Supplier Sustainability Management
Winbond has actively embraced CSR to build a more resilient and sustainable supply chain. We also expanded the scope beyond our own business to our supply chain and wish to establish a stable and sustainable partnership with suppliers and subcontractors. In addition to quality, delivery time, price and production process technologies, we also set high standards for CSR to realize corporate sustainability.
| 2020 Sustainable Supplier Management Outcomes | ||||
| 1. | Suppliers committed to the Winbond Ethics and Integrity Policy | 100% | ||
| 2. | Commitment rate for Winbond Supplier Code of Conduct Commitmen t Letter | 100% | ||
| 3. | Commitment rate for Declaration of Non-use of Hazardous Substa nces | 100% | ||
| 4. | Commitment rate for Contractor Safety, Health and Environmenta l Protection Management and Letter of Commitment for Education Training | 100% | ||
Supplier Sustainability Management Structure
| 1. New Supplier Selection | 2. Supplier Maintenance | 3. Supplier Communication |
| Signing of commitments by new supplier Written review | Supplier management and audit | Training and reporting mechanism |
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Winbond requires all suppliers to conform to or sign onto the sustainability-related codes of conduct and ethics, Employee Code of Ethics, International Declaration of Human Rights, and International Labor Office Tripartite Declaration of Principles. They must have adopted policies on green products, environmental protection, and Hazardous Substance Free (HSF), or comply with the requirements set by the Responsible Business Alliance (RBA). Preference is given to vendors with ESG standards during the selection of new suppliers. Suppliers are classified and graded by Winbond for effective management and maintenance of approved suppliers. Regular supplier audits and conflict mineral investigations are also conducted. In 2020, all (163) raw material suppliers had signed the Winbond Code of Ethics and Integrity, Winbond SUPPLIER CODE OF CONDUCT COMMITMENT LETTER (including clauses on compliance with RBA and Conflict Minerals Declaration), and Declaration of Non-use of Restricted Substances.
At the same time, Winbond maintains close contact with suppliers through activities such as the annual suppliers conference. Winbond also set up natural disaster reporting mechanism with suppliers for the reporting of earthquakes in the supply chain. Timely information on the geographic information of affected suppliers helps Winbond mitigate losses from business disruptions while improving our productivity and efficiency.
New Supplier Selection
The new supplier selection mechanism includes the quality system questionnaire (covering quality, delivery time, service, technology, and supplier quality systems), RBA Code of Conduct, and CSR standards. The supplier must also provide a third-party quality system certificate, the supplier management principles for Process/Product Change Notice (PCN), and fill out the questionnaire on hazardous substance management. Subcontractors for secure products must also provide their international security certification and fill out the “Security Control Measures Questionnaire for Secure Product Subcontractors.”
Percentage/Number of Suppliers Approved under Environmental, Social and Governance Screening (Unit:%)
| Year | Number | Percentage |
| 2018 | 2 | 100% |
| 2019 | 11 | 100% |
| 2020 | 4 | 100% |
| Total | 17 | 100% |
Winbond has key operating sites in Japan, Korea, and Taiwan. We have suppliers in the US, Japan, Korea, Taiwan and other parts of the world. The purchasing statistics from each operating site showed that 96.5% of raw materials were purchased locally by value in 2020. This was 3.0% lower than the previous year due to allocation of orders based on supplier production capacity. The largest category of purchasing from previous years was direct materials at 40.5%.
Localized Purchasing from Suppliers (Unit:%)
| Type | Proportion by Value (Domestic) | Proportion by Value (Overseas) | ||
| 2019 | 2020 | 2019 | 2020 | |
| Wafer | 41.5 | 38.6 | 0.2 | 0.8 |
| Chemical | 45.4 | 45.6 | 0.4 | 2.7 |
| Gas | 10.8 | 10.4 | 0.0 | 0.0 |
| Target | 1.8 | 1.9 | 0.0 | 0.0 |
| Total | 99.5 | 96.5 | 0.6 | 3.5 |
LRisk Management for Key Raw Materials
Winbond engages in risk management for key raw materials in accordance with our procurement management procedure. The formula of raw materials provided by upstream suppliers are confidential, but the risk management processes would insureWinbond’s requirement on non-use of restricted substances. All suppliers are regularly required to provide their CMRT list as well and none sourced their materials from smelters in high-risk regions.
Supplier Sustainability Audit
Supplier Classification and Grading
Suppliers are classified and graded by Winbond for their effective management (sorted by type of requisition). Inventories are also conducted to track the overall condition of the supply chain. The six main categories of Winbond suppliers are equipment, parts and components, raw materials, factory affairs, automation, and back-end subcontractor.
Establishment of Supplier Sustainability Audit Standard
Winbond regularly evaluates approved suppliers on their quality, delivery time, service, and service. Suppliers are then graded as A, B or C based on the outcome of the evaluation. Their grade also affects how they are handled. To ensure the normal operation of all related mechanisms, Winbond also conducts annual audits at suppliers (raw materials) and subcontractors (packaging and testing) for control of supply chain risks. The audit looks not only at “quality management” but also “green audit” and “social responsibility audit.” All suppliers undergo written or field audits every year. In 2020, 12 subcontractors and 20 suppliers of raw materials were audited and all suppliers met Winbond’s standards.
Sustainability Review Mark
Supplier Evaluation Outcome Handling Mechanism
| Supplier Grade | A | B | C |
| Handling Mechanism | Maintain existing relationship with the supplier and continue with regular written audits. |
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Sustainability Review Standard
| Aspect | Review Item | Scoring Criteria |
| Quality Management | In addition to requiring quality and management system certification from suppliers, Winbond has defined 12 categories in the inspection form:Quality system; contract review; design management; document control; suppliers management; product source traceability; control of manufacturing process; inspection and testing; verification management; control of non-conforming products; product transport, packaging, storage and delivery; quality records. These include 4 quality indicators. | Excellent (Score ≧ 90%) Good (90% > Score ≧ 80%) Re-review (Score <80%) |
| Green Review | Suppliers undergo a green review every year to ensure their compliance with the “Green Product and Environmental Policy.” The review looks four areas (management responsibility, outsourcing management, process management and customer support) and has 7 indicators. Green review also covers conflicts mineral investigation. The supplier is required to sign a declaration and provide the relevant investigative data. | Excellent (Score ≧ 90%) Good (90% > Score ≧ 80%) Re-review (Score <80%) |
| Social Responsibility Review | The “Winbond Code of Conduct for Suppliers” is based on the relevant standards defined by the Responsible Business Alliance (RBA). Suppliers undergo a review of their economic, environmental and social performance. The RBA Self- Assessment Questionnaire (SAQ) and Validated Audit Program (VAP) are also employed for an in-depth analysis of actual supplier engagement with social responsibility. | In 2020, 11 subcontractors completed SAQ and 6 of them also completed VAP. |
Supplier/Subcontractor Pass Rate for Economic, Environmental and Social Audits (Unit:%)
| Procurement Type / Aspect and Standard | Supplier/Subcontractor (Packaging and Testing Vendor) |
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| Economic Aspect | ISO 9001 Quality Management System | 100 |
| IATF 16949 | 100 | |
| Environmental Aspect | ISO 14001 Environmental Management Systems | 100 |
| REACH | 100 | |
| RoHS | 100 | |
| IECQ QC 080000 | 100 | |
| Social Aspect | ISO 45001 | 100 |
| Responsible Business Alliance (RBA) | 91.7 | |
Outcome of Supplier/Subcontractor ESG Assessment
| Supplier Category | Companies Audited | Companies Approved |
| Packaging and Testing Vendor | 12 | 12 |
| Raw Materials Vendor | 20 | 20 |
Conflict Minerals Management
Winbond does not purchase or use minerals such as Gold (Au), Tantalum (Ta), Tungsten (W) and Tin (Sn) sourced from mines in conflict regions controlled by non-government or illegal armed groups in the Democratic Republic of Congo in accordance with the RBA Code of Conduct. 100% of our key suppliers have signed the Winbond SUPPLIER CODE OF CONDUCT COMMITMENT LETTER as well. We have formally stated to suppliers our policy on non-use of conflict minerals through our corporate website and information letters.
Winbond uses the Conflict Minerals Reporting Template (CMRT) from the RBA CoC to investigate suppliers for conflict minerals. Suppliers are asked to provide Winbond with the smelters of related materials and ensure that their information is up to date. Winbond will continue to work with suppliers to ensure that we only use Tier-1 certified Conflict-Free Smelters announced by RBA. Conflict mineral investigations were conducted by Winbond at 22companies (including 14 suppliers and 8subcontractors) and all complied with the relevant regulations. In 2020, no sales prohibitions were placed on Winbond products either.
Supplier Sustainability Engagement
Winbond values our partnership with suppliers. We not only look forward to working with suppliers on improving our sustainability competitiveness and performance, but also consider it to be our social responsibility. Supplier’s conferences are therefore regularly held by Winbond along with sustainability review standards to help suppliers improve their economic, social and environmental performance.
Suppliers Conference
Winbond values our long-term relationship with subcontractors and a Suppliers Conference is convened every year to communicate our quality and CSR policies, share the latest Winbond quality requirements and industry innovations, strengthen our consensus and collaboration with subcontractors, and encourage suppliers to join us in fulfilling their CSR. Awards are also presented to outstanding suppliers to thank them for their support and motivate their continued push for sustainability.
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Supplier/Subcontractor Counseling
Winbond looks forward to growing together with our supplier and subcontractor partners through continuous improvements in production processes and quality. We therefore offer counseling on improvement activities to suppliers and subcontractors, and work with them to use the DOE experimental design method to improve product yields. At the same time, we encourage the sharing of information security practices and factory automation experience, so that we can all learn from each other and grow together. We actively assist local suppliers with enhancing their capabilities to create a win-win outcome as well as improve the sustainability and resilience of the supply chain.
Supplier/Subcontractor Counseling Outcomes
| Scope of Counseling | Problem Description | Improvement Method | Improvement Outcome |
| Improve WLCSP yield at subcontractor | WLCSP AOI (Automatic Optical Inspection) yield did not meet the target of 99.5% |
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Before improvement: 97.63% After improvement:99.86% |
| Maintenance of information security |
Production disrupted for 7 days at subcontractor due to ransom ware attack |
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Design of AGV (Automated Guided Vehicle) to replace manual operations |
Education and Training for Security Guards
Winbond also develop training courses and programs for security guards at our sites every year. We regularly organize training on topics such as human rights as well as RBA audits for security contractors. All security contractors passed the RBA audit in 2020. The audit covered 10 items including human rights, health and safety. Such audits not only maintain workplace safety at Winbond but also improve security contractors’ understanding and performance in social responsibility.
Site security implemented enhanced COVID-19 prevention measures for personnel entering the site in 2020. These included taking body temperature measurements and wearing of masks. Management training on epidemic prevention was also implemented.
Education and Training Outcomes
| Topic | Content | No. of Security Guards | Course Duration(Hours) | Site |
| Workplace Equality | Education and training on workplace bullying, abuse, and harassment. | 17 | 3 | CTSP Site |
| 12 | 2.5 | Jhubei Office | ||
| Epidemic prevention education | Security guard provided education and training on temperature measurements and wearing of masks for epidemic prevention to employees/ visitors/contractor personnel entering the site. | 17 | 4 | CTSP Site |
| 12 | 3 | Jhubei Office |