Supply Chain Initiatives

Basic Policy of Procurement
Supplier Program
Supplier Assessment
Communication with Suppliers

Basic Policy of Procurement

Lasertec is guided by its corporate philosophy since its foundation, "Inventing for your success, inventing for the future", and the vision of what we want to be, "Be the first point of contact for worldwide customers searching for solutions."

Based on these, we adopt a fab-lite strategy, under which we outsource the production of our products to third parties so that we can provide customers with solutions faster than anyone else.

Today, we face various social issues, including environmental and human rights concerns. We believe that to foster a prosperous and sustainable society, it is essential that we, along with our suppliers, not only ensure the quality and performance of our products but also engage in environmental, social, and governance (ESG) initiatives. By strengthening our relationships with them through these initiatives, we aim to create a sustainable supply chain.

Under such circumstances, together with the growing interests in corporate social responsibility (CSR), we are expected to reduce ESG risks across the entire supply chain and enhance supply chain resilience. It is our basic policy that we practice fair trade, and we strive to create value in the supply chain by building relationships based on trust with our suppliers who support our business and engage in co-creation with them.

Sustainable Procurement Policy

In our everyday procurement activities, we promote open communication with our suppliers and build relationships with them based on trust and co-creation. We hope to grow together with them while fostering an ethical and sustainable society.

We go beyond compliance with the laws, regulations, and social norms of the countries where we operate and engage in procurement initiatives that conform to international standards and guidelines to meet stakeholder expectations. Our code of conduct aligns with the RBA Code of Conduct compiled by the Responsible Business Alliance (RBA), and we ask our suppliers to adhere to the same Code of Conduct. We believe that by doing so, we can create products that meet our customers' needs with all materials and components conforming to their respective specifications and quality standards.

We monitor the status of suppliers' initiatives with respect to our Sustainable Procurement Policy by performing supplier evaluations, asking suppliers to answer various questionnaires, including self-assessment questionnaires ("SAQs"), and conducting audits. In this activity, we value open dialogues with our suppliers and support their improvement efforts as needed.

Sustainable Procurement Policy

Initiatives
Declaration of Partnership Building	Seek coexistence and coprosperity across the entire supply chain.
QCDS (Quality, Cost, Delivery, Service)	Engage in procurement activities that ensure appropriate quality, pricing, and delivery based on prior agreements with suppliers. This includes providing Key Suppliers with feedback based on their annual QCDS assessments and requesting improvements.
Human Rights	Engage in procurement activities that are conscious of human rights, work environments, and worker health and safety.
Environment	Engage in environmentally conscious procurement activities that focus on reducing environmental burdens in the supply chain.
Business Continuity Planning (BCP)	Prepare for unforeseen events by formulating a business continuity plan and promoting activities that enhance supply chain resilience.
Information Security	Strictly manage confidential information obtained during the course of business.
Conflict Minerals	Promote responsible procurement of minerals throughout the entire supply chain.
Supplier SAQs and Audits	Ask suppliers to complete SAQs about the RBA Code of Conduct, BCP, and design change management, and conduct on-site audits and interviews so we can request improvements and verify their effectiveness.

Notes:

Our Sustainable Procurement Policy has been established to reflect the principles of our sustainability initiatives focused on CSR and ESG, which we must address in business activities. When we discuss procurement policies with our suppliers, we may refer to it as CSR procurement, if it is convenient to do so from the perspective of their business activities.

We designate our suppliers who account for the top 75% of our annual procurement spend as well as our staffing agencies and contractors who provide services in our facilities as "Key Suppliers". This includes both companies to which we outsource production ("Manufacturing Contractors") and suppliers with whom we have established business relationships ("Suppliers"). The Supplier Program described on this page applies to our Key Suppliers.

Initiatives to Enhance Effectiveness of Sustainable Procurement

To enhance the sustainable procurement of our supply chain, we ask our suppliers to consent to the RBA Code of Conduct, to which many global companies adhere. We ask them to answer SAQs covering the five sections of the RBA Code of Conduct (A. Labor, B. Health and Safety, C. Environment, D. Ethics, and E. Management Systems) and to share what they do in these areas. We also conduct on-site audits. Through these efforts, we are striving to engage in open communication and collaboration for improvements.

The RBA Code of Conduct[PDF:212KB]

The Responsible Business Alliance (RBA) Code of Conduct establishes standards to ensure that working conditions in the electronics industry, or industries in which electronics are a key component, and its supply chains are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. In alignment with the UN Guiding Principles on Business and Human Rights, the provisions in this Code are derived from key international human rights standards including the ILO Declaration on Fundamental Principles and Rights at Work and the UN Universal Declaration of Human Rights.
- RBA (Responsible Business Alliance)

A　Labor

We are committed to upholding the human rights of workers and treating them with dignity and respect as understood by the international community. This applies to all workers, including temporary, migrant, student, contract, directly employed, and any other type of workers.

1）Freely Chosen Employment
We do not permit forced labor, bonded (including debt bondage) or indentured labor, involuntary or exploitive prison labor, slave labor, or human trafficking.

2）Young Workers
We do not use child labor in any stage of manufacturing.

3）Working Hours
We comply with the laws and regulations of working hours and do not exceed the maximum hours set by local laws.

4）Wages and Benefits
We pay compensation in accordance with applicable wage laws, including those relating to minimum wage, overtime pay, and legally mandated benefits. We pay workers who work overtime at pay rates greater than regular hourly rates in accordance with local laws.

5）Humane Treatment
We put measures in place to prevent offensive or inhumane treatment of workers, such as violence, gender-based violence, sexual harassment, sexual abuse, corporal punishment, mental or physical coercion, bullying, public shaming, or verbal abuse, or the threat of such treatment.

6）Non-Discrimination/Non-Harassment
We do not engage in harassment or discrimination based on race, color, age, gender, sexual orientation, gender identity and expression, ethnic or national origin, disability status, pregnancy, religion, political party affiliation, union membership, military service status, protected genetic information or marital status, in hiring and employment practices, such as wages, promotions, rewards, and access to training.

7）Freedom of Association
In conformance with local law, we respect the rights of workers to form and join trade unions of their own choosing, to bargain collectively, and to engage in peaceful assembly as well as respect the rights of workers to refrain from engaging in such activities.

B　Health and Safety

We recognize that in addition to minimizing incidents of work-related injury and illness, a safe and healthy work environment enhances the quality of products and services, consistency of production, and worker retention and morale.We also recognize that ongoing worker input and education are essential to identifying and solving health and safety issues in the workplace and have the following measures in place.

1）Occupational Safety
We identify and assess worker potential for exposure to health and safety hazards (chemical, electrical and other energy sources, fire, vehicles, and fall hazards) and take appropriate measures to mitigate such hazards.

2）Emergency Preparedness
We identify and assess potential emergency situations and events and minimize their impact by implementing emergency plans and response procedures, including emergency reporting, employee notifications, evacuation procedures, worker training, and drills.

3）Occupational Injury and Illness
We put in place procedures and systems to prevent, manage, track, and report occupational injury and illness.

4）Industrial Hygiene
We identify and assess worker exposure to chemical, biological and physical agents. If any potential hazards are identified, we take appropriate measures to mitigate such hazards.

5）Physically Demanding Work
We identify, evaluate, and control worker exposure to the hazards of physically demanding tasks, such as manual material handling and heavy or repetitive lifting, prolonged standing, and highly repetitive or forceful assembly tasks.

6）Machine Safeguarding
We evaluate production and other machinery for safety hazards and properly install and maintain safety mechanisms to prevent injuries or dangers to workers.

7）Sanitation, Food, and Housing
We provide workers with access to clean toilet facilities, drinking water, and sanitary food preparation, storage, and eating facilities.

8）Health and Safety Communication
We provide workers with appropriate health and safety information and training in their native language or in a language they can understand for the workplace hazards they are exposed to, including but not limited to mechanical, electrical, chemical, fire, and physical hazards.

C　Environment

We recognize that environmental responsibility is integral to producing world-class products. We identify the environmental impacts of our manufacturing operation and strive to minimize adverse effects on the community, environment, and natural resources from these operations while safeguarding the health and safety of the public.

1）Environmental Permits and Reporting
We obtain, maintain, and keep current all required environmental permits (e.g., discharge monitoring), approvals, and registrations, and follow their operational and reporting requirements.

2）Pollution Prevention and Resource Reduction
We endeavor to minimize or eliminate our emissions of pollutants and generation of waste either at the source or by practices such as adding pollution control equipment; modifying production, maintenance, and facility processes; or by other measures. We conserve our use of natural resources, including water, fossil fuels, minerals, and virgin forest products by practices such as modifying production, maintenance, and facility processes, substituting materials, re-use, conservation, and recycling, or other means.

3）Hazardous Substances
We identify, label, and manage chemicals, waste, and other materials hazardous to humans or the environment to ensure that they are handled, transported, stored, used, recycled or re-used, and disposed of safely.

4）Reduction of Solid Waste and a Responsible Approach to Disposal and Recycling
We have implemented a systematic approach to identify, manage, reduce, and responsibly dispose of or recycle non-hazardous solid waste.

5）Monitoring, Control, and Management of Air Emissions
We characterize, routinely monitor, control, and treat as required prior to discharge air emissions of volatile organic chemicals (VOC), aerosols, corrosives, particulates, ozone-depleting substances, and combustion byproducts generated from our operations. We effectively manage ozone-depleting substances in accordance with the Montreal Protocol and applicable regulations.

6）Adherence to Material Restrictions
We adhere to all applicable laws and regulations regarding the prohibition or restriction of specific substances in products or manufacturing, including labeling for recycling and disposal.

7）Water Management
We implement a water management program that documents, characterizes, and monitors water sources, use and discharge; seeks opportunities to conserve water; and controls channels of contamination.

8）Tacking and Minimizing Energy Consumption and Greenhouse Gas Emissions
We establish a company-wide greenhouse gas reduction goal. We track and document our energy consumption and all relevant Scopes 1 and 2 greenhouse gas emissions and publicly report this information alongside our greenhouse reduction goal. We also look for methods to improve energy efficiency and minimize our energy consumption and greenhouse gas emissions.

D　Ethics

To meet our social responsibilities and to achieve success in the marketplace, we uphold the following ethical standards.

1）Business Integrity
We uphold the highest standards of integrity in our business interactions and have a zero-tolerance policy prohibiting all forms of bribery, corruption, extortion, and embezzlement.

2）No Improper Advantage
We do not promise, offer, authorize, give, or accept bribes or other means of obtaining undue or improper advantage. We also implement monitoring, record-keeping, and enforcement procedures to ensure compliance with anti-corruption laws.

3）Disclosure of Information
We perform all business dealings transparently and reflect them on our books and records accurately. We disclose information regarding our labor, health and safety, environmental practices, business activities, structure, financial situation, and performance in accordance with applicable regulations and prevailing industry practices. We do not commit any falsification of records or misrepresentation of conditions or practices in the supply chain.

4）Intellectual Property
We respect intellectual property rights, conduct transfer of technology and know-how in a manner that protects intellectual property rights, and safeguard customer and supplier information.

5）Fair Business, Advertising, and Competition
We uphold standards of fair business, advertising, and competition.

6）Protection of Identity and Non-Retaliation
We maintain a whistleblower protection program that ensures the confidentiality, anonymity, and protection of supplier and employee whistleblowers, unless prohibited by law.

7）Responsible Sourcing of Minerals
We adopt a policy and exercise due diligence on the source and chain of custody of the tantalum, tin, tungsten, and gold used in the products we manufacture to reasonably assure that these materials are sourced in a way consistent with the Organisation for Economic Co-operation and Development (OECD) Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas or an equivalent and recognized due diligence framework.

8）Privacy
We are committed to meeting reasonable privacy expectations for the personal information of everyone we do business with, including suppliers, customers, consumers, and employees. We comply with privacy and information security laws and regulatory requirements when personal information is collected, stored, processed, transmitted, and shared.

E　Management Systems

We establish and adopt a management system that is designed to ensure: (a) compliance with applicable laws, regulations, and customer requirements related to our operations and products; (b) conformance with this policy; and (c) identification and mitigation of operational risks related to this policy. This system also facilitates continual improvement and contains the following elements.

1）Company Commitment
Policy statements on the company’s social and environmental responsibility affirming our commitment to compliance and continual improvement, endorsed by management executives, and posted in facilities in the local language.

2）Management Accountability and Responsibility
A clear identification of the executives and company representative(s) responsible for ensuring implementation of the management systems and associated programs, and a regular review by management of the status of the management systems.

3）Legal and Customer Requirements
A process to identify, monitor, and understand applicable laws, regulations, and customer requirements.

4）Risk Assessment and Risk Management
A process to identify the legal compliance, environmental, health and safety, and labor practice and ethics risks associated with our operations.

5）Improvement Objectives
Written performance objectives, targets, and implementation plans to improve our social, environmental, and health and safety performance, including a periodic assessment of our performance in achieving those objectives.

6）Training
Programs for training managers and workers to implement this policy, our procedures, and improvement objectives and to meet applicable legal and regulatory requirements.

7）Communication
A process for communicating clear and accurate information about this policy and our practices, expectations, and performance to workers, suppliers, and customers.

8）Worker Feedback, Participation, and Grievance
Ongoing processes, including an effective grievance mechanism, to assess workers’ understanding of and obtain feedback on or violations against practices and conditions covered by this policy and to foster continuous improvement.

9）Audits and Assessments
Periodic self-evaluations to ensure conformity to legal and regulatory requirements, the content of this policy, and customer contractual requirements related to social and environmental responsibility.

10）Corrective Action Process
A process for timely correction of deficiencies identified by internal or external assessments, inspections, investigations, and reviews.

11）Documentation and Records
Creation and maintenance of documents and records to ensure regulatory compliance and conformity to company requirements along with appropriate confidentiality to protect privacy.

12）Supplier Responsibility
A process to communicate the requirements of this policy to suppliers and to monitor supplier compliance with them.

Request for Compliance with Sustainable Procurement Policy and RBA Code of Conduct

We send our suppliers a written request for compliance with our Sustainable Procurement Policy and the RBA Code of Conduct and receive their response to ensure their awareness and concurrence.

We are striving to be a good corporate citizen that complies with international laws, national laws, and social norms, and to be a company that meets our customers' expectations. In this context, we conduct surveys and regularly hold briefings for suppliers to strengthen our supply chain and promote understanding of our initiatives. Since it is the expectation of the international community that companies establish sustainable procurement policies and follow the RBA Code of Conduct, we will communicate the responsibilities we have under the circumstances to our suppliers and build a true partnership with them based on mutual understanding and trust.

For Key Suppliers, we conduct assessments of quality, cost, delivery, and service, annually, and provide them with our feedback and requests for improvement for the next year. We identify areas where improvement is necessary and take them on together as part of efforts to keep strengthening our supply chain.

Supplier Program

We adopt a fab-lite strategy where the production of most systems is outsourced to third parties. We therefore think it is highly important to build a relationship of mutual trust with each of our Suppliers and Manufacturing Contractors. We also believe that such relationships must align with international norms and principles, including the RBA Code of Conduct and the Ten Principles of the UN Global Compact. We have a supplier program in place that leverages the synergy between the fab-lite strategy and our quick decision-making that enables us to adapt to an ever-changing society.

Lasertec Supplier Program

Suppliers and Manufacturing Contractors

We have designated 45 companies representing the top 75% of our annual procurement spend as "Key Suppliers". Our strong partnership with these companies plays a crucial role in the development of one-of-a-kind leading-edge products and enables mutual business growth.

Lasertec's Initiatives

With respect to Key Suppliers, we implement supplier management initiatives as shown in the table below. We review the contents of these initiatives as necessary for the improvement of our supplier management. In FY2025 (July 2024 to June 2025) and onward, we plan to revise the criteria of our supplier evaluation as well as the contents of SAQs including their categories, questions, and scoring methodology.

Initiatives

	Overview	Specific actions
Supplier evaluation	Regular evaluation of Key Suppliers in the areas of quality, cost, delivery, and service	We make a quantitative assessment of suppliers' activities annually based on our business with them, SAQs, and audits, and provide feedback for improvement.
RBA SAQ	Assessment of the status of compliance with the RBA Code of Conduct	We gather responses from suppliers to check whether their activities comply with the RBA Code of Conduct.
BCP SAQ	Assessment of the status of business continuity planning	We use SAQs of our own format to check the status of business continuity planning and design change management and request improvements as necessary.
Design change management SAQ	Assessment of design change management for products from suppliers
Supplier audits	On-site check of documents and records, management systems, and suppliers' initiatives, and feedback for continuous improvements	We perform on-site verifications of information provided to us in RBA, BCP, and design change management SAQs.
Creditworthiness checks	Check of financial statements and assessment of business conditions based on hearings with suppliers and research agency reports	We obtain objective assessments of ratings and business conditions from third-party research agencies to prepare for contingencies of suppliers.

Supplier Evaluation

We conduct an annual evaluation of Key Suppliers in the areas of quality, cost, delivery, and service and provide feedback on the results. The purpose of this is to strengthen our supply chain by reviewing business records, sharing findings with suppliers, and making collaborative efforts for improvement.

RBA SAQ

We ask each of Key Suppliers to answer SAQs to check the status of their compliance with the RBA Code of Conduct. The purpose of this is to raise the level of our procurement up to international standards. We use the results of the SAQs to identify transaction risks. We also visit their HQs and production facilities to audit their internal regulations and documents, and records of business that support their responses. We provide feedback on the results of audits and request improvements, if necessary. We ask them to submit an improvement plan and check the effectiveness of their efforts. We also communicate the need to strengthen their response capabilities.

BCP and Design Change Management SAQs

We believe it is important to strengthen our collaborative efforts with Suppliers and Manufacturing Contractors in the areas of business continuity planning (BCP) and design change management. We are taking specific measures to enhance the resilience of our supply chain against contingency situations. We ask our suppliers to answer SAQs on BCP and design change management in the same manner as we do with our SAQs on RBA compliance. The purpose of this is to see if the measures Suppliers and Manufacturing Contractors are taking meet the required standards and, if necessary, to request improvements. We provide feedback on the results and make requests for improvement. We ask them to submit an improvement plan and check the effectiveness of their efforts. We also communicate the need to strengthen their response capabilities.

Supplier Audits

We audit Key Suppliers about their responses on the RBA, BCP, and design change management SAQs. We interview the managers of their supply chain-related departments and visit their production facilities to see if they comply with relevant regulations and standards. We also check their internal rules and records of actions to see if there is any discrepancy. This allows us to grasp the status of their activities that we would otherwise not be able to understand merely by conducting SAQs.

Creditworthiness Checks

We believe that we need to accurately understand our suppliers' business conditions to keep our supplier management intact. When we renew our business relationships with suppliers, we may ask them to disclose their business strategies and information about the status of their business, including their financial statements, if necessary. We also periodically check credit reports from research companies.

Schedule

In every fiscal year, we undertake various activities as part of our supplier program to make our supply chain better and stronger.

	What we do	How often
QCDS assessment	■Supplier evaluations ■Deciding content of next supplier evaluation	Once a year
Sustainable procurement assessment	■Supplier briefings	Once a year
Sustainable procurement assessment	■SAQs ■Onsite audits ■Requests for improvement & receiving responses	Once or twice a year¹
Strengthening resilience	■BCP/Design change management SAQs ■Credit checks	Once a year
Internal efforts	■Training for new employees	Once a year
Internal efforts	■E-learning	As required

1: Includes on-site verifications of improvement efforts

Future Areas of Focus

In the next few years, we will focus on the following areas to further strengthen our supply chain.

	Initiative	Example Targets
BCP	Improve production locations	・Improve the production locations of Key Suppliers ・Enhance communication with Key Suppliers and tier 2 suppliers
BCP	Work together to address supply chain challenges	・Reduce lead times by improving production processes ・Take on component procurement issues together as part of efforts to strengthen the supply chain
Communication	Build quality partnerships with suppliers	Hold briefings for suppliers to discuss our initiatives and requests for important matters such as the RBA Code of Conduct and design changes
SAQs	Make improvements based on the previous year’s activities	Revise SAQs so we can more accurately understand and evaluate the status of Key Suppliers
Careful selection of suppliers	Ask suppliers to consent to the RBA Code of Conduct and the Sustainable Procurement Policy	Execute a basic transaction agreement with suppliers, which includes their consent to the RBA Code of Conduct and our Sustainable Procurement Policy
Careful selection of suppliers	Rank suppliers based on audits and supplier evaluations and share the rankings with our vendors	Support suppliers to achieve a high benchmark through our improvement activities Find new suppliers who consent to our Sustainable Procurement Policy

In addition to the above, we will conduct company-wide training about compliance requirements.

A recent example of such training is an e-learning course taken by all of our employees about the Subcontract Act, information security, and the handling of trade secrets.

Supplier Assessment

1) New Suppliers

Before conducting business with any new Suppliers or Manufacturing Subcontractors, we execute a basic transaction agreement with them and, if necessary, request their written consent to our Sustainable Procurement Policy and the RBA Code of Conduct.

In some cases, we may ask them to confirm the terms and conditions of business (QCD, environmental, safety and security, and sustainability) and/or visit their production facilities and HQ to check their business activities.

2) Existing Suppliers

We ask them to take e-learning courses to learn about our procurement-related initiatives and answer SAQs on their procurement activities. If we find that improvement is necessary, we submit a written request for improvement and solve their problems together. With respect to Suppliers and Manufacturing Subcontractors, we conduct on-site audits, if we find it necessary from the results of SAQs, to grasp their situations. We then follow it up to keep checking the status of compliance with our requests for improvement.

Assessment Process Flow

Communication with Suppliers

Declaration of Partnership Building

We have formulated a "Declaration of Partnership Building"^*1 and announced it publicly to promote the creation of new value throughout the entire supply chain while adhering to social norms by building better relationships with our business partners and furthering our healthy trade practices.

*1The "Declaration of Partnership Building" was established at the "Council on Promoting Partnership Building for Cultivating the Future", whose members are comprised of the Chairman of the Japan Business Federation, the Chairman of the Japan Chamber of Commerce and Industry, the President of the Japanese Trade Union Confederation, and the ministers of relevant ministries (Cabinet Office, Ministry of Economy, Trade and Industry, Ministry of Health, Labour and Welfare, Ministry of Agriculture, Forestry and Fisheries, and Ministry of Land, Infrastructure, Transport and Tourism). The declaration is intended to show the determination to build a new type of partnership by promoting cooperation, coexistence, and coprosperity among partners in the supply chain and others seeking value creation.

Declaration of Partnership Building[PDF:105KB]

Compliance Helpline for Business Partners

For the prevention, early detection, and swift resolution of compliance issues, we have put in place a compliance helpline for our suppliers, subcontractors, and other business partners. If you find any violation or potential violation of laws and regulations regarding our business practices, or the conduct of our officers and employees, please use this helpline to submit your report from the following website.

URL: https://www.dial-soudan.jp/cp/lasertec/login?lang=en
ID：lasertec　Password：lasertec1960

Notes about the helpline:
- This helpline is not for making business inquiries. If you have such an inquiry, please contact the department in charge.
- We will not treat whistleblowers or their employer companies unfavorably for their whistleblowing reports.
- All information contained in your whistleblowing report, including personal information, will be used only by our officers and employees responsible for handling compliance matters and only to the extent necessary to respond to the reports. We will not disclose such information to any third party without your prior consent unless we are required to do so by law. For information about the handling of personal information, please see our privacy policy.
- This helpline is a third party-operated system with strict security control, available 24 hours a day, 365 days a year. You can submit reports either in Japanese or English, anonymously if you choose to do so.