Supply Chain Management

With regard to supplier selection, potential raw material suppliers must operate according to VIS's supplier management policies as well as the "Vendor Safety, Health, and Environment Audit Management Guidelines"; suppliers must follow these guidelines and complete relevant evaluation procedures before they are selected to become qualified vendors.

The evaluation process includes a preliminary review and an on-site audit. Our Supplier Quality Management Department conducts the preliminary reviews, then invites our Risk and Environmental Safety Management Department, as well as any other relevant departments to conduct inspections. The audits include areas such as environmental protection, health and safety, etc. Finally, our Supplier Quality Management, Procurement, Materials Management, and Risks and Environmental Health and Safety Management Departments jointly select suitable suppliers based on the audit results. In addition, the same evaluation procedures also apply to our existing suppliers. We demand constant improvements of our suppliers in order to raise their competitiveness in product quality, delivery time, costs, and services. VIS' supply chain covers an extensive range of expertise and applications, including international and domestic equipment suppliers, component suppliers, raw material suppliers (8" wafers, chemicals, gases, photoresist materials, and metal targets), engineering services, information software facilities, office supplies (including computer, communication, and consumer electronics), information software, and outsourced manpower (security services, cleaning, dormitories, and transportation vehicles). VIS has over 1,000 partners worldwide, of which 5% are international and 95% are domestic suppliers (including manufacturers with branch offices in Taiwan, distributors, and wholesalers).

VIS Supplier Code of Conduct

Green Supply Chain

VIS views all suppliers as business partners, we hope to build strong, long lasting relationships with our suppliers, while jointly establishing competitive, sustainable supply chain partnerships.

Apart from closely monitoring the product quality, delivery time, costs, and services provided by our suppliers, we also constantly push them to enhance their competitiveness, protect the environment, continue to improve a safe and healthy environment, value employee rights, schedule reasonable work hours, prohibit the use of child labor, and emphasize gender equality.

We seek to fulfill our corporate social responsibilities together with the suppliers, while developing effective risk management and business continuity plans. These are VIS' long-term goals which we will continue to focus on and strive to achieve. In order to fulfill these goals, the Procurement Department not only strives to fulfill its CSR obligations, but also prioritizes the purchase of energy-saving products with environmental protection labels, and engages in the green procurement of government-promoted energy-saving environment-friendly products with environmental protection labels including computer equipment, office papers, and electrical appliances.

The total amount of funds VIS has spent on green procurement over the past 5 years has reached NT$114.8 million.

VIS will not stop here, however, to further expand our influential power, we urged all suppliers to comply with HSF, safety, health, environmental policies, as well as fulfill their CSR obligations and perform their due diligence in managing conflict minerals by following relevant international/domestic laws and regulations. We also required our downstream suppliers to sign commitment guarantee letters to fulfill their corporate citizenship role and extend their activity scope downward. This not only facilitates our environmental protection efforts, but also expands VIS' contribution to CSR.

Management of Conflict Minerals

As for the management of conflict minerals, VIS is fully compliant with the Electronic Industry Code of Conduct (EICC), as well as the conflict minerals source disclosure regulations recently issued by the U.S. Securities and Exchange Commission (Rule 13p-1 of the U.S. Securities Exchange Act of 1934), to avoid purchasing conflict minerals (gold, tin, tantalum, tungsten, and other minerals that may be specified in the future by the EICC) from specified countries (Democratic Republic of the Congo and neighboring countries).

VIS also requires all suppliers to guarantee their minerals are from EICC/GeSI approved refineries (conflict-free smelter), establish a mechanism of reasonable certainty, exercise their due diligence, and acquire relevant certifications. For refineries not approved by the EICC/GeSI, we request them to obtain certification from EICC/GeSI or a third party audit organization, which will verify that the minerals used by the company and its suppliers are not conflict minerals.

In consideration of customer concern over information on the management of conflict minerals, the procuring department provides the most up-to-date Conflict Minerals Reporting Template (CMRT) on VIS's online system to facilitate customer access to relevant management information. Customers can make online inquiries and download the template from the platform anytime.

Localization Strategy of Supply Chains

The development of semiconductor industries in European countries, the United States, Japan, and South Korea started earlier than Taiwan, which provided them with technological advantages, as well as the control of key techniques and raw materials. Although Taiwan's semiconductor industry has attempted to surpass the performance of these countries through continued improvements, it remains reliant on foreign imports for machinery equipment, raw materials, and software applications.

VIS firmly believes that by supporting domestic supply chains, it will not only facilitate the improvement of domestic supply chains, but also increase employment opportunities, elevate the quality of employees and raise employees' salary standards, and boost domestic economy, all of which could exert tangible benefits, divert risks, and reduce relevant costs. In addition, with the length of transportation routes significantly shortened, we will be able to exercise our corporate social responsibility by reducing carbon emissions!

Under our long-term efforts in implementing local procurement strategies, in 2017 VIS collaborated with over 1,000 partners worldwide, of which 5% are international and 95% are domestic suppliers (including manufacturers with branch offices in Taiwan, distributors, and wholesalers). Our domestic purchases amounted to NT$3 billion, and we have furthermore contributed NT$21 billion over the past 5 years (2012 to 2016). We will continue to devote our efforts in this area with the hope of maximizing our contributions to the society.

Please refer to the section on "supply chain management" in VIS CSR Report for other supplier management related regulations.