To establish supplier management systems and specifications, comply with quality/cost/delivery/service/technology and ESG management systems, and require upstream supply chain management and supplier corporate social responsibility fulfillment commitments.

iST, a laboratory for verification and analysis of electronic industry. In order to ensure the provision of professional and timely service quality to important international customers, we have specially formulated supplier management procedures and procurement management procedures to classify suppliers. Grade I-PCB and assembly sites with transaction volume exceeding 5,000,000NTD per year. Grade II-A-Taiwanese PCB and BGA processing sites with transaction volume under 5,000,000 NTD per year. Grade II-B-Socket distributors and overseas PCB sites. Grade III-Facility construction, repair／maintenance service Suppliers, test subcontractors. Grade IV-Equipment suppliers and others、Grade IIV-Chemical suppliers. And perform hierarchical management according to the attributes and importance of suppliers at each level.

To ensure product quality and on-time delivery meet Company and customer requirements, iST has established “Suppliers Management Procedure” and “Procurement Management Procedure.” iST assesses and evaluates critical suppliers based on quality policies, management processes, supply chain management, and anomaly management. A score above 70 is qualified, 60-70–is conditionally approved, and below 60 is not approved. Qualified suppliers are required to sign a “NON-DISCLOSURE AGREEMENT” to safeguard sensitive information.

iST conducts annual evaluations for key suppliers engaged in significant transactions. In addition to cost, delivery, service, and process, the new ESG rating scale for sustainable management of suppliers has included ESG self-assessment surveys as part of the annual evaluation criteria in 2023. Scores above 3.5 are considered qualified, scores between 3.0 and 3.5 are conditionally approved, and scores below 3.0 are considered not qualified. In the year 2023, a total of 43 suppliers underwent evaluation, resulting in a 100% qualification rate.

iST also conducts both regular and random on-site assessments of suppliers. These assessments encompass an evaluation of the supplier’s process capabilities, quality standards, delivery control, and internal management processes. In the 2023 assessment, corporate social responsibility was added as a criterion, reviewing suppliers’ adherence to occupational safety, environmental protection, and labor rights. In cases where discrepancies are identified, the supplier is required to implement continuous improvement measures, reduce deficiencies, or potentially terminate the business cooperation.

iST mandates that all construction contractors and equipment suppliers entering our premises undergo safety induction training provided by our Environmental Health and Safety (EHS) unit.

In 2023, 26 safety education sessions were held with 208 participants. Waste disposal contractors must possess relevant certifications and comply with environmental regulations, signing a “Contractor Safety and Environmental Consent Agreement” to ensure adherence to safety and environmental management guidelines.

iST requires suppliers to commit to strict adherence to the Company’s established integrity-related regulations. During the course of normal business transactions with iST, suppliers are obligated to refrain from engaging in any bribery, offering inducements, or providing undue benefits to iST employees or their associates in order to facilitate business interactions. Suppliers are strictly prohibited from influencing, persuading, or enticing iST employees to deviate from their duties or faithful obligations to the Company. For suppliers involved in substantial financial transactions, the company mandates the signing of a “Supplier Integrity Commitment Letter.” In 2023, 13 new commitment letters were issued to eligible suppliers, and all have successfully signed and returned the document.

In summary, when implementing our supply chain management, iST considers not only efficiency and costs, but also focuses on the performance of partners in various dimensions such as environment, society, and governance. Through regular evaluations, iST continuously understands the supplier operational status to enhance mutual sustainability, as well as encouraging the suppliers internalize ESG into their company management and operations. This will enhance the overall resilience and adaptability of iST’s supply chain in facing unforeseen events, ensuring iST can consistently provide professional services to customers and maintain supply chain resilience.

As a major third-party laboratory recognized by important domestic and international clients, iST’s equipment purchases are required to meet customer verification requirements. In addition to large equipment sourced from internationally renowned manufacturers, other items such as consumables, instruments, chemicals, outsourcing, and testing peripherals are purchased with the goal of sustainable operations. Considering energy-saving and environmental factors in procurement, logistics, recycling, and reuse processes. Collaboration with suppliers fulfills social responsibilities in environmental protection and energy conservation and emission reduction. Products are prioritized from local, environmentally friendly suppliers (with eco-labels and approvals from Environment Protection Administration) for creating a green supply chain. iST also requires all suppliers to confirm ESG issues when accepting orders. Over the past three years, the proportion of domestic purchases, excluding large equipment, has consistently exceeded 90%, with the percentage of local procurement increasing each year (as detailed in the table below).

Following OECD’s “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict- Affected and High-Risk Areas,” iST establishes a framework for responsible investigation. In addition to advocating the prohibition of “conflict minerals,” suppliers are required to sign the “Conflict Minerals Non-Usage Commitment” after evaluation and assessment, this due diligence process is utilized to identify and assess whether raw materials and components provided by suppliers involve conflict minerals. In 2023, 4 new PCBA assembly plants were included in the due diligence, and all of them complied with the requirements of the “Conflict Minerals Non-Usage Commitment.”