Supplier Management

Supply Chain Framework

The production and operating activities of ChipMOS, not only create the direct economic values, more importantly, help the upand downstream industrial chain to create the indirect economic values via the technology cooperation. By following the RBA code of conducts as the policy guidelines for the vendor management, it is committed to promote the local sourcing strategy and vendor coaching, seeking to improve the overall competitiveness and create the win-win situation.

Local Sourcing Strategy

By enhancing the local sourcing strategy, ChipMOS reduces the supply chain risks, as well as the carbon emssion in the overall supply chain and creates the local jobs. The term “local vendor” refers to the manufacturing plants of vendors locate at the same area as the production bases of ChipMOS. For instance, if a manufacturing plant of a vendor locates in Taiwan, this is a local vendor to ChipMOS’plants in Taiwan. In 2021, 60% of the procurement expenditures was from the local vendors. In the recent years, the percentage of the local vendors has tended to increase continuously; however, in 2021, the foreign vendors were affected by the pandemic more seriously, and ChipMOS’ countermeasure was to increase the inventory level of the materials supplied from out-of-Taiwan, to diversify the risk of material interruption due to longer delivery time and material shortage resulted from the pandemic. 

Looking to the future, we will insist the local sourcing strategy and spirit, to select quality vendors in Taiwan, and increase the proportion of local sourcing, while expecting to bring more jobs to Taiwan, and further enhance the development of overall local industries.

Vendor Management Committee

ChipMOS complies with the code of conducts of the Responsible Business Alliance (RBA) and applies such as the policy and guidelines to manage the vendors in terms of environment and human rights, and clearly specifies the five management scopes for vendors, including labor, health and safety, environment, professional ethics and management system.

ChipMOS has established the “Vendor Management Committee” consisting of five groups, namely engineering, subcontracting, production and material management, procurement, and quality. The Committee works in a cross-function way to implement the vendor management scopes together, including vendor selection, vendor audit, and vendor appraisals, to be committed to conform to the standards of RBA’s code of conducts, and work with the vendors to grow together, and operate sustainably.

Supplier Code of Conduct

Supplier Ethical Management Policy

To ensure that suppliers understand ChipMOS's adherence to honest and integrity in all business activities, we require for additional clauses regarding Regulations Governing Professional Moral Conduct when signing procurement contract with suppliers. In case of illegal conduct from ChipMOS's employees or relevant suppliers, the incident can be reported via our whistleblowing mailbox at Audit_Committee@chipmos.com. To collectively bear the responsibility of ethical practices with our suppliers, ChipMOS will investigate and punish the illegal conduct, while keeping the identity of the whistleblower confidential and to adopt proper protection measures.

Supplier's CSR Statement

ChipMOS strives to comply with the RBA Code of Conduct, and to ensure that suppliers can clearly understand the Code, we request specific suppliers to sign the Statement on Corporate Social Responsibility (CSR) and require our supply chain partners to join us in fulfilling corporate social responsibility. Starting from 2014 to the end of 2021, 264 specific suppliers have signed the Statement on Corporate Social Responsibility, and the signature reply rate is 100%.

Note: Based on the Enforcement Regulations of RBA, the certain vendors refer to service provider (HR agencies, cleaning janitors, security guards, stationed vendors, cafeteria service provider, and etc.), raw material vendors, and production equipment providers.

Selection of New Vendors

ChipMOS has built a set of new vendor selection process. When the unit in need request for new vendors, the Vendor Management Committee will evaluate, including for major dimensions: engineering technical capability, quality management system, price, service (including capacity and promise of delivery time), as well as the industrial history from the vendor's existing customers, to evaluate the risks of introducing the vendor in a holistic manner.

ChipMOS expects the vendors agree with our philosophy of the sustainable operation, and the requirement of ensuring product quality. We adopt the highest reviewing criteria for the evaluation; for the new vendors of the key materials, their certifications of international quality systems are verified, e.g. ISO 9001, ISO 14001, IATF 16949, and ISO 45001; implementation of the process management, green product, Responsible Business Alliance (RBA) and health and safety management are reviewed, to ensure the suppliers meeting the requirements in terms of environment and labor practices, including product quality, prohibition of hazardous substances, and employee protection. The selection process of new vendors is as the following figure. These who pass the evaluation will be registered in ChipMOS’ Approval Vendor List (“AVL”) for subsequent daily management.

Vendor Evaluation

Coaching and training vendor

By correcting the defects found during the appraisal and audit, ChipMOS insists a positive and open attitude to discuss with the vendors, plus promotions and training from various aspects, to learn from each other while growing together, and ensuring no ecurrence of defects. If vendors obtain certification of international standards, it is a plus for audit and evaluation. ChipMOS will keep on coaching vendors to obtain various certification of international standards.

For example, in light of the customers’ needs for applications on automotive products, other than ChipMOS must be certified for the automotive international certification IATF 16949, the vendors’ production qualities must be under tight controls. Therefore, other than including the automotive requirements in the annual quality audit surveys to vendors, the process audit form for the German vehicle supply chain quality management system VDA6.3 is required to be completed by the vendors for automotive products. It is ChipMOS’s responsibility to enable suppliers to understand the requirements for automotive specifications better and obtain the certified quality via ChipMOS’s audit and coaching process for suppliers; therefore, the percentage of suppliers obtaining IATF 16949 increased to 42% in 2021 from 37% in 2020.