Focusing on the profound impact of the raw materials used in the manufacturing process on the environment and society, PSMC has formulated a "raw materials policy" to implement the spirit of sustainable raw material use in its procurement practices. Through the supplier risk management process, we evaluate whether the supplier's operation and production of raw materials have negative impacts or potential risks on social and environmental aspects such as labor safety, energy resource consumption, ethics, and quality, and prioritize the procurement of raw materials and use this process to confirm the traceability of raw material sources to suppliers.

In order to reduce the impact of raw material production on the environment and society, in addition to requiring suppliers to sign the Supplier Code of Conduct to comply with environmental and social regulations, PSMC will in the future provide technical support and project cooperation with suppliers to reduce the negative external impacts of raw material production for making substantive contributions. In addition, in order to systematically implement the raw material management plan, PSMC has launched the development of in-plant recycling and remanufacturing technology for some raw materials and is gradually increasing the use of third-party verified sustainable raw materials and the proportion of procurement and use of recycled raw materials to continuously track and report on the progress of procurement targets. And through themed training courses, purchasing personnel can fully grasp the concepts and essentials of sustainable raw material purchasing, so as to achieve phased purchasing goals as scheduled.

In order to establish a closer partnership with suppliers in regions where the company’s operating sites are located, PSMC follows the principle of local procurement for our raw material sourcing operations. Local procurement not only helps to reduce greenhouse gas emissions in the overall supply chain, create local employment opportunities, and promote economic development, but also improves PSMC’s ability to control product quality and lead times, while helping build a resilient and competitive supply chain. In 2023, local suppliers accounted for 95.99% of PSMC’s suppliers, and their procurement accounted for 82.40% of total value. There was also a steady upward trend in these figures.

In response to the global trend toward green products, PSMC gives priority to products and services that are Green Label certified, and recognized by governments and international organizations. The green product/service assessment criteria have been incorporated into the company’s procurement practices and supplier assessment screening mechanisms. PSMC’s total green procurement value in 2023 exceeded NTD$213 million, an increase of 33.56% over the previous year. The major procurement items were products that have passed Taiwan’s Type I environmental labeling certification, and other certifications such as Energy Label, Carbon Label, Green Building Material Label, as well as internationally recognized ENERGY STAR Label, EPEAT (Electronic Product Environmental Assessment Tool) Registry Label, TCO Certified Label initiated by the Swedish Federation of Professional Employees, etc.

PSMC is committed to respecting and protecting human rights, practicing high standards of social ethics and fulfilling corporate responsibilities. To this end, PSMC asks all target and gas suppliers with whom we have dealings to commit to not using upstream suppliers and countries of origin in conflict minerals areas in order to achieve the goal of 100% conflict-free minerals. We also call on all of our supplier partners who have business dealings with PSMC to join the Responsible Business Alliance's "No Minerals Accepted from Conflict Mines" pledge and ask our raw material suppliers to comply with the following requirements:

• Suppliers must fulfill their social and environmental responsibilities.
• Suppliers must ensure that no products are made from the minerals extracted in the areas of Congo, or its neighboring countries that are in armed conflicts, or extracted in poor working conditions.
• Suppliers must disclose the source of the minerals, such as Ta, Sn, Au, and W; and complete investigation forms.
• Suppliers must convey PSMC’s policy of "no conflict minerals" to their upstream suppliers and supply chains.

Conflict minerals are from the Conflict-Affected and High Risk Areas, or neighboring armed countries that illegally mine such minerals: tantalum (Ta), tin (Sn), tungsten (W), gold (Au) and Cobalt(Co).

• Tantalum (Ta), tin (Sn), tungsten (W) , gold (Au)：PSMC and its suppliers have committed themselves to avoid using conflict minerals, have proceeded to conduct an annual detail research in its supply chain and updated its research data, and checked and collected the latest information on the RMI official website every year. If there are any updates, the supplier will be requested to provide the update and feedback.
• Cobalt(Co)：If there are any updates in the conflict mineral template, the supplier will be requested to provide the update and feedback. This encourages suppliers to participate in Responsible Minerals Assurance Process (RMAP). If cobalt is in the scope of CMRT management, PSMC will require suppliers to strictly obey the rule of CMRT.

PSMC established the Supplier Code of Conduct based on the「Responsible Business Alliance (RBA, formerly known as EICC) Code of Conduct」. It requires suppliers to make sure that their labor, health and safety, environment, business ethics and the management system are subject to the code, and that suppliers are to strictly obey the laws/ rules of the country/ area where their business run. The aforementioned will be checked in the pre-selection and annual supplier audit, suppliers’ status of compliance with this Code will be one of the considerations for PSMC’s evaluation of and decision making on the purchasing.

RBA Commitment  

Powerchip Semiconductor Manufacturing Corporation (PSMC) is a professional wafer manufacturing company. Sustainable development is the core vision of the corporation. PSMC has established a comprehensive policy of the raw material and the commitment are implemented after approval of the president to ensure it's procurement behavior and to meet standards regarding to account environmental, social and governance (ESG) factors.

PSMC is committed to abiding by the following concepts and principles and we will establish a sustainable, stable and responsible supply chain to bring positive impacts to the enterprise, society and the environment through the promotion and implementation of these raw material policies.

1. Sustainability first: Commitment to give priority to the purchase of sustainable raw materials verified by third parties, encouraging suppliers to increase the production of recycled raw materials and plan to increase the proportion of sustainable raw materials and recycled raw materials. We are seeking to establish long-term cooperative relationships with suppliers and work together to reduce consumption of energy and resource in the production process and the impact on local communities and groups, and to minimize the negative impact of the use of raw materials on sustainable development.
2. Supply chain transparency: The advocacy requires suppliers to provide detailed information on the source and manufacturing process of their products to ensure compliance and traceability of the raw materials.
3. Risk Management: Committed to identifying and managing risks related to raw material procurement, including supply interruptions, price fluctuations and regulation changes, etc., to lower down the uncertainty through pre-planning and risk assessment.
4. Continuous improvement: To improve the policy and process of raw material procurement continuously and establish a model of sustainable raw material procurement through cooperation with suppliers, PSMC welcomes suggestions and feedback from internal and external stakeholders to create a more resilient and sustainable supply chain.
5. Comprehensive compliance: Avoid using raw materials containing materials from globally important biodiversity sites and adhere to all relevant laws, regulations and standards.