An Overview of Supply Chain

Businesses selecting local suppliers can not only fulfill their social responsibility to the community but also reduce the environmental impact resulting from transportation and distribution over long distances. In 2022, more than 93% of GIGABYTEʼs first-tier suppliers were located in Asia, of which 90% were in the areas where our main manufacturing bases are situated. GIGABYTE adheres to local procurement in order to maintain productivity and continuity of operations as well as improve local economic development.

Local Procurement Rate

The local procurement rates at all of GIGABYTEʼs main manufacturing locations (i.e., Nanping, Dongguan, and Ningbo) have exceeded 75% in recent years. In 2022, the local procurement rate was 81.25%.

Local Procurement Rate in the Past 5 Years

[Note 1] Local:The sites where materials are produced are in the areas where GIGABYTEʼs main manufacturing bases are located.

[Note 2] Procurement amount:calculate based on the purchase amount of the year.

Supply Chain Management Policy and Risk Management

In 2018, GIGABYTE officially issued the “GIGABYTE Guidelines of Sustainable Procurement” which applies to the Headquarters, Nanping Factory, two factories in China, and the subsidiaries with substantial influence in Taiwan. We commit to regarding the “Code of Conduct for Responsible Business Alliance” issued by the Responsible Business Alliance (RBA) as the highest guiding principle. 4 major management aspects (including 15 sub-goals) and 4 zero tolerance regulations are set to assess the risk of a supplier. When selecting suppliers, other than the basic requirements like quality, delivery, service, cost, etc., we also conduct investigations and regulations for environmental management systems, occupational safety and health systems, corporate social responsibility, hazardous substances, etc., to ensure that the chosen suppliers are in compliance with sustainable procurement standards.

4 Management

Product quality, production and manufacturing ability, service, deliver time, price.

ISO 14001, legal compliance, environment management measures.

GIGABYTE Hazardous Substances Management, international standards and regulations of chemicals management

Sustainable supply chain evaluation management system, labor human right, conflict minerals, ISO 45001, corporate ethics.

4 Zero Tolerance Regulations

  • Child labor
  • Forced labor / prison labor
  • Discharge of untreated toxic and hazardous substances or materials

  • Behaviors that cause immediate injury to employees

Download the GIGABYTE Guidelines of Sustainable Procurement (Chinese version only)

Identification of High-risk Suppliers

GIGABYTE adopts grading management for existing and new suppliers through evaluation in accordance with the “Supplier Quality Management Practices”. In 2022, a new supplier grading management system was introduced. In addition to the existing criteria such as supplier contracts (CMRT, RBA) and material rating (quality, delivery, cost, and service), it also integrates the supplier sustainability assessment system which has been promoted and implemented since 2012. The new system enables the grading and rating to fully reflect the overall sustainability performance of GIGABYTEʼs suppliers. Moreover, a high CSR-related risk assessment is conducted quarterly, and suppliers rated as D-level will be weeded out. The strategic assessment of suppliersʼ sustainability performance provides assurance of the quality and stability of the suppliers and reduces supply chain risks.

In 2022, GIGABYTE audited 44 suppliers for RoHS, quality, and CSR. The audit identified 7 suppliers with moderate risk and 2 suppliers with high risk, with quality system audits being the most common problem. GIGABYTE is aware of the list and continues to track the situation with these suppliers. 2 suppliers with moderate risks were rated as low risk after improvement and review. In terms of CSR, suppliers were assessed against the Responsible Business Alliance (RBA) Code of Conduct in 2022 and around 90% of cases were good (scored above 85). The overall average score was 93.5. We will continue to promote related initiatives and projects in the future so that we can lead our supply chain partners in embracing sustainability.

Audit Result of Quality System / RoHS
Audit Result of Supplier CSR Performance

High CSR Risk Assessment Mechanism

A quarterly CSR risk assessment is conducted for all suppliers under the new tiered supplier management system. The assessment covers 4 aspects: society, environment, governance, and commerciality. In particular, we put more attention on whether critical suppliers, whose purchase amount exceeds NTD 10 million and therefore is classified as Level 1 or Level 2 (accounting for 38% in 23Q1), are fined for labor, environment, financial transactions, and conflict minerals violations. The matrix also considers corporate governance evaluation, ESG disclosure scope, and positive and negative media coverage. A report on high-risk suppliers is then provided to relevant personnel within each BU to improve their supplier management.