Governance

Integrate UMC group resources to achieve the most competitive supply chain value through strategic cooperation.

drive suppliers to improve economic, social and environmental performance, and their sustainable development efforts.

Continuously advise vendors on diversifying their supply and localized sourcing

Encouraging suppliers on energy conservation and carbon reduction to form a circular economy.

Actively implement green procurement, pursue economic benefits and consider eco-friendly balance.

Ensure that products and supply chain do not contain conflict minerals.

Focus on suppliers' energy resource use and water resources management to respond to the impact of extreme climate change on the supply chain.

Strengthen waste recycling and reuse, and strive to reduce environmental pollution impact.

• To firmly believe the key point of an enterprises management is to fulfill economic, environmental, and society obligations. To voluntarily reinforce the enterprise's commitment to these obligations, and promote the benefits to customers, employees, suppliers & the community.
• To monitor fire and earthquake damage, security risks & hygiene, environment, and labor rights. Supply chain risk management is also a competitive capability; as such, the company shall focus on supply chain vendors risks and voluntarily provide any assistance, if necessary.
• To ask suppliers to conduct the survey and management of the current business operating status, material sourcing diversification and the geographic dispersion of suppliers' production. To reduce the material shortage risks from extreme climate or serious natural disasters.
• To build up our risk evaluation program for supply chain vendors and establish an eternal evaluation method for them. To regard the method as the risk evaluation element and become one of the most important UMC procurement strategic references with elements of delivery date, quality, finance and business operation.
• UMC requires suppliers to guarantee conducting suppler assessment and obtaining supplier signatures non-conflict minerals and ensure that products from suppliers the use of tin, tantalum and tungsten. UMC shall exercise due diligence in supply chain audits to exclude the use of conflict minerals from the Democratic Republic of Congo (DRC) or Central Africa. UMC encourages suppliers to promote similar management policy. UMC has announced related procurement policy to CSR column in the official website to ensure metal procurement procedure meets social and environmental responsibility.
• To respect and protect the rights of intellectual patent property and conduct fair trade, advertisement and competition.
• To commit to business integrity and forbid any inappropriate profit acceptance, corruption, extortion, or defalcation. To establish an identification and penal security mechanism.

UMC enforces conflict minerals management according to the disclosure rule on conflict minerals released under Rule 13p-1 of the U.S. Securities Exchange Act of 1934 of the U.S. Securities and Exchange Commission (SEC). We have implemented a new supplier evaluation system.  At the new supplier selection stage, we have required the procurement of "conflict-free minerals," which refers to minerals sourced from smelters recognized by the Responsible Minerals Initiative (RMI) or equivalent organizations. Existing suppliers are also required to actively investigate and verify specified materials (gold, tantalum, tin, and tungsten, cobalt, and mica), and sign a Responsible Minerals Declaration. We also conduct due diligence, and through annual supplier audit operations, examine whether suppliers' upstream smelters / refiners use conflict minerals. Adopting a supply chain material traceability and control method to reconfirm the absence of conflict minerals. On the other hand, UMC is also an active participant of global advocacy groups such as RMI of RBA. Through the Responsible Minerals Assurance Process (RMAP), obtain supplier information that complies with conflict mineral requirements as the basis for upstream supply chain management. Require all suppliers to respond to conflict mineral information based on the latest RBA Conflict Minerals Reporting Template (CMRT). UMC's dedicated personnel will then verify whether it complies with RBA-approved smelters to ensure the procurement of conflict-free minerals. If a supplier uses minerals from smelters not listed as qualified under RMAP, UMC will refuse to use the product and request the supplier to submit a plan for improvement within a specified timeframe.

UMC aims to audit all conflict mineral suppliers every three years, having completed audits for all conflict mineral suppliers from 2016 to 2022, and complying with RBA certification, achieving conflict-free supply chain management.

In addition to implementing conflict minerals management according to corporate policy and commitment, UMC also submits Specialized Disclosure (SD) forms to the U.S. SEC while publishing the completed forms on its official website to declare the outcomes of conflict minerals management efforts and demonstrate our commitment to corporate social responsibilities.

UMC has 100% tracked source countries and regions of the minerals used, and the countries/regions list is as follows:

Country of Covered Minerals

The latest SD forms may be downloaded as below.

Vision

UMC is committed to responsible procurement of raw materials based on its purpose to respecting human rights, protecting the environment, and complying with all laws and regulations. Amplifying the positive impacts and taking reasonable steps to minimizing the negative impacts that the company operations has on the environment and society.

Strategy

1. Team up with suppliers to trace key raw materials back to their sources. By risk assessment to reduce significant negative environmental or social impacts in the extraction/production of the raw materials.
2. Collaboration and partnership with stakeholders such as industry bodies and nongovernmental organizations as well as the company’s membership of industry groups that clearly aim to create or improve best practice for sustainable raw material.
3. Incorporating sustainable material requirements into supplier management. We are committed to increase the use of third-party verified raw materials and recycled raw materials to promote sustainability.
4. Avoid raw materials from sites containing globally or nationally important biodiversity to avoid habitat destruction, reduce pollution and avoid the over exploitation of natural resources.

Note : The Policy signed by Chairman

• UMC evaluates raw material methods to determinemanagement priorities.

UMC adopts the Scale approach, prioritizing the assessment of raw materials in the product. Through product component analysis, over 99% is silicon, while the rest consists of trace metals, including Al, Ti, Fe, Cu, Ni, and Co. UMC prioritizes the management of these materials to ensure that environmental and social impacts are avoided during the extraction or manufacturing stages.

• UMC’s sustainable raw material management process

UMC tracks environmental and social risks in the raw material supply chain through Supplier ESG risk assessment and Screening Process. The screening process includes environmental, social, governance, business closeness, Sector-specific/Country specific, and Commodity-specific risk related suppliers.

At the same time, UMC also requires raw material suppliers to be traced back to the source supplier during the annual ESG risk assessment process, and requires suppliers to be included in the relevant assessment process to reduce social and environmental impacts.

In 2023, 100% of the audited suppliers completed the improvement of deficiencies within the specified time limit, and no supplier terminated their cooperation due to non-compliance with company regulations.

• The raw materials suppliers will be assessed by following process:

• • Desk Assessment Process

1. 1. Send an ESG self-assessment questionnaire, and use the UMC’s E-Platform to manage, control, and progress track and evaluate the survey
   2. The questionnaire requires suppliers to attach supporting documents
   3. A dedicated person will compare the supporting information to see if it meets UMC requirements.
   4. If the requirements are met, the initial score of the questionnaire will be maintained; if the requirements are not met, the score of the questionnaire will be lowered.
   5. Annual Supplier ESG Performance Score Summary

• • Identify supplier risk levels:

1. 1. Suppliers whose ESG self-assessment scores are lower than UMC’s requirements are listed as potential high-risk vendors.
   2. Suppliers with finding found during on-site audits last year will be included in significant high-risk supplies
   3. Suppliers whose ESG self-assessment scores meet UMC’s requirements are considered low- to medium-risk suppliers.

• • High risk suppliers will be audited on-site by third party
  • Tracking &Suppliers improvement mechanism

1. 1. Request suppliers to make improvements according to audit reports
   2. Suppliers whose audit results are lower than UMC’s requirements will be audited in the following year
   3. For suppliers that have failed to meet the standards for two consecutive years, UMC will halt transactions according to company policy

• UMC’s action to reduce negative environmental impacts of raw material production
  • UMC 2030 low-carbon supply chain

The kick-off meeting was held in 2022 to conduct carbon emissions investigations on participating low-carbon suppliers, and to engage consultant companies to provide education and training to guide them in conducting greenhouse gas inventories. In addition, all suppliers are required to establish carbon reduction plans.Our goal is to have 500 Tier1 suppliers participate and reduce carbon emissions intensity by 20% by 2030 (base year 2020)

• • UMC Completed biodiversity survey for Tier 1 suppliers.No supplier's factories are located in biodiversity areas.UMC also requires suppliers to conduct biodiversity surveys on their upstream suppliers.
  • Conduct RBA, UNGP and UMC supplier code of conduct investigations on Tier 1 suppliers to reduce the impact of the upstream supply chain on human rights and occupational safety and health.

For relevant annual results, please refer to the latest UMC Sustainability Report
Download – UMC

• Targets for the share of sustainable raw materials

UMC set the following targets for the sustainable proportion of relevant metals with third-party sustainable certification in 2025 and 2030:

UMC will continue to collaborate with suppliers and their upstream smelters to promote sustainable certification and will include this item in the evaluation for future new supplier selections.

• Targets for the share of recycled raw materials

UMC has set the following targets for recycled raw materials in 2025 and 2030 as follows:

• Reporting progress on sustainable raw materials sourcing targets Regarding the procurement of sustainable raw materials, UMC will continue to conduct regular tracking and reporting on the progress of procurement targets every six months at the Corporate Sustainability Committee quarterly meeting.

• Training the company’s internal stakeholders on their roles related to sustainable raw materials In order to raise awareness of sustainability among UMC's internal procurement personnel, we also provide employee education and training on international sustainability standards and issues. We plan to conduct sustainable raw material awareness training for relevant business employees in 2024

• Consumption exposure of metals or minerals used in UMC products

1. (1) Sector-specific risk suppliers screening: On-site service provider suppliers as defined  by Responsible Business Alliance Code (Responsible Business Alliance, RBA).
   (2) Country specific risk suppliers screening :Conduct an annual BCP risk survey on key raw material suppliers, and classify the country with a supply chain risk map (such as frequent natural disasters, geopolitics, war...)

   (3) Commodity-specific risk suppliers screening :Conduct annual BCP risk surveys on key raw material suppliers, and classify key raw materials with supply chain risk maps (such as: high purchase volume, single source, non-substitutable,...)

2. Tier1 suppliers: Direct transactions with more than 2 orders per year and transaction amount greater than NT$2 million Tier 1 suppliers are also classified by importance such as procurement volume, critical material, and critical/non-substitutable suppliers. In 2023 631ppliers met the criteria. Significant Tier1 Suppliers: The annual purchase amount of the suppliers for more than 80%. Significant High Risk Suppliers:Suppliers who still do not meet UMC standards after providing corrective action plans in the previous year audit.

The following five standards were adopted to regulate and guide suppliers, hoping to establish a supply chain management system with sustainable development.

The core value of UMC's sustainable supply chain is "Sustainability and Mutual-Development." In addition to the existing environmental training for the suppliers, UMC extended its supply chain management to implement initiatives for sustainability, strengthening the guidance for local suppliers to establish sustainable supply chain capability To enhance the awareness of procurement personnel on sustainability initiatives and effectively implement the sustainable supply chain management, UMC held a number of educational training courses to accelerate the development of sustainable supply chain management.

Contact us: For further information, please see Supplier Contact in General Inquiries.

The latest SD forms may be downloaded as below.

*The following data has been verified by a third party. You can check the third-party statement in the sustainability report.

*Tier-1 suppliers : Direct transactions with more than 2 orders per year and transaction amount greater than NT$2 million Tier 1 suppliers are also classified by importance such as procurement volume, critical material, and critical/non-substitutable suppliers.
*Significant suppliers in Tier-1:Suppliers accounting for the top 80% of the purchase amount
*Significant suppliers in non Tier-1:Significant tier 1 suppliers of our significant tier 1 supplier as Significant non-tier 1 suppliers.
The definition of Significant non-tier 1 suppliers is High-volume, critical component and non-substitutable suppliers.