Sustainable Supply Chain Management
Faraday provides comprehensive IC design and turnkey services, with internal IC design capabilities while outsourcing wafer production, packaging, and testing. We work closely with each supplier to ensure smooth operations of production flow and continuously monitor processes to deliver high-quality products that meet customer expectations.
Policy of Sustainable Supply Chain Management and Procurement
Faraday conducts comprehensive reviews and audits based on objective evidence when evaluating and onboarding new suppliers to ensure compliance with regulatory requirements and Faraday's standards. Qualified suppliers undergo regular sustainability assessments and must adhere to the “Faraday Supplier Code of Conduct”. We evaluate our partners against this code to ensure they meet expectations in corporate governance, environmental responsibility, and social impact.
If a supplier fails to meet the requirements of the “Faraday Supplier Code of Conduct” and is unwilling to cooperate or fails to improve within the specified timeframe, it may compromise the business relationship with Faraday. In severe cases, it could result in termination of the partnership.
Faraday's Supplier Code of Conduct
Sustainability Self-assessment for Qualified Suppliers
Our suppliers are required to conduct an annual sustainability self-assessment and submit their results, covering five key areas of labor rights and ethics, health and safety, business continuity and information security, environmental impact and climate change, and supply chain management.
Criteria of Procurement Decision
Business Continuity Planning (BCP)
Faraday is committed to implementing a robust Business Continuity Plan (BCP) to mitigate the impact of natural disasters, pandemics, and geopolitical risks on its operations. To ensure uninterrupted supply capabilities, we have established an Emergency Response Command Center, which comprises five dedicated response teams: Administration, IT, Supply Chain, R&D, and Business Operations.
In the event of unexpected disruptions, the command center assesses the affected areas, analyzes potential risks, and deploys mitigation strategies to minimize operational impact on the supply chain. We regularly update the BCP measures, evaluates emerging risks, and develops response strategies to enhance resilience. Through transparent communication with customers and stakeholders, Faraday strengthens trust, security, and overall satisfaction.
Operational Risk Management
To reduce risks associated with raw material shortages and production disruptions, Faraday implements the following proactive measures:
- Through a rigorous and expedited engineering certification process, we support customers in establishing alternative supply sources, including secondary suppliers, testing platforms, and materials, expanding production capacity and enhancing scheduling flexibility.
- By consolidating customer demands, we sign strategic agreements with key suppliers to secure priority for capacity and delivery schedules.
- To ensure stable supply of critical packaging materials, we collaborates with key raw material suppliers and establishes long-term capacity agreements aligned with product development roadmaps.
- We work closely with strategic suppliers to optimize long-term wafer capacity planning, securing annual wafer allocation and ensuring scalability to accommodate unexpected customer demands.
- To address geopolitical risks, we strictly adhere to international import/export regulations and enforces a 100% audit and control of Strategic High-Tech Commodities (SHTC). The measures ensure regulatory compliance, business continuity, and the protection of shareholder interests.
New Supplier Assessment
Faraday evaluates new suppliers according to "Outsourced Vendor Evaluation and Assessment Guidelines," considering quality, cost, and production capacity alignment to determine a supplier’s competitiveness. Additionally, we employ the "Quality System and Process Checklist" to evaluate the maturity of their quality management system and ensure their engineering capabilities meet Faraday’s standards.
Moreover, environmental management, occupational safety, business ethics, and restricted substance control are key factors in supplier assessments. we categorize suppliers based on their production type and develops customized checklists to ensure compliance with evaluation criteria.
- Quality system: All suppliers must comply with ISO9001Environment management system: All manufacturing suppliers must comply with ISO14001
- Supporting data for non-use of conflict minerals: Manufacturing suppliers must provide relevant proof
- Occupational safety management system: Compliance with ISO45001 standard as the bonus item, which is beneficial to the assessment
- Hazardous Substance Process Management System: Compliance with QC080000 standard as the bonus item, which is beneficial to the assessment
- RBA items, such as using child labor, forced labor, and so on, supplier must comply with “Faraday Supplier Code of Conduct”
- Information Security: Assessments cover six key areas of management, network security, physical security, access control, backup and redundancy, and awareness training.
Supplier Management
Qualified Supplier Management
After passing the assessment flow, new suppliers go to the stage of sustainable supply chain management, focusing on 4 aspects of production management, supplier audits, continuous improvement, and regular rating. Suppliers are evaluated based on 5 key criteria of quality, cost, delivery, service (QCDS), and sustainability.
For environmental impact assessments, suppliers must evaluate their footprint across the entire product lifecycle, from raw material sourcing and design to manufacturing, logistics, and customer use. They are required to minimize environmental impact and maintain a valid ISO 14001 certification, aligning with Faraday’s sustainability goals and commitment to environmental protection.
Annual Audit of Qualified Suppliers
Faraday conducts annual audits of its qualified suppliers. Before the audit, suppliers must complete a self-assessment using Faraday's checklist, which evaluates: Compliance with quality system requirements, Production control measures, Responsible Business Alliance (RBA) standards, including labor rights, health & safety, and environmental protection, Information security protocols.
Annual Audit Results of Qualified Suppliers in the Past Three Years
| Items | 2022 | 2023 | 2024 | |
| Foundries | Number of audited suppliers | 1 | 1 | 4 |
| Audit completion rate | 100% | 100% | 100% | |
| Major deficiency improvement rate | No major deficiencies | No major deficiencies | No major deficiencies | |
| Packaging supplier | Number of audited suppliers | 7 | 7 | 6 |
| Audit completion rate | 100% | 100% | 100% | |
| Major deficiency improvement rate | 100%(2/2) | 100%(2/2) | No major deficiencies | |
| Testing suppliers | Number of audited suppliers | 9 | 7 | 5 |
| Audit completion rate | 100% | 100% | 100% | |
| Major deficiency improvement rate | 100%(2/2) | 100%(3/3) | 100%(3/3) | |
| Electricity savings from baking process(kWh) | Carbon emission factor (KgCO₂e/kWh) |
Carbon emission reduction (KgCO₂e) |
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| 2022 | 566,280 | 0.495 | 280 |
| 2023 | 282,744 | 0.495 | 140 |
| 2024 | 180,101 | 0.494 | 89 |
Supplier Carbon Reduction Initiative
Since 2019, Faraday has launched a carbon reduction initiative to optimize the baking process before delivery, aiming to help suppliers reduce carbon emissions by 30%-40%. Starting in 2023, we began actively promoting this initiative across the supply chain, offering the optimization methods free of charge to facilitate seamless integration into standard production processes. This initiative is projected to cut carbon emissions by at least 100 tons per year.
Supply Chain Support and Collaboration
Faraday provides regular sustainability training for both suppliers and internal employees, ensuring compliance with best practices in corporate governance, environmental responsibility, and social impact. Additionally, we help suppliers in adopting the ECRS (Eliminate, Combine, Rearrange, Simplify) methodology to optimize workflows, reducing resource consumption, labor inefficiencies, and process time waste. Committed to fostering a responsible and efficient supply chain, Faraday strives to deliver high-quality products and services to its customers.
Regular Evaluations
Faraday conducts performance evaluations for qualified suppliers whose production contribution exceeds 10% in accordance with the " Outsourced Vendor Evaluation and Assessment Guidelines" each quarter. The evaluation assesses quality, cost, delivery, and service, identifying opportunities for continuous improvement. To further align with the United Nations Sustainable Development Goals (SDGs), we enhance supplier sustainability management by incorporating a management system risk assessment into the quarterly evaluation. This assessment is divided into two key categories:
- Sustainability factors, covering management practices, social responsibility, and information security
- Responsible Business Alliance (RBA) compliance, focusing on labor rights and regulatory compliance
Continuous Improvement
Supplier Quality Case Studies: regular case study reviews help reduce product hold rates and enhance operational efficiency.
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