For information on upstream, midstream, and downstream of Walsin Lihwa's supply chain, please refer to Business Overview in the Annual Report and the Company's website.

To achieve effective corporate governance and integration of procurement resources for the transparency, sustainability, professionalism, and efficiency of procurement at Walsin Lihwa, Yantai Walsin Stainless Steel’s procurement management system implementation in 2023 commenced a price inquiry platform trial to develop procurement process standardization and transparency by using IT system tools for procurement management and real-time sharing of supply chain issues, so that corporate social responsibilities can be fulfilled together with suppliers.

To implement effective supplier management, Walsin Lihwa has important raw materials, materials, assets and equipment, project contracting, waste treatment, and outsourcing factored into key supplier identification, which is also based on the principles of procurement value, importance, influences, uniqueness, and strategic considerations. 156 key suppliers^Note have been identified from a total of 3,619 suppliers^Note. The 156key suppliers amount to 63.09% of the total procurement value and are also the objects of promotion of supply chain resilience to strengthen supplier corporate social responsibilities.

We work together with our suppliers in the pursuit of corporate sustainability and growth. We continue to engage in local procurement and to promote local economy and reduce energy consumption in transportation. The key suppliers in Taiwan increased by 12 as compared to that in the previous year, and local suppliers amounted to 18.87% of the procurement expense. 32.45% of procurements made by our key suppliers in mainland China are sourced from local suppliers. Overall, 27.83% of our key suppliers are local suppliers.

Committed to green procurement, Walsin Lihwa has its "Sustainable Procurement Management Measures" to promote priority procurement of the items with green product labels. In 2023, we reported a green procurement amount of approximately NT$1.8 billion to the Department of Environmental Protection, Taipei City Government, mainly focusing on pig iron raw materials from the Stainless Steel Business Group, the Wire and Cable Business Group's plastic bobbins (leased) and closure plates, as well as IT equipment used by the Company such as laptops, servers, and printers. Moreover, to decrease products' environmental impacts, the Wire and Cable Business Group uses recycled wooden bobbins, iron bobbins, and closure plates to decrease procurement of new ones. The Stainless Steel Business Group also makes good use of scrap steel, scrap brass, and recycled nickel chromium pig iron. In 2023, the green procurement expense in Taiwan amounted to about NT$9.189 billion, 13.72% of the total procurement in Taiwan and 0.92% higher than 12.80% in 2022.

For effective implementation of sustainable supply chain management, Walsin Lihwa provided education and training to the employees responsible for procurement respectively in April and September 2023. The courses covered analysis of ESG principles and backgrounds as well as relevant corporate practices in Taiwan and overseas to strengthen the awareness of sustainable supply chain management, There were also supply chain field inspection and supply chain risk assessment mechanisms to help the employees responsible for procurement comprehensively strengthen their sustainable supply chain management professionalism.

There were 787 new suppliers in 2023 and a "CSR sustainability self-assessment form for new suppliers" was conducted on them. According to 774 (98.35%) valid self-assessment forms received, environmental shortcomings primarily resulted from failure to develop energy saving and carbon reduction measures and processes because of unfamiliarity with carbon management. Walsin Lihwa shall continue its promotion of carbon management to suppliers on a regular basis and discuss related issues at supplier conferences to help suppliers strengthen carbon management. Social shortcomings were light occupational injuries at some suppliers in the last 3 years. Therefore, Walsin Lihwa shall ask all contractors and transportation providers to take a 2-hour course on contractor safety provided by environmental protection, occupational health and safety, and logistic units before they enter any plant to ensure a safe work environment established together by both parties.

To effectively strengthen supplier sustainability management and grow together with suppliers, Walsin Lihwa's supplier assessment includes quality, timeliness of completion and delivery, service, communication, and coordination to ensure suppliers meet all these criteria. Moreover, all suppliers are required to sign the "Supplier's Undertaking" to strengthen supplier management by increasing their awareness and commitment.

Walsin Lihwa also invited key suppliers to respond to its"CSR sustainability self- assessment form" to assess their management status quo including the economic aspect of sustainability governance, supplier management, and protection of trade secrets; the social aspect of human rights as well as occupational health and safety; and the environmental aspect of environmental management, greenhouse gases, air pollution, water resource management, and waste management. Analysis of suppliers' sustainability management was based on questionnaire findings to assess the of the probability of threats to sustainability and degrees of impact and identify how key suppliers under such threats would impact the operation of Walsin Lihwa and the degrees of impact.

21.60% of the key suppliers have obtained the ISO27001 Information Safety Management System certification and have sound data protection and trade secret management systems.

38.27% of the key suppliers have obtained the ISO 45001 Occupational Health and Safety Management System certification and implement effective identification of potential hazards throughout production and processing, provide relevant education and training to employees, and have emergency response plans.

40.12% of the key suppliers have obtained the ISO 14001 Environmental Management System certification and have environmental protection and energy management policies. 22.22% of them have implemented greenhouse gas emission management with third-party certification.

In 2023, there were 18 high-risk suppliers. Although no improvement plan has been formulated yet, Walsin has analyzed and provided feedback for these suppliers and it is expected to jointly formulate improvement plans through on-site visits in 2024.

Major issues and improvements to be tracked are as follow:

Sustainability-wise, risk value calculation was affected primarily because suppliers had no relevant policy for ethical conduct or ethical management, or had no proper ESG planning to help identify material risks. Suppliers will be required to implement relevant policies and commit themselves to perfection of related guidelines in writing in the following year.

Occupational health and safety shortcomings-wise, raw material suppliers have product transportation and vehicle safety management regulations and measures, but has no audit mechanism. Promotion of audits will continue, and counselling and tracking will include audits. Field inspections will ask for evidences of improvement made.

Waste management-wise, suppliers are able to manage legit waste cleaning companies but has no audit on a regular basis. They will be asked to perform routine audits in cooperation with Walsin Lihwa's field inspections and promotion of environmental safety.

To strengthen the depth and width of supply chain sustainability development, annual suppler conferences were expanded in 2023. Onsite audits and interviews of selected key suppliers were also made to provide corresponding guidance and assistance based on individual sustainability risk issues to prevent and lower risks by approaches including:

• Regularly and irregularly hold communication and discussion meetings to support suppliers' growth and improve their business quality.
• Continue to carry out 100% pre-work safety education and training for existing contractors.
• Onsite checking of suppliers' practices in management, social and environmental aspects, and continue to improve the assessment and checking of deficiencies.
• Identification of procurement process risks through system management and evaluation form development.

In 2023, unscheduled visits to 79 suppliers promoted Walsin Lihwa's sustainability policy and common goals with them. Supplier conferences were hosted by Walsin Lihwa for the first time instead of individual business units in the past. The suppliers to the Stainless Steel Business Group, Wire and Cable Business Group, and Resources Business Group were invited for exchange and sharing respectively in Taiwan and Mainland China. The supplier conferences were intended to facilitate ongoing communication with suppliers to help them better deal with sustainability issues and encourage them to include sustainable development into their management agendas.

The Taiwan session entitled Low Carbon Alliance and Harmony Co-Prosperity and the Mainland China session entitled Corporate Sustainability and Energy Conservation discussed sustainability issues and trends. Three topics including ESG trends, sustainable carbon emission management, and smart production technology exchange were also explored to help increase suppliers' knowledge of sustainability governance and strengthen risk management to face up to market challenges together with suppliers, improve supply chain sustainability management, fulfill corporate social responsibilities, and gradually carry out ESG for sustainable development.

Walsin Lihwa's Adheres to the Spirit and Philosophy of Serving Customers: Focused on customer and industry development, optimizes the service process and enhances customer trust to create a win-win situation.

To strengthen customer service quality and efficiency, Wire and Cable Business Group precisely manages customer needs quotations, and complaints by dynamic supply adjustment, production plan optimization, and accurate forecasting of customer demand to enable timely delivery. The group is committed to becoming customers' most trusted partner through ongoing service process optimization, responsiveness to customer demand and feedback, and cooperation for joint development. The Stainless Steel Business Group has comprehensively implemented customer relationship management in both Taiwan and Mainland China to integrate quotation, customer complaint, and receivables management, which enables high quality and high efficiency of customer service. Production-wise, stock preparation and scheduling are improved by ongoing data analysis to strengthen delivery stability, In response to the international trend of carbon fees and tariffs, participation in the Program for Promotion of Net Zero Transformation to the Manufacturing Sector of the Industrial Development Administration, Ministry of Economic Affairs in 2023 developed a 1+N carbon management demonstration team together with customers, so that the Stainless Steel Business Group as an upstream steelmaker can be a bellwether to help downstream customers take carbon inventory and diagnose energy saving measures. 11 customers have joined the program, and the business group looks forward to more customers' participation to together promote low-carbon transformation of the stainless steel industry chain.

For an in-depth understanding of customer feedback to product quality by unscheduled visits to customers, Wire and Cablee Business Group and the Stainless Steel Business Group respectively held 34 technology seminars and 14 focus interviews with their customers in 2023 to gather and analyze customer needs, and completed improvement of many customer part numbers and new product tests. The power cables for big wind turbines and high-speed charging cable sets developed together by Walsin Lihwa and customers are strong backup for customers to enter new markets. Moreover, salespeople’s knowledge of different types of products has been strengthened, so that customers can order different types of products from a single sales window to save the trouble of ordering from multiple windows in the past and strengthen customers' trust in salespeople.

In 2023, a total of 1,309 customer satisfaction surveys were issued, and 1,159 copies were returned, with a return rate of 88.5%. The overall satisfaction rate of 89.6% increased by 3.1% compared to 86.5% in 2022.

Technical compliant management assumes an important role in our commitment to sustainable development and quality control to help identify and resolve key product and service issues to continue improving customer satisfaction. Timely responsiveness to complaints includes product returns and adoption of qualified materials throughout the supply chain. Our commitment to customer satisfaction continues raising the bar for product and service development to demonstrate the confidence in product quality and highlight the emphasis on customer relationship management.

Adhering to the principle of protecting business information and customer privacy, Walsin Lihwa has established regulations such as the "Employee Code of Ethical Conduct" and "Information Security Management Procedures" to prevent unauthorized access, tampering or improper disclosure of information, and to protect customers' privacy and rights. At the same time, through publicity, management review, internal audit, etc., all employees are required to abide by relevant management regulations. In 2023, the Company has not violated the privacy of its customers nor received any complaints from customers about the violation of their privacy.