of Conduct,” which is based on the Responsible Business Alliance (RBA) Code of Conduct.
Supplier Code of Conduct
Support for Partners’ Implementation of Social Responsibility
LX Semicon conducted ESG due diligence and consulting for major suppliers with a certain level of transaction volume. ESG risks identified through on-site due diligence were shared with the suppliers, and recommended response measures were provided. Although no critical risks were found among the assessed suppliers, areas requiring improvement were identified across various domains including human rights and labor, health and safety, and ethics. To support substantial improvements, LX Semicon conducted consultations and gathered feedback from the suppliers.
| Category | Improvement Tasks (Examples) |
|---|---|
| ESG System |
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| Governance |
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| Social |
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| Environment |
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Risk Management
Supply Chain Risk Management
LX Semicon defines key risk categories that reflect the specific characteristics of the semiconductor industry and operates a system to assess the competitiveness of its suppliers based on these risks. To manage financial risks, the company conducts credit evaluations of its suppliers twice a year (semiannually) to continuously monitor their financial soundness. In addition, from a non-financial capability and management perspective, suppliers are evaluated semiannually based on five core evaluation criteria: technology, quality, cost, delivery, and ESG. This systematic approach allows LX Semicon to proactively identify and manage supply chain risks while supporting sustainable supplier development.
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
LX Semicon operates an online ESG assessment system to encourage suppliers to participate in ESG risk management. The evaluation criteria are structured across four main categories (environment, human rights-labor, ethics-governance, product-service responsibility). Assessment results are communicated to each supplier, and improvement is recommended for items identified as having a high risk of occurrence. Information related to LX Semicon’s supplier ESG assessments is available through the Data Library.
Supplier ESG Assessment
Supplier ESG Assessment Process
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Selecting Target Companies
- Target partner selection
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Conducting ESG Assessment
- Online evaluation system(annually)
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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. |
To prevent the unethical mining and distribution associated with human rights violations and environmental destruction, LX Semicon strictly manages the use of conflict minerals such as tin, tantalum, tungsten, and gold. Based on its Responsible Mineral Sourcing Policy, the company operates a conflict minerals management system. To prevent conflict minerals from entering its supply chain, LX Semicon continuously strengthens efforts to inspect suppliers’ use of such minerals and ensures the control of non-use throughout its procurement processes.
Responsible Mineral Sourcing Policy
Conflict Mineral Management Process
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STEP 1
Inspection on the status of conflict minerals
Verify the use of certified smelters
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STEP 2
Supplier CMRT application/
reviewRequire the submission of CMRT and the Pledge Against Conflict Minerals and examine them
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STEP 3
Creation of LX Semicon
CMRTGenerate a CMRT that encompasses all of our products
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STEP 4
Stakeholder
responseProvide additional data as per stakeholder requests
