Supply Chain Management

Sustainable Supply Chain Management

Policy

In order to reduce the sustainability risks and maintain the competitive advantages of LITEON and its suppliers as a whole, LITEON makes continuous improvements in Sustainable Supply Chain Management and selects responsible manufacturing and green products as the theme for our sustainable supply chain management strategies and sets SDG 8 and SDG 12 as the long-term goals. In view of above mentioned, to effectively implement sustainable supply chain management, LITEON's main policies are as follows, 

1. Ensure effective identification and management of economic, environmental, and social risks to enhance sustainability and resilience of the supply chain
2. Enforcing responsible procurement practices to promote green supply chains and encourage suppliers to reduce environmental impacts on their business operations and products
3. Strengthen responsible mineral management to ensure minerals from unqualified smelters in conflict-affected areas are not used and to build up responsible procurement practices

Organization

LITEON's sustainable supply chain management operates in a Sustainable Supply Chain Subcommittee under the Corporate Sustainability Committee of the Board of Directors. Through regular oversight by senior management and the Board of Directors, the Company monitors sustainable supply chain performance targets and project implementation results, demonstrating its strong commitment to sustainable management.

The Sustainable Supply Chain Subcommittee takes traditional supply chain management and adds domestic and international regulations and electronics industrial benchmark—Responsible Business Alliance (RBA) guidelines to build a strong and sustainable supply chain management framework.

Framework

The Sustainable Supply Chain Management Framework consists of four key pillars: Sustainability Requirements, Supplier Assessment, Risk Identification, and Management Mechanisms. Through close collaboration with suppliers, LITEON works to create and enhance sustainable supply chain value. In addition, LITEON continuously monitors domestic and international regulations and emerging trends and updates its sustainability management practices as appropriate to further strengthen sustainable supply chain management.

The framework provides the basis for LITEON's sustainable supply chain management policy; It not only includes economics and governance, environment, and social aspects such as labor rights, environmental protection, health and safety, and ethics and management systems but also contains business relevance, country and sector and commodity specific issues, which are made key components in supplier selection, evaluation, and audit.

These above policies and framework establish risk controls and identify high-risk suppliers. Improvement measures are based on evaluation results and designed to help suppliers make progress on an ongoing basis. We hope to improve the performance of sustainable management on the supply chain and reduce operational risks on said supply chain. We also hope to develop partnerships based on sustainable growth.

Supply Chain Sustainability Management Mechanism 

Sustainability Management Process

LITEON starts by establishing basic sustainability guidelines and requiring supply chain members to comply with the guidelines, uses risk identification tools to find high-risk factors and supplier industries, requires suppliers to improve any deficiencies or shortcomings, and then manages the entire supply chain through incentive and penalty mechanisms and development plans, the details are as follows and refer to the following figure.

Comply with Sustainability Guidelines

LITEON has implemented the Supplier Code of Conduct by adopting the Responsible Business Alliance (RBA) Code of Conduct and considering international regulations including the United Nations Guiding Principles on Business and Human Rights, the International Labor Organization's Declaration on Fundamental Principles and Rights at Work, and the Universal Declaration of Human Rights.

The Supplier Code of Conduct and Supplier Management Compliance Commitment requires all suppliers to conduct all business activities in compliance with the rules therein regarding labor rights, health and safety, the environment, business ethics, and management systems, and suppliers are required to comply fully with the laws and regulations in the countries/regions where they operate their businesses. On top of that, LITEON not only requires Tier-One suppliers to comply but also requests the suppliers to impose the same guidelines to their upstream suppliers.

Furthermore, regarding ethical corporate management, LITEON has required that all suppliers sign the  "Integrity Commitment"  since 2021. The commitment letter stipulates that no bribe shall be paid or any other inappropriate gains shall be provided or given between any supplier and LITEON employee to close a deal or perform a contract, and a supplier shall not engage in any conduct that directly or indirectly benefits a LITEON employee or stakeholder.

Regarding product production, LITEON has the LS301 standards in place for products, materials and other green products provided by suppliers. The standards provide the restricted substance guidelines for green products and the responsible mineral management policy, and the details can refer to the  Hazardous Substances Free Management of Green Product Management。

The above principles are applied to evaluate all suppliers including new suppliers, and the requests for suppliers are as follows,

• LITEON's suppliers are required to sign Supplier Executive Certification of Compliance, and Integrity Commitment and promise compliance with LITEON Supplier Code of Conduct.
• LITEON's suppliers must fully comply with local laws and regulations, and have risk control practices in place to ensure compliance.
• LITEON's material suppliers must comply with LITEON Standard of Controlled Hazardous Substance (LS301) with no use of hazardous substances.
• Suppliers must follow LITEON's Restricted Substance Management Plan and provide adequate and regularly updated declarations or proofs.
• LITEON's suppliers must comply with LITEON's responsible mineral management policy and cooperate with LITEON to complete due diligence report.
• LITEON's suppliers should build up management systems for quality, labor, environmental protection, ethics, health and safety, and capacity building.

Screening and Assessment

Identification and Classification 

Supplier Assessment Aspects

Supply chain risk management is a key element of LITEON’s sustainable operations. Based on industry characteristics and a comprehensive assessment of governance, environmental, and social risk factors, industry categories with relatively high sustainability risks include ICs, printed circuit boards (PCBs), cables, enclosures, and power supply units. These sectors are therefore prioritized for sustainability risk audits and management.

In alignment with the Responsible Business Alliance (RBA) Code of Conduct, supplier risks are assessed across Governance, Environmental, and Social dimensions. Key risk considerations are described below:

Identification of Significant Suppliers

For more effective supplier management, LITEON has identified a list of critical suppliers on which to direct its management efforts. The following principles were applied to identify critical suppliers based on the products, production processes, and sales characteristics of individual business groups in 2025.

• Top 75% of direct materials by annual purchase
• Exclusive or irreplaceable
• Critical parts or components
• Highly polluting production processes

In 2025, LITEON followed the above principles and assessment aspects to identify 566 significant suppliers, and its purchase amount accounting for about 75%. The supplier types and procurement ratios are as follows,

Audit and Corrective Action Plans

LITEON adopts the Responsible Business Alliance (RBA) Code of Conduct (CoC) as the primary framework for supply chain management. The Company also references various international standards and external sources, including the Business Social Compliance Initiative (BSCI), customers’ sustainability goals and requirements, as well as supplier audit results and feedback, as key inputs for the continuous improvement of sustainable supply chain management.

In 2025, LITEON not only completed  RBA 2nd and 3rd party on-site audits but also implemented a series of desk assessments, including Sustainability Self-Assessment Questionnaire (SAQ)-based risk identification, responsible minerals due deligence, human rights questionnaires, and ISO 14067 certificate document reviews, for all siginificant suppliers covering 566 in total.

Suppliers found in violation or high-risk(overall score under 60%) are required to implement immediate corrective and remedial actions to mitigate potential adverse impacts and risks. Based on the assessment results, only 6 significant suppliers were assessed as high-risk and requested to provide corrective and remedial actions, and no suppliers were classified as disqualified suppliers due to material violations of social or environmental responsibility requirements identified through ESG sustainability audits or other supplier audit activities. Therefore, no significant  supplier contracts were terminated in 2025. LITEON adopts a zero-tolerance policy toward serious violations, including the use of child labor.

In addition, further analysis of SAQ responses indicates that most significant tier-one Suppliers have established a certain level of sustainability awareness, including sustainability strategies, dedicated sustainability organizations, and related management measures. However, improvements are still needed in carbon disclosure and energy management. For example, some suppliers have not yet obtained ISO 14064 or ISO 14067 certification for greenhouse gas inventories and product carbon footprints, nor have they established renewable energy plans or carbon reduction targets.

Overall,  LITEON continues to monitor suppliers identified as high risk and prioritize them for 2nd and 3rd party on-site audits. Suppliers with identified improvement needs are required to submit corrective action plans, implement improvement measures, and undergo follow-up monitoring to ensure effective remediation.

Hence, to strengthen the overall resilience and sustainability capacity of the supply chain, LITEON will continue to support suppliers through supplier conferences, training programs, experience-sharing activities, and inventory and disclosure guidance initiatives to enhance carbon disclosure transparency and energy management capabilities, thereby.

Reward and Removal Mechanism

For effective supplier management, LITEON follows a set of screening criteria in the supplier selection process. In addition to the criteria for quality, cost, delivery, service, management, innovation, and technical capabilities (QCDS-MIT), LITEON implements green supply chain-based procurement management system. If suppliers are unable to meet the minimum ESG requirements within a set time frame, they will be excluded from being contracted.

Meanwhile, LITEON took an extra step and implemented the "Supplier Qualification Evaluation Procedure" to introduce elements of the LITEON Code of Conduct, the LITEON Supplier Code of Conduct, and the Supplier Executive Certification of Compliance into supplier qualification evaluation. Audit results were divided into three categories and included in the sourcing decision-making process for the purpose of facilitating continuous improvement. LITEON also conducted review meetings to monitor suppliers' ESG performance in various areas. 

• Outstanding Supplier Recognition Program

LITEON's business units implement suitable supplier incentives according to the nature of their sourcing activities and the characteristics of their suppliers. For power product business units, suppliers with an outstanding QCDST (quality, cost, delivery, service, and technology) rating, or a total transaction amount ranked in the top 30, or other outstanding performance that meets the criteria will be selected as outstanding suppliers, will be presented awards at the supplier conference.

Furthermore, mechanical products business units presents special awards to suppliers that comply with the EU's RoHS Directive, having a complete IECQ QC080000 management system, or with an annual RSC audit score of more than 90, or no missing data in the green material system, or no RoHS data exceeding the limits and with internal testing facilities and random risk assessment mechanisms, will be presented awards at the supplier conference.

Besides, automobile products business unit grants one-year audit exemption to outstanding suppliers that have passed supplier audits for three years in a row. Other business units still organize similar supplier conferences and outstanding supplier award ceremonies.

Engagement and Development

Capacity Building for Hierarchical Suppliers

LITEON has implemented a phased and hierarchical supplier engagement model, structured into basic and advanced levels according to defined stage-specific objectives.

The basic level emphasizes the communication of LITEON’s supply chain management strategies and sustainability goals, while recognizing outstanding suppliers to reinforce strategic partnerships.

The advanced level focuses on empowering suppliers’ sustainability management abilities through capacity-building initiatives such as training programs, advisory support, and collaborative carbon reduction projects, promoting deeper integration of sustainable practices across the supply chain.

Supplier Meeting / Training / Conference 

All of the supplier meetings and annual projects are all supervised by the Sustainable Supply Chain Sub-Committee. 

In 2025, LITEON supply chain negotiation activities were held a total of 3 times, including one in-person sharing session, one training program, and one project communication meeting. LITEON has made every effort to synchronize physical and online participation in supplier conferences, education and training, and project discussions to overcome geographical limitations and reduce transportation time, costs, and carbon emissions.

These activities mainly focused on topics such as climate change, energy conservation and carbon reduction, corporate carbon management, product green design/product carbon footprint, restricted substance regulations, biodiversity, circular economy/waste resource recycling, and responsible minerals. LITEON has also referenced international trends and customer requirements to optimize its information on these topics.

LITEON invites all Tier-One suppliers to participate in all events, especially those listed as high-risk or siginificant suppliers who are required to attend relevant training courses or meetings (online or offline) to ensure that suppliers comply with international standards and LITEON's supplier code of conduct requirements in areas such as labor, health and safety, environment, and ethics. During the activities, LITEON also shared case studies of the suppliers with good ESG performance to provide achievements and references for other suppliers. In 2025, there were about 800 suppliers to participate in our online and offline events including 453 significant suppliers,  such as ISO 20400 implementation, ISO 14067 training, and how to record and trace product activity data.

• Highlight 1: Low-Carbon Sustainable Supply Chain Integration Project          

LITEON launched a two-year initiative as a model for building a low-carbon supply chain. The project engaged 30 Taiwanese suppliers and implemented four key programs: low-carbon material development, waste gas emission reduction, product carbon footprint assessment, and greenhouse gas (GHG) inventory.

By 2025, the project achieved reductions of 14,000 metric tons of GHG emissions and 13,000 metric tons of product carbon footprint emissions, totaling 27,000 metric tons of carbon reduction, significantly surpassing the original KPI target of 10,000 metric tons. LITEON will continue working with supply chain partners to share decarbonization experience and achievements, driving broader carbon reduction impacts and shared value across the supply chain.

• Highlight 2: Supply Chain Energy Conservation Assistance Project      

In 2022, LITEON invited eleven suppliers to jointly participate in the "LITEON Supply Chain Energy Conservation Assistance Project" of the Industrial Development Bureau of the Ministry of Economic Affairs, and set the goal of freeing up 2.5% of the energy-conserving space. 

During the project period, the seed personnel of the supplier Energy Conservation Alliance will conduct online courses through the "Ewant Open Education Platform" to improve the basic knowledge and skills in energy conservation and carbon reduction; and professional consultants and factories cooperate with suppliers to measure their air compressor, air conditioning, lighting, pumps, and other public systems to find potential for carbon reduction.

The members of LITEON's supply chain energy conservation alliance are mainly large energy users, are required to save 1% of electricity each year, energy conservation improvement has been continued. As the public systems of the electronics industry are mainly composed of electricity consuming devices such as air compressors and ice water machines and pumps.

Therefore, this project helps by giving priority to in-depth reviews of air-conditioning system efficiency, pump efficiency, and fan efficiency. After the one-year project period, LITEON's supply chain Alliance submitted a total of 77 specific suggestions for improvement, which have a power saving potential of 5.67 million kWh and an average energy conservation potential of 4.23% for each plant. It is estimated that carbon reduction reached 2,887 tons of CO₂e.

Training Sessions for Buyers and Suppliers

LITEON's supply chain spans a diverse range of industries, requiring timely and effective ESG risk oversight. To strengthen supply chain sustainability governance, LITEON implemented a Sustainable Supply Chain Transparency Management Program to perform a digital sustainability risk assessment platform while enhancing supplier training and audit mechanisms for sustainability risk assessments. In addition, with ISO 20400 serving as the guiding framework, LITEON has conducted sustainable procurement training for procurement professionals across its business units and, together with internal audit and sustainability teams, updated its sustainability risk assessment questionnaire with support from external consultants.

2024 marked the first year of the program, during which Taiwanese suppliers were invited to participate in a pilot implementation. The program was complemented by on-site visits to validate questionnaire responses, strengthen due diligence efforts, and further enhance the supply chain risk management framework.

In 2025, LITEON completed ISO 20400 sustainable procurement training for suppliers, with a total of 130 suppliers and procurement professionals participating through both online and in-person sessions. These efforts helped strengthen awareness and understanding of sustainable procurement practices across the supply chain ecosystem.

Low Carbon Supply Chain

Supply Chain and Localized Purchasing 

LITEON provides diversified, high-quality products and solutions across a wide range of applications, including 5G, automotive electronics, power management, communication systems, Internet of Things (IoT), personal and industrial computers and peripherals, consumer electronics, mobile and wearable devices, LED lighting and advanced applications, cloud computing, and industrial automation.

As a result, LITEON's supply chain consists of a diverse and highly interconnected supplier network. Major raw materials include integrated circuits (ICs), printed circuit boards (PCBs), electronic components, cables, plastic parts, metal parts, and packaging materials.

Based on procurement categories, suppliers are primarily classified as direct material suppliers and indirect material and service suppliers, with direct material procurement accounting for most of the annual procurement spend.

In 2025, LITEON cooperated with 2,600 raw material suppliers. LITEON's manufacturing sites and supply chain partners are primarily located in Taiwan, Mainland China, and the Asia-Pacific region. Local procurement accounted for approximately 91.63% of total procurement in 2025. The slight decrease compared with the previous year was primarily attributable to adjustments in manufacturing and supply chain deployment.

Going forward, LITEON will continue to promote local procurement to maximize supply chain efficiency and sustainable business value. 

Raw Material and Packaging Material Management

To strengthen raw material and packaging material management across its sustainable supply chain, LITEON continuously inventories the materials used in product manufacturing and packaging. Materials are classified as renewable or non-renewable based on their characteristics to better understand resource consumption patterns and provide a foundation for packaging optimization, source reduction, and resource efficiency improvement initiatives.

LITEON’s Low-Carbon Supply Chain Milestone

LITEON launched its supply chain decarbonization program in 2022, marking the first year of its supply chain carbon reduction initiative. Over the past three years, a total of 120 suppliers have participated in the program. Suppliers have been guided in phases based on industry and product characteristics, with key suppliers progressively completing carbon inventories.

LITEON has established phased objectives to build a comprehensive supply chain carbon emissions database. During 2023 and 2024, the program focused on enhancing suppliers’ greenhouse gas inventories and selected product carbon footprint assessments. In 2025, the focus shifted to establishing the infrastructure for product carbon footprint data and planning supplier data disclosure requirements to support long-term decarbonization strategies. In addition, LITEON implements an internal carbon pricing mechanism and develops a digital raw material carbon factor management system to drive suppliers to establish carbon data infrastructure and continuously improve carbon reduction performance.

Responsible Raw Materials Management

Responsible Sourcing Policy

Environmental aspect: (refers to LITEON Natural Capital Policy)

• Committed to minimizing the negative impact of raw materials on the ecological environment, including reducing the mining of virgin materials and recycling materials to reduce waste generation.
• Increasing the use of recycled raw materials year by year and increasing the use of third-party verified raw materials.
• Avoid the use of raw materials from sites of global or national importance for biodiversity, avoid habitat destruction, reduce pollution, and avoid over-exploitation of natural resources.
• Ensure that the raw materials used comply with international environmental protection and responsible minerals regulations. 
• Strengthen cooperation with external stakeholders, including working with academia and research institutes to develop sustainable raw materials.

Social aspect: (refers to Responsible Minerals)

As a responsible corporate citizen of the world, LITEON has declared and committed to refraining from the use of metals sourced from unqualified smelters in conflict mines. The company also requires that all its suppliers comply with LITEON's responsible mineral/metal sourcing policy:

• Ensure the absence of "responsible minerals from unqualified smelters" in Congo and surrounding countries and regions in their products, and adhere to the applicable regional and international laws for responsible minerals.
• Trace sources of all Gold (Au), Tantalum (Ta), Tin (Sn), Tungsten (W), Cobalt (Co), and Mica and other sources of responsible minerals published in the Responsible Minerals Initiative (RMI) in all products; while all suppliers should complete a connection report to confirm sources of related minerals and should use a list of RMI compliant smelters/refiners to avoid mines directly or indirectly financing armed groups in conflict-affected regions.
• Convey these requirements to their upstream suppliers.

Responsible Mineral Management Process

LITEON is committed to not using metal minerals from conflict areas and has joined the Responsible Minerals Initiative (RMI) as a member, requiring suppliers to comply with LITEON’s responsible mineral (metal) procurement policy as follows:

• To ensure responsible mineral sourcing and promote mineral due diligence, LITEON follows the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
• In accordance with the specifications of the Responsible Minerals Initiative (RMI) and using its Conflict Minerals Reporting Template (Note), the scope of the investigation includes Conflict-Affected and High-Risk Areas (CAHRAs), CAHRAs to trace the origin of minerals such as Gold (Au), Tantalum (Ta), Tin (Sn), Tungsten (W), Cobalt (Co), and Mica.
• These requirements are communicated to upstream suppliers to ensure compliance .
  
  

  Note: The conflict minerals template refers to the conflict minerals investigation template recently announced by RMI official website, including the Conflict Minerals Reporting Template (CMRT), the Extended Minerals Reporting Template(EMRT) and The Pilot Reporting Template(PRT).

  
  
  

Notice: If you have any problem or issue regarding LITEON's Responsible Minerals Management, please directly contact         
              " ethic.hotline@liteon.com "

 ▶ For the comprehensive disclosure of our responsible mineral management, please refer to LITEON RESPONSIBLE MINERALS REPORT.