Walsin Lihwa’s policies, such as the "Supplier Management Measures", "Supplier Social Responsibility Performance Appraisal Principles", and "Sustainable Procurement Management Measures", ensure suppliers meet requirements on quality, cost, timely delivery, and service quality. There are also written evaluations and onsite audits to track suppliers' performance in issues such as environmental protection and human rights, thereby ensuring suppliers fulfill their social responsibility and promoting the sustainable development of the supply chain.

For information on the upstream, midstream, and downstream parts of Walsin Lihwa's supply chain, please refer to Chapter 4 - Business Overview in the Annual Report and the Company's website.

In response to corporate governance requirements and to integrate procurement resources, as well as implement Walsin Lihwa's procurement culture (transparency, sustainability, professionalism, and efficiency), in 2024 Walsin Lihwa launched the "Walsin Lihwa Procurement Network and Procurement Management Platform" project at the Taiwan plants in order to expand the benefits of Yantai Walsin Stainless Steel's price inquiry platform. The next-generation platform will further expand the standardization and transparency of Walsin Lihwa's procurement process. The implementation is expected to be completed at the end of 2025. The system will be launched at Walsin Lihwa's business units in Taiwan in 2026, with suppliers gradually invited to participate.

Walsin Lihwa's systematic management will effectively improve the efficiency, transparency, and fairness of the Company's procurement. The platform's functionality will include collecting suppliers' carbon emission data by filling out specific fields in the system, which will enable the establishment of carbon footprint management mechanisms in conjunction with overall policy planning, thereby realizing the carbon reduction commitment of the supply chain. In addition, procurement teams will travel to suppliers and conduct onsite reviews to deepen partnership relationships. Moreover, in response to the Company's policy of promoting green supply chains, suppliers will work with the Walsin Lihwa Low Carbon Alliance to jointly turn the green value chain trend into reality.

To implement effective supplier management, during the identification of key suppliers Walsin Lihwa takes into account considerations such as important raw materials, materials, assets and equipment, project contracting, waste treatment, and outsourcing; in accordance with the "Supplier Management Measures" formulated by Walsin Lihwa, the Company also examines factors such as procurement value, importance, influence, uniqueness, and strategic cooperation when selecting key suppliers. Out of a total of 5,413 suppliers ^{Note 1}, 503 have been selected as key suppliers ^{Note 2}, which account for 64.92% of total procurement value. These key suppliers are also the targets for the promotion of supply chain resilience and strengthening supplier corporate social responsibility.

Walsin Lihwa works together with suppliers in the pursuit of corporate sustainability and growth. The Company continues to engage in local procurement, promote local economies, and reduce energy consumption in transportation. The proportion of local suppliers in procurement expenditures in each region was 52.71% in the Taiwan region, 18.36% in the Mainland China region, and 29.94% in the Europe region, respectively. Overall, 27.45% of key suppliers are local suppliers.

Walsin Lihwa is committed to green procurement. In accordance with the Sustainable Procurement Management Measures, the Company prioritizes the purchase of products or services with lower environmental impacts, thereby encouraging the production and use of green products and driving green consumption. Walsin Lihwa reports a green procurement amount of approximately NT$130 million to the Department of Environmental Protection of Taipei City Government for 2024, mainly focusing on nickel chromium pig iron raw materials from the Stainless Steel Business Group, the Wire and Cable Business Group's forklifts (leased), 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 and iron bobbins to decrease the procurement of new ones. The Stainless Steel Business Group also actively utilizes recycled materials such as scrap steel, scrap copper, and scraps. In 2024, green procurement expenses in Taiwan amounted to about NT$7.716 billion, 13.70% of the total procurement in Taiwan.

In response to the escalation of various trade restrictions resulting from geopolitical issues and pandemic events, Walsin Lihwa has implemented proactive contingency measures, such as strengthening partnerships with suppliers, regular reviews of the establishment of reasonable safety stock inventories, and the active development of alternative resources, in order to ensure the stability and flexibility of the supply of various materials. In 2024, 56 new substitute raw materials were successfully developed for the Taiwan and Mainland China plants, thereby preventing the risk of material shortage

To implement sustainable supply chain management and strengthen the professional capabilities of procurement personnel regarding sustainable management, Walsin Lihwa organized a number of education and training sessions for procurement personnel in Taiwan and Mainland China in 2024. In addition to explaining the impact of climate change and global carbon reduction goals, the courses also shared Walsin Lihwa's implementation results in the Walsin Lihwa Low Carbon Alliance, which has received support and resources from the government. The courses allowed personnel to learn about hot topics in the market as well as Walsin Lihwa's own actions regarding carbon management. Relevant education and training will continue to be held in the future in Taiwan and Mainland China from time to time.

In 2024, a total of 617 new suppliers ^Note were added the Taiwan, Mainland China, and Malaysia plants. The "CSR Sustainability Self-Assessment Form for New Suppliers" was used to assess the social and environmental impacts of the new suppliers and ensure that the Company's supply chain complies with environmental protection and sustainable development principles. A total of 596 questionnaires were collected (response rate of 96.60%). In terms of environmental protection, Walsin Lihwa has established specific management measures and procedures for carbon reduction in order to enhance suppliers' carbon management capabilities. The Company will also organize discussions on specific topics at the Supplier Partner Exchange Meeting in order to strengthen suppliers' carbon management awareness.

To ensure that new suppliers meet social standards and reduce supply chain risks, Walsin Lihwa requires all contractors and transportation providers to take 2 hours of contractor safety courses provided by environmental protection, occupational health and safety, and logistic units before entering plants, thereby maintaining safe working environments.

Walsin Lihwa aims to grow alongside the Company's partners in order to strengthen and implement sustainable supplier management. The Company evaluates suppliers' quality, timeliness of completion and delivery, service, and communication and coordination abilities, thereby ensuring that they can meet the Company's requirements and further strengthening supplier management mechanisms. To enhance suppliers' awareness of and commitment to sustainable development, suppliers of the Taiwan and Mainland China plants are required to sign the "Supplier's Undertaking" and ensure that they comply with related management regulations.

Walsin Lihwa also invited key suppliers to respond to the Company's "Supplier CSR Self-Assessment Form" to assess their management status, including economic aspects (sustainable governance, supplier management, and protection of trade secrets), social aspects (human rights, occupational health and safety), and environmental aspects (environmental management systems, greenhouse gases, air pollution, water resource management, and waste management). Analysis of suppliers' sustainability management was based on questionnaire findings, enabling the Company to assess the probability of threats to sustainability and degrees of impact, as well as identify how key suppliers under such threats would impact the operations of Walsin Lihwa, and to what severity, and develop early warning mechanisms. There were 8 high-risk suppliers in 2024. The main issues and follow-up improvements were:

Regarding sustainable governance, the main factors that affect the calculation of risk values are suppliers' failure to implement management policies, such as codes of ethical conduct or ethical management policies, disciplinary measures for violations, or any lack of appropriate ESG planning. These factors were used to identify major risks, thereby preventing supply chain disruptions or abnormalities. To this end, suppliers are not only encouraged to include relevant matters in their implementation guidelines, but are also required to commit to creating comprehensive guidelines in writing for the following year.

Regarding waste management, the suppliers have managed legal waste removal companies, but did not audit them on a regular basis. Therefore, suppliers will be asked to include waste management in their routine audits, to be conducted in conjunction with Walsin Lihwa's onsite inspections and awareness-raising activities.

To enhance the scope and depth of supply chain sustainability development, in 2024 the Supplier Partner Exchange Meeting was expanded, and onsite audits and interviews of selected key suppliers were conducted to provide corresponding guidance and assistance based on individual sustainability risk issues, thereby preventing and lowering risks. The implemented measures included:

• Held communication and discussion meetings on a regular and as-needed basis to support suppliers' growth and improve their business quality.
• Continue to carry out pre-work safety education and training for 100% of current contractors.
• Onsite reviews of suppliers' ESG practices, and continue to improve the assessment and checking of deficiencies.
• Identification of procurement process risks through methods such as system management and assessment forms.

In 2024, Walsin Lihwa actively promoted its sustainable development policies and common goals by making unscheduled visits to 133 suppliers. Moreover, Walsin Lihwa organized the Supplier Partner Exchange Meeting, inviting local and overseas supplier partners from the Stainless Steel Business Group, Wire and Cable Business Group, and Resources Business Group to participate in 2 events held respectively in Taiwan and Mainland China. The aim of these Exchange Meetings was to deepen collaborations with suppliers, enhance their ability to address sustainability issues, and encourage them to incorporate sustainable development into their corporate management agendas.

For the Exchange Meeting in Taiwan, the theme was "Low-Carbon Sustainability, Smart Future.". In Mainland China, the slogan for the Exchange Meeting was "Low-Carbon and Smart for a Win-Win Future". These events allowed the Company to work with suppliers and explore global sustainable development trends. Both Exchange Meetings featured 3 themed seminars: "Walsin Lihwa's Sustainable Business Development", "Corporate Green Sustainability and Carbon Reduction", and "Digital Applications of AI and Upgrades to Business Operations". Experts from industry and academia were invited to participate. The goal of these Exchange Meetings was to enhance suppliers' knowledge of sustainable governance, strengthen their risk management mechanisms, and for Walsin Lihwa to jointly respond to market challenges alongside suppliers, thereby promoting sustainable supply chain management, fulfilling CSR, and gradually achieving ESG sustainability goals.

In addition, in 2024, a signing ceremony for strategic cooperation agreements was held for the first time at the Exchange Meeting in Mainland China, where Walsin Lihwa signed cooperation agreements with key strategic partners. The purpose of these agreements is to strengthen supply chain resilience, as well as jointly seek innovation opportunities, deepen collaborations, and achieve mutual growth and sustainable development.

In 2025, Walsin Lihwa will for the first time be implementing an outstanding supplier selection mechanism, in which suppliers' performance in sustainable development and common transactions will be comprehensively evaluated. The evaluation criteria will include: Production of products with national green labels, outstanding performance in carbon emissions management, and excellent performance in common transactions such as product quality, delivery, and service.
Suppliers selected will be invited to participate in the annual Supplier Partner Exchange Meeting, where they will be publicly commended for their outstanding contributions. They will also be invited to share their practical experiences, thereby promoting knowledge exchanges and collaborative growth throughout the supply chain. Furthermore, when all other conditions are equal, outstanding suppliers will be prioritized for transactions and price negotiations in future business opportunities, thus further deepening mutual collaborations and jointly working together to attain sustainable development goals.

Walsin Lihwa adheres to a spirit and philosophy of serving customers: Focus on customer and industry development, optimize the service process, and enhance customer trust to create a win-win situation. To strengthen customer service quality and efficiency, the Wire and Cable Business Group precisely manages customer requirements, quotations, and complaints in order to dynamically adjust supply, as well as accurately forecast customer demand and optimize production plans in order to enable timely deliveries. Walsin Lihwa is committed to becoming customers' most trusted partner through ongoing service process optimization, responsiveness to customer requirements and feedback, and cooperation for joint development.

The highlights of the Wire and Cable Business Group's various plants' customer service can be seen in the following examples. The Stainless Steel Business Group has continued to implement digitalization projects to optimize service quality, including the full deployment of a CRM system in both Taiwan and Mainland China, the integrated management of business activities such as quotations, customer complaints, and billing, thereby enhancing the quality and efficiency of customer service. The electronic synchronization system launched in 2023 serves to shorten communication times for orders between customers, and facilitates customers tracking the progress of orders as well as inventory adjustments. The first demonstration customer began using the system in 2023, and since then the system has been used for 41.8% of all shipments as of 2024. In the future, the system will be expanded to more customers in order to further enhance customers' competitiveness. In addition, in response to international trends in carbon fees and carbon tariffs, Walsin Lihwa is participating in the Industrial Development Administration, Ministry of Economic Affairs' Net Zero Transition Program for the Manufacturing Division, and has created the "1+N Carbon Management Demonstration Team" alongside the Company's partners. To date, 11 customers have joined the program. By leveraging the prior experience of upstream steel mills, the Company can help downstream customers conduct carbon inventory and energy-saving diagnostics, thereby jointly promoting low-carbon transformations in the stainless steel industry chain.

The Wire and Cable Business Group held a total of 32 key customer interviews in 2024 to gain a more in-depth understanding of customer feedback on product quality, collect and analyze customer requirements, and promote material improvements and new product testing. For example, Walsin Lihwa and customers jointly developed innovative products such as large wind turbine cables and fast charging cables, providing customers with stable support and technical protection for expanding into new markets. On the other hand, the Stainless Steel Business Group worked closely with customers via the product expert service team to resolve technical pain points. In addition to routine visits to customers to develop an understanding of their use of materials, 43 customer technical seminars were also held in Taiwan in 2024 to discuss quality issues, track the progress of new product testing, and conduct discussions on specific technical topics, thereby helping customers optimize their use of materials, such as adjusting processing procedures and equipment parameters.

In terms of customer satisfaction, the overall satisfaction of the Wire and Cable Business Group reached 89.28%, maintaining the same level as 2023. Specifically, the quality satisfaction rate has risen to 90.03%, which reflects customers' high satisfaction with products' reliability and stability. The service satisfaction rate reached 91.4%, which shows that customers appreciate the Company's service efficiency and support. The business conditions satisfaction rate remained at 74.68%, demonstrating stable performance. The delivery satisfaction rate slightly increased to 89.1%, demonstrating Walsin Lihwa's strong supply chain and logistics capabilities. The customer satisfaction survey conducted by the Stainless Steel Business Group showed that the overall satisfaction rate did not reach the expected target of 84.9%, in which the drop in delivery satisfaction was the most significant. In recent years, factors such as international raw material prices and a lethargic stainless steel market have caused the overall supply chain to retain low inventory, resulting in downstream customers having higher requirements regarding shorter delivery times and more precise delivery dates. To responsed to these challenges, Walsin Lihwa leverages digital technology to predict customer procurement requirements, and has optimized production schedules to enable precise delivery dates, thus ensuring timely deliveries. This will lead to higher customer satisfaction regarding the Company's deliveries.

Adhering to the principle of protecting business information and customer privacy, Walsin Lihwa has established regulations such as the Ethical Conduct Guidelines for Employees 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 2024, the Company did not violate the privacy of its customers and did not receive any complaints from customers about the violation of their privacy.