2023Environmental,Social, and CorporateGovernance ReportSG Micro Corp
Green R&DEnvironmentalManagementEnergy Conservationand Carbon FootprintReductionWaste and MaterialManagementGreen Opportunities
Green Comes First
Scienti?c GovernanceEnhance GovernanceStructureBusiness EthicsInternal Control andRisk ManagementInformation Securityand Data ProtectionEnhance SustainableGovernance Systems
ResponsibleProcurement
Build a SustainableSupply ChainCon?ict MineralsManagement
Innovation and R&DResearch, Developmentand InnovationStrict Quality ControlIntellectual PropertyRights
Together We ThriveRecruitmentSalary andCompensationEmployee Bene?tsTalent DevelopmentCare for the EmployeesHealth and SafetyTaking SocialResponsibility
Appendix
About this ReportKey PerformanceIndicatorsGRI IndexGlossaryFeedback Form
Company OverviewAbout SGMICROSocial ResponsibilityPerformanceHighlightsAwards andRecognitionCorporate Culture
Message from theChairman
CONTENTS
Message from the Chairman
The year of 2023 was one of transformation and hope. In a complex world of ?uctuating changes, SGMICRO kepta hand on the pulse of our era. We faced up to many challenges with unwavering vigor, seeking the opportunitiesfor a brighter future. SGMICRO has always been resolute in our vision to become a leading comprehensive analogIntegrated Circuit company with conviction that technology innovation will provide a new chapter of a moreprosperous humanity. Technology, a vital force for societal development, brings a broad wealth of possibilities formankind with every evolutionary step. We ?rmly believe continued technological innovation provides our generationwith a more bene?cial path for the welfare of all and for the sustainable development of our planet.Since our company's inception we have maintained our focus on developing high-performance, high-quality,eco-friendly IC products.. Behind our commitment is the sincere desire to reduce energy consumption, protectour environment, and improve quality of life, thus creating value for society for generations to come. In 2023, webuilt on our core competitive technologies and product portfolio while exploring and developing new, innovativetechnologies and products. The company's production lines cover 32 categories and more than 5,200 products, manyof which are already widely utilized in a broad range of markets, such as new energy vehicles, photovoltaic energystorage, intelligent manufacturing, and green household appliances, creating value for our customers while servingour common goal of energy conservation and protecting our environment.As one of the leading IC design companies, we bear the responsibility of growing our company while we remaindedicated to a sustainable future for all. We are dedicated to creating a green supply chain system by integrating the
sustainable development philosophy into our supplier systems at every stage. The company values improving ourteams' diversity, equality, and inclusivity. We are dedicated to creating a fair, inclusive, and safe workspace whileo?ering a competitive salary and bene?t system and career development opportunities. Furthermore, SGMICRO isalso an active participant in various social welfare events to raise public awareness of sustainable development andsocial responsibility.We are committed to improving operational e?ciency through lean management practices. By re?ningcomprehensive aspects of our governance, such as the corporate structure, the sustainable framework, and ethicalconduct, we enhance the e?ectiveness of risk and compliance management. Looking back on 2023, the companymade steady improvement across various fronts, including our ?nancial strength, team e?ciency, and resilienceagainst risks. Amidst a challenging environment, the overall operational performance was robust.In the future, SGMICRO will take on more responsibilities as we collaborate with our stakeholders to advancethe sustainable development of the economy, society, and our environment. As faithful as ever to our sense ofresponsibility and commitment, we are committed to seeking opportunities for bringing positive transformations inour world when confronted with unforeseen challenges.
Zhang ShilongChairman and CEO
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Message fromthe Chairman
CompanyOverviewGreenComes First
GreenComes FirstScienti?cGovernance
Scienti?cGovernanceInnovationand R&D
Innovation
and R&DResponsibleProcurement
ResponsibleProcurementTogetherWe Thrive
TogetherWe ThriveAppendix
About SGMICRO
With a vision to become a leading comprehensive analog ICs company, SGMICRO specializes in the research,development, marketing, and sales of high-quality, high-performance analog ICs. Embracing an engineer-centric culture, the company ?rmly places meeting customer needs as its core principle. Since inception, we havebeen developing and producing highly reliable, highly quality analog IC products fuelled by continuous designinnovations.SGMICRO initially focused on developing high-performance operational ampli?ers and LDOs, targeting variousindustrial applications as its core markets. It then strategically expanded its product categories to address theentire signal-chain solutions in analog, mixed-signal conditioning, and a complete line of power managementsolutions. As a fabless analog IC company, SGMICRO established a longstanding partnership with TSMC from thevery beginning. , We successfully developed a series of high-precision, low-noise, high-speed operational ampli?ers(OpAmp) utilizing CMOS process technology to replace the traditional bipolar processes. This gave the company theinitial recognition of our technical expertise and a cost advantage in the market place.SGMICRO has always committed to independent product development, driven from the importance it attributesto intellectual property rights. This commitment has cultivated a deep in-house technical expertise fosteringcontinuous improvement capabilities. With years of e?ort, this commitment has led to an impressive proprietaryproduct portfolio. The company simultaneously developed a systematic quality assurance mechanism. Additionally,all the IC products from SGMICRO meet RoHS regulations and other environmental standards.With an eye for detail and commitment to continuous improvement, SGMICRO is committed to delivering worry-free products. While serving a diverse set of industrial customers, SGMICRO has demonstrated great ?exibility inadapting to the most dynamic applications of information and communication-related terminal products. Thishas extensively enhanced the company's management capability ensuring a stable, and robust supply chain whilemaintaining cost competitiveness. This has earned the company an excellent reputation with its customers in ourshort lead-time delivery performance and consistency of delivering high quality products with very high volume.Since inception, the company has maintained a stable founding team and kept a low employee turnover rate.Consistently and rapidly growing, SGMICRO has been achieving annual pro?tability since 2009, culminating in itslisting on the Shenzhen Stock Exchange on June 6, 2017, under the stock code 300661.SGMICRO aims to be a global leading supplier of a comprehensive portfolio of analog IC solutions. The companydevelops direct cooperation with a global set of top brand manufacturers in factory automation, solar inverters,energy storage systems, new energy vehicles, Li-battery formation, white appliances, 5G wireless base station,optical ?ber modules, servers, o?ce automation equipment, machine vision, smart phones, audio systems, VR,game console, and smartwatches.
Overview
Headquartered in Beijing China Until 2023, the total shipment exceeds
20 billion unitsPublicly listed on the SZSE ChiNext (stock code300661) on June 6, 2017
Until the end of 2023, over 1,400 employees and
over 1,000 R&D personnel
Products
5,000+
Customers5,000+
2023 Revenue
(RMB Billion)
2.616
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Patents obtained
Newly applied patents
Newly introduced marketable products
Environmental Performance
R&D Performance
Water consumption (m?)
10,148.00Power consumption (kWh)
6,734,013.00
Greenhouse gas emissions (Scope 1-2, unit: tCO2e)3,851.63
Awards and RecognitionSocial Responsibility Performance Highlights
Top 10 China IC Brands
SGM8196Product of the Year
Annual Best Employer Award
The Most Valuable Investment
Award of Golden Bull 2023
China Analog IC IndustryLeading Excellence Award
SGM41570 PowerManagement of the Year
The 14th Tianma Award forInvestor Relations of Listed
Company in China
Best Interaction IR Team
Award
Number of employees1,415Employee training coverage rate(100%)
Social Performance
Average learning hours
60.5
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Message fromthe ChairmanGreenComes First
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Corporate Culture
SGMICRO is dedicated to achieving our business objectives while creating value for our society through innovation-driven initiatives aligned with market-oriented strategies. We attach great importance to our strategic planning by prioritizing research and development, seeking solutions to crucial technicalchallenges, and enhancing our existing products. While continuously strengthening our leading position in China's analog IC industry, we are focused ondeveloping state-of-the-art, high-performance analog IC products and technologies aiming to position ourselves as a globally recognized brand.
Corporate Strategy
SGMICRO upholds values of integrity, accountability, progress, and teamwork, cultivating a work environment that promotes independence, self-con?dence,open-mindedness, inclusion, diversi?cation, and a willingness to embrace innovation. Within a context of clear, direct, truthful, complete, and simplecommunication, SGMICRO urges all employees to understand their job's purpose and value to work collaboratively with their team. We view new challengesas opportunities for growth encouraging employees to exceed expectations, demonstrate their unique value, and achieve personal growth.With a ?at organizational structure, SGMICRO is dedicated to continuous improvement and promotes open and direct exchange across all levels andfunctions. All managers are actively engaged as mentors providing motivation, assistance and trainings in the resolution of critical issues. Employees areencouraged to take ownership of their work, assuming leadership roles, embracing challenges, and driving innovation. Collaborating with colleagues, theyaccumulate valuable experience, deepen their understanding, and optimize operations to enhance e?ciency. SGMICRO pays special attention to team vitalityand e?ciency promoting a competitive yet collaborative approach that is synchronized with our objectives while allocating resources based on dynamicevaluations. Combined with a results-oriented performance evaluation system, the employees are empowered to grow alongside the company for long-termdevelopment.The company places a strong emphasis on ethical and legal conduct requiring all employees to align their conduct with legal and social ethical standards. Thissafeguards the long-term interests of our customers, the company, and employees. Employees are to refrain from providing false or misleading informationand strictly adhere to integrity commitments and anti-bribery regulations in all business activities. SGMICRO's commitment to ethical conduct extends acrossall our operational locations. The governance mechanisms are thoughtfully designed to ensure that the business policies align with all long-term interestsand demands of stakeholders, including government entities, society, customers, employees, and shareholders. We actively ful?l social and environmentalresponsibilities and believe that this will ensure sustainable development over the long term.
Our Culture and Values
Diligent and InnovativePeople-oriented Team WorkResponsible
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Green Comes First
In the face of the mounting challenges posed by climate change around the globe,SGMICRO dedicates itself to actively implement sustainable development practices.Continuous exploration and innovation in every aspect of our daily operations allowus to integrate environmental protection principles and minimize our environmentalimpact. Moreover, through continuous research and innovation, we promote thedevelopment and application of green and low-carbon technologies, contributing toour industry's overall sustainable development.
Green R&D
As a leading analog IC company, our commitment to environmental sustainability are deeply engrained in our technological innovation. As the company continues steadily on its growth path, our cumulative shipped products are estimated toexceed 30 billion units by the end of 2024, which is equivalent to impacting every person worldwide more than four times. Our products have penetrated various industrial and consumer sectors, yielding positive impacts on the environment.Environmental protection principles guide every aspect of our research and development processes. Every product displays our dedication to environmental protection, resource conservation and our practical approach to the industry's greenand carbon emission trends.Our research and development processes are founded in the principles of energy conservation, emission reduction and protecting our environment. From our product de?nition and design to manufacturing, we place great emphasis on greenprocedures. During product de?nition, we focus on technical speci?cations such as low energy consumption, small size and streamlined processes. In circuit design, we minimize power consumption, chip size and silicon layers while enhancingreliability and lifetime. Throughout manufacturing, we collaborate extensively with our foundry partners to select environmentally friendly raw materials. These e?orts ensure our products are designed and manufactured with optimumenergy savings and minimum emission-reduction while minimum use of resources and waste. Furthermore, our high quality and long-lasting products help to prolong the lifespan of customers' end products, thereby reducing electronic andpackaging waste.
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Environmental Management
SGMICRO adheres to industry standards and environmental protection laws and regulations of the People's Republic of China, includingtheEnvironmental Protection Law,Water Pollution Prevention and Control Law,Air Pollution Prevention and Control Law,Preventionand Control of Environmental Pollution by Solid Wastes Law, andEnvironmental Noise Pollution Prevention and Control Law. As part ofour commitment to green and environmentally friendly development, we actively align with national carbon neutrality and peak carbonobjectives, ful?lling our social responsibility by promoting energy conservation and emission reduction.We actively promote the standardization and institutionalization of environmental management, enhancing our organizational structurein the process. Drawing from documents such asEnvironmental Impact Assessment and Control ProcedureandEnvironmental Objectives,Indicators, and Measures Control Procedure, we emphasize the management's leadership role in the system.The company sets multidimensional annual targets for solid waste recycling control rates, noise emissions, energy consumption, healthand safety incidents, and hazardous substance non-conformance events. We issued aQuality Environmental Objective Release Ordertoclarify the integration of environmental objectives and indicators into management reviews.In 2023, the company updated its ISO 14001 environmental management system certi?cation. Utilizing the ISO 14001 environmentalmanagement system, we conduct annual training on related content to enhance employee environmental protection awareness. At thetime of this report, 100% of the employees participated in environmental protection-related training.
Accountability for ane?ective environmentalmanagement system
Ensure the establishedenvironmental policiesand objectives areconsistent with thecompany's strategicdirection and currentecological context
Integratingenvironmentalmanagement systemrequirements intoorganizational businessprocesses
Secure the availabilityof resources requiredfor the environmentalmanagement system
Convey the importanceof environmentalmanagement systemrequirementscompliance
Guarantee thatthe environmentalmanagement systemachieves its intendedoutcomes
Provide guidanceand support toemployees so theycontribute e?ectivelyto the environmentalmanagement system
Promotecontinuousimprovement
Responsibilities of Management in Environmental Management
Compliance withapplicable laws,regulations, and otherrequirements.
Continuousimprovement ofthe environmentalmanagement system.
Energy conservation, emissionreduction, pollution prevention,and control.
Provide the best products andservices for green energy customers,promoting a green supply chain.
Environmental
PolicyLegal
c
omp
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Risk
pr
ev
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tionCont
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improvem
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Green
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Energy Conservation and Carbon Footprint Reduction
Responding proactively to the call for environmental protection, SGMICRO highly emphasizes the e?ective utilization and rationalmanagement of energy resources. It integrates energy conservation and emission reduction policies into its core operationalprocesses, aiming to reduce environmental impact while lowering production costs and enhancing competitiveness.Our Approaches
Regularly inspect, maintain, and repair equipment to promptly identify and resolve faults, ensuring stableoperation and e?cient energy utilization.
Variable frequency air conditioners are installed and operated according to company regulations,with summer temperatures not set below 26 degrees Celsius and winter temperatures not exceeding20 degrees Celsius.
The Integrated Management Department tracks monthly electricity and water usage, conducts statisticalanalysis, and promptly addresses any anomalies according to established procedures.
Monthly paper consumption is monitored, and employees are encouraged to reuse paper to minimize waste.Meeting rooms are equipped with electronic monitors to promote paperless o?ce practices.
Prominent notices in public areas promote water conservation, energy saving, and paper conservation,encouraging employees to incorporate energy-saving awareness into their daily habits.
Energy-e?cient LED lighting is installed throughout our o?ce spaces to reduce energy consumption.
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Waste and Material Management
SGMICRO primarily engages in analog and mixed-signal integrated-circuit (IC) design, research, and sales with nodirect involvement in product manufacturing. Our operational activities generate general solid waste and electronicwaste. To address this, the company has formulated waste management regulations and practices that include100% classi?ed storage and precise labelling. Additionally, waste classi?cation recycling points are established inoperational areas, and employees undergo waste management training, advocating for waste sorting and recycling.In addition, the company signs waste disposal contracts with third-party processing organizations, maintainingwaste disposal records to ensure compliance and proper handling.As for discarded electronic products, testing kits or ?xtures, and various types of electrical equipment, the companyentrusts professional institutions with certi?ed recycling quali?cations to handle the disposal. Waste tonercartridges, toner drums, computers, and other equipment in various regions are collected and stored by localadministrative departments or IT departments. Regular contact is made with environmentally certi?ed recyclers tocontrol environmental risks e?ectively.
Waste Disposal
Battery recycling binsare set up for centralizedrecycling and processing.
Discarded Batteries
Discarded TonerCartridges and DrumsCentralized recyclingand processing
Discarded Circuit Boards,Samples, and Solder DrossCentralized recycling andcrushing are conducted, withvideo documentation of thecrushing process.
Solid Waste Management
SGMICRO rigorously follows GB12348-2008Industrial Enterprise Boundary Noise Standards Class III standards,maintaining company boundary noise levels below 65dB during the day and below 55dB at night (from 22:00 to 6:00the next day). Regular monitoring of noise pollution points is conducted to ensure compliance. Additionally, regularmaintenance and upkeep of noise-generating equipment are performed to reduce noise pollution.
Noise Pollution Prevention and Control
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The company diligently practices commitments to a green supply chain. We enforce strict requirements on our supply chain partners to adhere to HazardousSubstance Management standards throughout the material selection, wafer fabrication, assembly, and testing processes.. We ensure compliance withenvironmental protection laws, regulations and certi?cation standards by requiring up-to-date third party testing reports for both raw materials and ?nishedproducts. This commitment reduces the ecological impact of our products throughout their life-cycle-from production to use and disposal.Environmental symbols are prominently displayed on product packaging, and we prioritize the use of biodegradable and recyclable materials. We aim totransition to paperless transactions by leveraging barcode scanning and network-based information exchange, thereby reducing resource consumption.
Green Sourcing
Compliance with the RoHS
All company products comply with RoHS requirements, completing the necessary investigations,con?rmations, and testing to ensure they meet regulatory timelines and deliver on customer requirements.REACH Declaration
By the REACH legislation, the company con?rms that its products do not contain volatile substancesor intentionally release substances. Additionally, the company does not directly export any chemicalsubstances to the EU. The content of substances of very high concern (SVHC) in company products meets theEU requirement of less than 0.1%.Packaging and Packaging WasteDirective (94/62/EC)
The directive requires that the total concentration of heavy metals, i.e. lead (Pb), cadmium (Cd), mercury (Hg),and hexavalent chromium (Cr6+), in packaging does not exceed 100 ppm.Other Substances
The company con?rms, after investigations through the supply chain, that plastic materials containing redphosphorus or antimony trioxide ?ame retardants are not used. Furthermore, all products and raw materialsdo not contain per?uorooctane sulfonate (PFOS), per?uorooctanoic acid (PFOA), C9-C21 per?uorocarboxylicacids (PFCA), per?uorohexanoic acid (PFHxA), and per?uorohexyl sulfonic acid (PFHxS) substances.Halogen-Free Requirements
Halogen-free materials are used in all products. For products that meet halogen-free requirements, the labelincludes the addition of "HF"mark except "Pb free" and "RoHS" marks. Relevant material composition tablesand third-party testing reports are also provided to demonstrate product compliance.
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Reduce product power consumption byadopting dynamic power consumptioncontrol technology and controlling orshutting down unnecessary circuit andfunctional blocks in real time (dynamically)and minimizing the quiescent currentconsumption of chips.
Adopt the optimized PWM (Pulse WidthModulation) technology to improve thepower conversion e?ciency of DC/DCconverters and e?ectively reduce energyloss.
SGMICRO has optimized energy consumption reduction in its analog IC design across variouscategories.
The company's products are extensively employed in energy conservation and environmentalprotection, facilitating the across-the-board adoption and rapid development of various green andenergy-e?cient products.
Green productsEnergy-savingTechnologies
The company's high-performance battery management and protection product series are designed tooptimize lithium battery charging and discharging processes. These chips signi?cantly enhance overalle?ciency by implementing more e?cient power conversion architectures, optimizing internal switchingfrequencies, and reducing the on-resistance of the internal power device. This enhancement extends thebattery's lifespan, a critical factor in sustainable energy usage.
High-E?ciency and Energy-Saving Battery Management andProtection TechnologiesE?ciency and low power consumption are prevailing trends in integrated circuit (IC) development, particularly within the analogchip domain. These represent SGMICRO's core competencies. Over years of independent research and development, we havedeveloped world-leading technologies, intellectual property, and high-performance products. Our areas of competency includechip power reduction, enhanced power conversion e?ciency, process optimization, and chip size reduction. Notably, our series ofultra-low power operational ampli?ers, comparators, low-dropout regulators (LDO), boost converters and buck DC/DC convertersprioritize optimum performance with minimal power consumption and compact form factor. Adopting our products, ourcustomers create energy e?cient end-products that conform to environmental sustainability objectives.
Global climate change presents both challenges and opportunities. As we address this challenge, humanity is compelled toexplore and adopt low-carbon and sustainable development models. Emerging sectors such as clean energy and energy-savingenvironmental protection o?er unprecedented development opportunities. There are new impetus for economic growth as well ase?ective means to address environmental issues. Semiconductor technology, as the cornerstone of modern society, plays a crucialrole in driving the development of green technology. In response to these opportunities, the company began laying out innovativeproducts for applications in new, green, and clean energy ?elds many years ago. Collaborating with relevant end-productsmanufacturers, we have launched multiple next-generation analog IC products for energy conservation and environmentalprotection in various applications, such as photovoltaic energy storage, lithium battery manufacturing and management,new energy vehicles, and third-generation semiconductors. These e?orts contribute to the widespread adoption and rapiddevelopment of various green and energy-e?cient products, providing a more environmentally friendly and e?cient experiencefor our lives. Furthermore, they contribute to improving the Earth's environment and human sustainable development.
Case
Environmental Bene?ts of Ultra-Low Power DC/DC ConvertersCase
The company's introduction of ultra-low power synchronous boost DC/DC converters has set a newindustry standard with its outstanding energy e?ciency performance. The products achieve high-e?ciency energy conversion within a load current range of 10mA to 300mA while consuming minimalquiescent current (i.e. 50nA at the input pin and 1.7μA at the output pin). Its low power consumptionperformance is on par with the most advanced products in the world. This technological breakthroughimproves the energy utilization e?ciency of electronic devices and signi?cantly reduces overall energyconsumption.
Green Opportunities
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Scienti?c Governance
SGMICRO re?nes its corporate governance structure to establish an e?cient andintegrity-driven system. By harmonizing streamlined and e?ective mechanismswith ethical conduct and regulatory compliance, the company safeguardsinvestor interests and continually strengthens its overall value proposition.
Enhance Governance Structure
Since its establishment, the company has consistently adhered to relevant legal requirements and proactively re?ned its corporate governance framework. Clear and standardized responsibilities are assigned to the Board, executiveo?cers, supervisors, and the management team; creating a robust mechanism for independent oversight and strong corporate governance. This ensures that every decision adheres to legal regulations while safeguarding the interests of allshareholders.
Corporate Governance
The board of directors consists of ?ve members, including two independent directors with extensiveexperience in accounting, law, and other relevant ?elds. These board members have diverse professionalbackgrounds and industry expertise. Their collective contributions enhance SGMICRO's competitiveadvantage and elevate the e?ciency and quality of material decisions, thereby establishing a robustfoundation for our long-term growth. As of the current report, the attendance rate of directors at boardmeetings stands at 100%.Board of Directory Diversity
Shareholders'
Meeting
Composed of all company shareholders and serves as the company's governing body.
Board ofDirectors
Audit Committee
Reviewing the company's ?nancial information and disclosure, supervisingand evaluating internal and external audit work, and internal controls.Strategy Committee
Responsible for formulating the company's development strategies andmedium to long-term development plans.NominationCommittee
Responsible for selecting and reviewing candidates for directors and seniormanagement positions and assessing their quali?cations.CompensationCommittee
Tasked with establishing performance evaluation criteria for directors andsenior management, devising and reviewing compensation policies andschemes.
Board ofSupervisors
Serves as the supervisory body of the company, focusing on ?nancial oversight, ensuring the lawful andcompliant performance of the company's directors, general manager, and other senior executives.
General
Manager
Reports to the board of directors and is responsible for e?ectively managing day-to-day operations toachieve the company's business objectives.
Male: 2Female: 3Between 30 to50 yrs old: 2Over 50 yrs old: 3
Industry: 2Law: 1Finance: 1Management: 1
PhD: 3Other types ofdegree: 2
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The Board of Directors exercises oversight and management of information disclosure. The Board Secretarycoordinates and organizes speci?c matters related to information disclosure, with assistance from the SecuritiesA?airs Representative. At SGMICRO, we rigorously implement our information disclosure system and uphold thecon?dentiality of company insider information. This commitment is critical to safeguarding the interests of ourinvestors.We disclose information through diverse channels, including CNINFO and media outlets designated by regulatoryauthorities, such as theChina Securities Journal,Shanghai Securities News,Securities Times, andSecurities Daily,to ensure equal access to information by all our shareholders.
SGMICRO has implemented theInvestor Relations Management Guidelineto streamline and enhance our communication with investors. The Board Secretary oversees investor relations management,coordinating interactions with our investors. Responsibilities include organizing meetings, facilitating activities, and promptly addressing inquiries through various channels—such as regular reports, site visits,communication, roadshows, dedicated phone lines, email, fax, and investor relations platforms. Our proactive engagement aims to deepen investors' understanding of SGMICRO.
Disclosure of Information
Investor Relations
The 14th
Tianma Award for Investor Relations of China Listed Companies
(Organized bySecurities Times)
In theAnnouncement on the Results of the 2022-2023 Annual Information Disclosure Assessment forCompanies Listed on the ChiNext Market released by Shenzhen Stock Exchange, SGMICRO was granted'A' grade in recognition of our outstanding disclosure practices.2023
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Business Ethics
The company is guided by the principles of authenticity, compliance, resilience, and sustainability, with authentic data and legally compliant operations.We crack down on commercial bribery and oppose unfair competition. We comply with all relevant laws and regulations to maintain a fair, equitable, andcompetitively open commercial environment. Our superior quality products combined with an excellent reputation enables SGMICRO to continue securingnew business opportunities.
Per our strict integrity guidelines, we have developed policies such as theIntegrity and Anti-Corruption Management Standards, strictly prohibiting any formof bribery, corruption, embezzlement, extortion, misappropriation of funds, or any related conduct to ensure the smooth operation of the company. Allemployees are required to refrain from promising, o?ering, giving, granting, or accepting any improper and illicit bene?ts.
At the time of the report, we have issued theCode of Conductandupdated theIntegrity Commitment LetterandIntegrity and HonestyManagement Standards, clearly outlining requirements for standardizedoperations, anti-corruption, and fair transactions. These requirementshelp us to build an environment of good business ethics for the company.Employees and partners who discover any illegal or non-compliantbehaviour with the company's business practices and ethical standardscan promptly lodge complaints through dedicated channels in thecompany.SGMICRO protects whistleblowers, ensures their identities remaincon?dential, and maintains channels and policies of opencommunication. Employees and partners can express their complianceconcerns through dedicated channels, whether anonymously oridenti?ed. Complaints are investigated and any retaliatory actions orthreats against whistleblowers are strictly prohibited. The company willtake appropriate disciplinary action against any violation, including butnot limited to, termination of employment contracts and pursuing legalliability.
Integrity and Honesty
Whistleblowing and Protection Mechanism
Mailing address:
O?ce of Integrity and ComplianceRoom D-1106, International Finance CenterNo. 87, North Third Ring Road, Haidian DistrictBeijing, China
E-mail: informer@sg-micro.comDedicated phone line: 010- 88825983
The company conductsregular integrity and honestymanagement training foremployees, reinforcing theirunderstanding of businessconduct and principles. Duringorientation, new employeesgain a deep understanding ofthe company'sIntegrity andHonesty Management Standards,which apply to all employeesof SGMICRO and its direct andindirect subsidiaries , includingmarketing personnel who havesigned theIntegrity CommitmentLetter.
Integrity and HonestyManagement Training
Every year, the companyorganizes activities topromote integrity and honestymanagement concepts tobusiness partners who havedirect business dealings withthe company, ensuring that theycomply with the integrity andhonesty management standardsand relevant regulations.Business partners of the companyall have signed theLetter ofCommitment to Honesty andIntegrity.
Promotion of Integrity andHonesty Management
Relevant departments ofthe company organizeannual integrity and honestymanagement audits, covering allemployees and business partnerswho have direct businessdealings with SGMICRO. TheAnnual Integrity and HonestyManagement Audit Reportisreleased after a comprehensiveevaluation and analysis.
Annual Integrity and HonestyManagement Audit
The Audit Committee,established under the Board ofDirectors, adheres to relevantlaws and regulations whileoverseeing business ethics andcorruption issues. It promotesa comprehensive system ofintegrity, continuously enhancesSGMICRO's capacity for legalgovernance, and standardizes themanagement of business ethicsin the company.
Establishment of SupervisoryManagement Institutions
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Internal Control and Risk Management
SGMICRO has a rigorous internal controlmanagement mechanism and a well-de?nedinternal control management policy. The riskmanagement system is backed by robust internalcontrol management measures that help ensureits e?ective operation.We continuously re?ne the internal controlsystem to comply with relevant laws andregulations, such as theCompany Law of thePeople's Republic of China, Basic Standard forEnterprise Internal Controland other internalcontrol supervision requirements.The Board of Directors is responsible forestablishing, strengthening, and e?ectivelyimplementing internal controls. The AuditCommittee, which operates under the Boardof Directors, serves as the company's internalcontrol supervision agency. The Board ofSupervisors oversees the Board's actions inestablishing and implementing internal controlmechanisms. Through ongoing operation,analysis, and assessment, the internal controlsystem has been instrumental in mitigatingoperational and management risks, thusfacilitating the company's continuous sounddevelopment.
?Regulatory requirements (changes inlaws and regulations/industry standards)?Requirements of relevant parties(supervision level of regulatoryauthorities/requirements of relevantparties)?Technology (new products/newtechnologies)?Political (supply chain/exchange rates/trade compliance)?Resources (intensi?ed marketcompetition/macroeconomicenvironment and industry ?uctuations/IT software)
?Financial status (asset-liability ratio/inventory turnover ratio/accountsreceivable)?Company management (managementprocess/after-sales service/documentcontrol/data information securitymanagement/authority)?Resources (company operatingenvironment/infrastructuremanagement/performance appraisal/personnel turnover)
SGMICRO attaches great importance to the assessment of business risks. At the time of this report, we have formulated theRisk and Opportunity Control Procedure. By utilizing ane?cient risk assessment system, potential risks are identi?ed and analysed in areas such as policy, operations, and ?nance based on internal control mechanisms, strategic planning,and industry characteristics. By thoroughly assessing and sorting the risks and considering the characteristics, signi?cance, and probability of occurrence, we can manage andaddress any potential risks promptly.
Internal ControlsRisk Management
Risk Identi?cation
External factorsInternal factors
Measures Against Risks
Continuously assess various risks;Develop and update risk response plansBased on the risk assessment results,appropriate and su?cient resources areallocated to ensure operation continuityOrganize various compliance trainingsto strengthen legal risk managementawarenessDevelop e?ective emergency responseand control procedures
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ResponsibleProcurementTogetherWe Thrive
TogetherWe ThriveAppendix
Information Securityand Data Protection
Our goal is to build a safe and stable corporate network environment,proactively apply advanced security protection technologies, and developa scienti?cally rigorous information security management system.Simultaneously, we actively promote the establishment and improvementof risk assessment mechanisms, accurately predict potential securityrisks, and take e?cient preventive measures to secure our corporateinformation systems.
The company strictly complies with relevant national laws and regulationsof China, such as theCybersecurity Law, theData Security Law, andthePersonal Information Protection Law. Considering our industry andthe speci?c characteristics of our company, we have established aninformation security management committee and working group, usingthe ISO 27001Information Security Management Systemas the policybenchmark. Our goal is to establish an information security managementsystem for carrying out information security protection and improvingour networks security defense system. At the same time, the companyhas compiled anInformation Security Emergency Response and BusinessContinuity Planto e?ectively prevent, control and minimize the impact ofdi?erent emergencies to ensure business continuity.The company continues to strengthen its network security capabilitiesand develop innovative security solutions to achieve all-round and three-dimensional protection from hardware facilities to software applications,from defense against external threats to internal management andcontrol, thereby providing a solid guarantee for the stable operation ofthe company's business. At the time of this report, the company has seenno information security incidents.
Information Security
Measures to Strengthen Information Security Management
?Regularly sends out reminders to be alertagainst phishing emails, enhancing employees'Internet security awareness and responsecapabilities.?Provides Internet security awareness trainingfor all employees through methods such asonline lectures and video tutorials; o?ersspecialized security training and advocacy forthe IT team.
Awareness and Training
?Controls access to external storage devices,restricts outbound emails, enforces applicationcontrol, and manages software compliance.?Important areas are equipped with accesscontrol, surveillance, IoT and other equipmentfor monitoring, and automatic warning ofsecurity incidents.
Endpoint and SecurityManagement
?Continuously revises and improves securityprotection policies based on business needsand technological developments.?Updates network security policies andprocedures to ensure alignment with the lateststandards and regulations.
Security Policy Updates
?Conducts regular simulations of cybersecurityincidents to enhance the IT team's ability torespond quickly to emergencies.?Periodically scans systems for securityvulnerabilities to identify, assess, and promptlyrectify potential security risks.
Emergency Response Drills andVulnerability Scanning
?Segregates the o?ce network from our R&Dnetwork, implements VPN access, controls andaudits data transmission.?Real-time monitoring of networks and systemswith automated alerts to enable timelyresponses to faults and anomalies.
Network Isolation andMonitoring
?Regularly checks the data managementpractices of various departments to ensuredata compliance and security.?Engages third-party auditors to verify thesecurity control and management capabilitiesof IT systems and resources.
Supervision and Audit
The company is committed to ensuring that every employee comprehensively understands and pro?ciently masters various security preventionmethods to create a safe and harmonious work environment. All new employees are required to undergo systematic training, including informationsecurity. We periodically conduct training sessions focusing on employees' professional skills and information security awareness. In 2023, thecompany intensi?ed e?orts to enhance employees' awareness and practical capabilities in information security, fortifying our defense againstcybersecurity threats.
Information Security TrainingCase
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The company rigorously complies with national laws, regulations, andindustry standards regarding information and data exchange to ensurethe secure storage and use of information. By establishing relevantmanagement systems, we protect our assets from unauthorized accessor attacks, thereby minimizing various information risks. Employees arerequired to comply with national laws and regulations related to networkusage and strictly adhere to con?dentiality policies, preventing leakageor theft of company information. Through a combination of policies andtechnologies, we e?ectively safeguard our information security.When it comes to the security of customer information and data,the company strictly complies with relevant laws and regulations oninformation protection and continuously enhances mechanisms tosecure various customer information and data.
Data Protection
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TogetherWe ThriveAppendix
Enhance Sustainable Governance Systems
The company believes that sound ESG management is the foundation ofhigh-quality sustainable development. Internally, we have established anESG management system led by our Board of Directors, with cooperationfrom various relevant departments.
While focusing on the development of integrated circuit design, the company continuously strengthens its sustainable development system, advancing our ESG management e?orts.We understand the demands of our stakeholder and aim to respond to our stakeholders on a timely basis, improving the company's level of sustainable development management.
The company attaches great importance to communication with variousstakeholders, and carries out the identi?cation, evaluation and analysisof substantive issues through various channels such as shareholders'meetings, customer satisfaction surveys, employee and managementsymposiums, the company's o?cial website and WeChat accounts. Westrive to continuously improve our sustainable development performance.
ESG Management System
Stakeholder Communication
Board O?ceESG WorkGroupVariousDepartments
Leads the ESG management system in coordinationwith various departments.Coordinates ESG management, communication,and information disclosure, reporting progress andoutcomes to the Board.Departments such as Human Resources, Operations,Quality, Internal Control, and Information Technologyare responsible for implementing speci?c ESGinitiatives.
ESG Management Structure
Stakeholders RecognitionExpectation and DemandsCommunication and Responses
Investors
Government/RegulatorsCustomersEmployeeSuppliers/Service ProvidersCooperative Organizations(i.e. NGOs, Scienti?cresearch institutions)Community and thePublicMedia
? R&D and innovation? Investor relationsmanagement? Board structure andgovernance? Anti-corruption? Engagement in communityphilanthropy? Company information disclosure? Product responsibilitymanagement? R&D and innovation? Compliant guarantee ofrights and interests? Sophisticatedcompensation system? Supply chain management? Mutual bene?t andprogress? Supply chain management? School-enterprisecooperation
? Industrial exchange andcooperation? EnvironmentalManagement? Anti-corruption
? Engagement in communityphilanthropy? Disclosure of Information? Engagement incommunity philanthropy
? Industrial exchange andcooperation
? Shareholders' Meeting? Disclosure of Information? Smooth communicationchannels for investors? Documentation system? Policy execution? Disclosure of Information? Compliance with regulations? Quality management system? Technical seminar? Customer satisfaction survey? Protection of employee rights
and interests? Convening of sta? assemblies? Multichannel career? Screening and review ofsuppliers
? Cooperation with suppliers
? Adherence totransparency? Screening and review of
suppliers? Industry forum
? Industry-university-research cooperation? Community activities? Exchange and interview? Establishment of smooth media
communication channels? Exchange and interview
? Risk management? Internal controls? Business information anddata protection? Risk control? Industrial exchange andcooperation? Anti-corruption? Smooth promotion system? An array of activities foremployees
? Reasonable pro?tdistribution? Performance brie?ng? Information securitysystem? Community charityactivities
development pathways? Employee training? Employee Activities
? Community charity activities? Participation of industry
exhibitions
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Based on the expectations of internal and externalstakeholders, as well as factors relating to business scopeand sustainable development, we carry out identi?cation,evaluation and analysis of substantive topics to determineissues pertinent to the company and our stakeholders.
Analysis of Substantive Topics
?Green R&D?Tackling Climate Change?Energy Conservationand Carbon FootprintReduction?Management andUtilization of WaterResources?Green Operation
?Product Quality Control?Product R&D andInnovation?Intellectual PropertyRights?Quality of CustomerService?Sustainable SupplyChain?Employee Bene?ts
?Talent Development?Health and Safety?Salary and PerformanceManagement?Industry-universityResearch Cooperation?Taking SocialResponsibility
?Corporate Governance?Board Composition?Board of SupervisorsPerformance?Disclosure ofInformation?Investor RelationsManagement?Business Ethics
?Compliance Control?Internal Control and RiskManagement?Information Security andData Protection
Substantive Topics of ESGEnvironmental TopicsSocial TopicsTopics of Corporate Governance
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Response to the UN's Sustainable Development Goals
?Focus on occupational health and safety training?Build employee clubs, organize cultural and sportsevents for the employees
Health andSafety
Innovation and R&D
TalentDevelopment
Recruitment
EmployeeBene?ts
Green R&DGreen OpportunitiesEnergyConservation andCarbon FootprintReduction
Waste and MaterialManagementGreenOpportunities
Enhance GovernanceStructureEmployee Bene?tsRecruitmentEnhance Sustainable
Governance SystemsBuild a SustainableSupply ChainCon?ict MineralsManagement
?Enhance technological innovation
?Carry out intelligent transformation
?Focus on Employee training?Prohibit all discrimination of any types
?Care for female sta??R&D of semiconductor products topromote the use of clean energy and fostersustainable development?Conservation of water resources?Improve utilization of water resources
?Responsible emissions management?E?cient management of resource?Facilitate the photovoltaic industry and promotethe utilization of solar energy
?Strengthen governance?Listen to the employees through multiplechannels
?Legal employment, promote employment rate?Build channels for stakeholder communication?Focus on supply chain construction and carry outtechnical exchanges and training with suppliers?Open up ecological cooperation and promotethe development of a healthy ecosystem in theindustry
ActionCorresponding ChapterCorresponding ChapterAction
G AL
SUSTAINABLEDEVELOPMENT
Good
Health and
well-beingQualityeducationGender equality
Clean water andsanitation
A?ordable andclean energy
Decent work
and economic
growth
Reduceinequalities
Sustainablecities andcommunitiesResponsibleconsumptionand productionPeace, justiceand stronginstitutionsPartnershipsfor the goals
Industry,innovation andinfrastructure
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Scienti?cGovernance
GreenComes FirstInnovation
and R&D
Innovation
and R&DResponsibleProcurement
ResponsibleProcurementTogetherWe Thrive
TogetherWe ThriveAppendix
Innovation and R&DSGMICRO specializes in research and development of analog Integrated Circuits(IC). We consistently benchmark ourselves against the world's top-ranking analogmanufacturers. Notably, our products excel in key speci?cations surpassing thoseof our international peers. Our outstanding product performance and quality,along with timely and e?ective customer support, have earned the trust andrecognition of our large customer base.
Research, Development and Innovation
Research, development, and innovation form the cornerstone of our continuous growth. We view our R&D strength as the most critical core competencyand have constructed a comprehensive technical R&D management system and process. Since its inception, the company has followed an independentinnovation strategy, constantly expanding investment in R&D and accumulating core technologies. Proactively conducting technological research and productplanning based on market trends, customer needs, and future technology advancements, we position ourselves to deliver competitive products to targetmarkets. While diligently applying existing products and technologies, we also actively pursue next-generation innovations.
SGMICRO has consistently invested a substantial portion of our revenue in research and development, progressively increasing our commitment. The ongoingR&D investment has resulted in rapid expansion of our technical team and signi?cantly bolstered our technical capabilities. We take pride in independentlydeveloping a wide range of core technologies, including key intellectual properties in analog chips for signal chain and power management markets.Leveraging these cutting-edge technologies, SGMICRO o?ers a comprehensive product portfolio that caters to diverse market requirements, providingspecialized solutions for speci?c segments.In the ?scal year 2023, our R&D investment amounted to 737 million RMB, accounting for 28.18% of the total revenue for the period, representing a 17.78%increase in R&D investment compared to the previous year. At the time of the report, we introduced over 900 new products, demonstrating the e?ectiveness ofprevious R&D investments and further accelerating the speed of new product introductions.
To manage each R&D project e?ciently, we have forti?ed our R&D management system. This includes enhancing project management, documentadministration, and cost control e?ciency through specialized R&D management software. Through persistent independent innovation, increased investment,continuous accumulation of core technologies, and adjustment of strategies aligned with market trends and customer demands, we o?er competitive analogIC solutions to global markets. We aim to consistently develop new technologies and products to enhance the company's long-term competitiveness.
R&D Investment
Investment in R&D (in 1,000 RMB)New Products Every Year
20232023202220222021202120202020207,075.3200
378,019.9500
625,828.0500
737,074.1900
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| Scienti?c Governance | Responsible Procurement |
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The construction and cultivation of our talent pool have always been a strategic priority at the company. We are dedicated to nurturing outstandingprofessionals in the analog IC development who resonate with our corporate culture and core values. We actively attract R&D talent through a wide variety ofchannels. In 2023, the size of our R&D team continued to expand, with R&D personnel accounting for 72.72% of the total employees. Of these, 555 individualshold master's degrees or above, which comprise 53.94% of the total R&D personnel, providing solid technical support for long-term development.
We have established a reward system to foster employee innovation. Our incentive schemes, including patent reward policies, quantify and recognizeemployees' innovative achievements in their daily work through the R&D performance evaluation system. These incentive schemes are regularly updated,emphasizing innovation as the driving force behind our ongoing development. Our patent portfolio continues to expand.
R&D Team
R&D personnel in 20231,029
Disclosure ItemUnit202320222021Total number of grantedpatents
piece(s)22916288Total number of newly appliedpatents of the year
piece(s)230263184Total number of registered IClayout designs
piece(s)259147115
We are committed to fostering industry prosperity through strongcollaborative partnerships. By actively participating in industryassociations and conferences, we have signi?cantly contributed toestablishing industry standards, promoting information exchange, andpromoting our industry's growth.
Industry Cooperation
Industry Collaborations:
Industry Association/UnionTitle
China Semiconductor IndustryAssociation
Director of the IntegratedCircuit Design BranchChina Integrated Circuit InnovationAssociation
Managing DirectorBeijing Semiconductor IndustryAssociation
DirectorShanghai Integrated Circuit IndustryAssociation
MemberChina Automotive Chip IndustryInnovation Strategic Alliance
DirectorAutomotive Electronics Industry AllianceMemberFast Charging AllianceSenior Member
Increase compared to last year
Increase percentage compared to last year
%
14.84
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Strict Quality Control
SGMICRO is committed to providing analog IC products characterized by superior performance and excellentquality. Our products adhere to the industry's highest standards, supported by a strict and complete qualityassurance system. Rigorous testing results in world-class consistency and reliability. We foster a "zero-defect"quality culture, guiding all employees to embrace the concept of "Getting it right the ?rst time and doing it wellevery time" as a conscientious daily practice. Our Quality Policy permeates every stage of our company's supplychain. We continually improve our products and manufacturing processes to provide high-performance, highlyreliable, consistent analog solutions that meet customer requirements.
Quality
Policy
By leveraging globally leading technologies and continuousdevelopment e?orts, we have expanded our market share withadvanced, high-performance products, thereby bolstering the overallstrength of our company.AdvancedTechnology
Maintaining consistent high product quality is essentialfor ensuring customer satisfaction, while simultaneouslystriving for continuous improvement.CustomerSatisfaction
Strive to create strong and dependable products, witha focus on achieving the highest level of quality andreliability.ReliableQuality
The quality management system, continually re?ned over timeensures continuous product quality improvements-a foundationalelement of our growth.ContinualImprovement
The photo won the SGMICRO Microelectronics Photography Contest.
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We have implemented a comprehensive Quality Policy in accordance with the Product Quality Law of the People'sRepublic of China, adhering to the highest industry standards. Our guiding principle encompass "advanced technology,reliable quality, customer satisfaction, and continuous improvement." Rigorous quality assessments are conducted onevery product to ensure its quality and reliability. We preferentially select wafer foundries and assembly & test factorieswith the highest reliability and yield rates. Additionally, every new product undergoes stringent testing against the higheststandards to uphold the utmost quality and reliability, allowing us to guarantee our product quality while continuallyexpanding our product lines.Strict product quality standards and quality management processes are established to oversee product design,production, and sales comprehensively. Rigorous tests are carried out before product warehousing and shipment.Moreover, the company diligently monitors crucial elements such as design standards, manufacturing methods,production work?ows, and testing protocols to consistently enhance product quality and bolster resilience againstexternal factors. This approach ensures both high production e?ciency and consistent product quality.At the time of the report, the company has consistently maintained certi?cation under the ISO 9001 quality managementsystem and the ISO 14001 environmental management system. By aligning our quality and environmental managementpractices with international standards, we have established a strong foundation that supports the company's continuousgrowth and optimization.
In line with our commitment to customer-centric principles, we are constantly improving service qualityto ensure the delivery of exceptional products and services. Our distribution strategy primarily leveragesproduct distribution channels, complemented by direct sales. This decision aligns with industry standardsand SGMICRO's unique circumstances. By adopting this approach, we e?ectively reach a broad spectrum ofend customers, enhance sales channel e?ciency, expand our customer base, and promote our products.We have assembled a team of skilled professionals committed to elevating customer satisfaction andre?ning product quality. Their expertise spans multiple dimensions including quality, technology, andservice for our customers. In 2023, we took proactive and e?ective measures to address customer qualityrequirements by expanding the customer quality team and optimizing customer response procedures,providing more direct support services.The company has established theCustomer Complaint Handling Process, which undergoes regularupdates. This process clearly outlines the designated person responsible for addressing customercomplaints, the handling process, response timeframes, and closed-loop management requirements.As a result, we ensure that customer complaints receive timely, e?cient, and professional responses. Weconduct ongoing customer satisfaction surveys, seeking and implementing customer suggestions forimprovement to enhance our services and products.
Quality SystemCustomer Service
At the time of the reportCustomer satisfaction rate
%
92.33
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Intellectual Property Rights
Our company prioritizes the protection of intellectual property rights and proactively seeks to apply for and establish such rights. We ensure comprehensive coverage by distributing patents across various domains of our operations. Ourcommitment to intellectual property management throughout operational processes strengthens our e?orts in acquiring, safeguarding, utilizing, and upholding these rights. This approach e?ectively protects our innovative accomplishments,reinforcing our core competitive advantage.
Adhering rigorously to laws and standards in China, such as thePatent Law and its Implementing Regulations, theTrademark Law,and theEnterprise Intellectual Property Management Standards,the company has constructed a sophisticated intellectual propertymanagement system. This system serves as a powerful safeguardfor our continued innovation and competitive edge in the market. Atthe time of the report, we continued to strengthen our intellectualproperty management system while preventing intellectual propertyrisks.
Aligning with our management philosophy of continuous innovationand intellectual property protection, SGMICRO actively safeguards thecompany's intellectual property. We have complied theIntellectualProperty Management Work Manual, tailored to the company'scharacteristics and IC industry. The principles ensure that matters arehandled properly, e?ectively, systematically, accurately, and promptly.The guidelines establish a standard set of expectations to standardizethe work?ow involving intellectual property and raise company-wideawareness of intellectual property protection. As of the reportingperiod, the company continues to promote the application andstrategic layout of intellectual property rights and constructed anintellectual property portfolio with patents at its core.
Intellectual Property System
Protection of Intellectual Property
Protection of Intellectual Property
Reasonable selection of the scope ofprotection and strategy for patentedtechnology ensures adequateprotection of the company'sinnovations. Before implementation,patent search, analysis, and evaluationare conducted; after implementation,the appropriate form of protection isdetermined, and timely action is takento protect the intellectual property.
Actively conduct various intellectualproperty training to e?ectively improvethe intellectual property protectionawareness of all employees as well asthe understanding and application ofintellectual property knowledge forrelevant personnel.
Strengthen patent early-warningmechanisms and inquiries ontrademarks as well as other relatedintellectual property to avoid the risk ofinfringement.
In a business partnership, all partiessign theNon-Disclosure Agreement
and clearly state matters regardingintellectual property rights, such as thedetails of their ownership and the rightto use them.
International Property Awards
?National Intellectual PropertyDemonstration Enterprise
?National Intellectual PropertyAdvantage Enterprise
?Beijing MunicipalInvention Patent Award
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ResponsibleProcurement
SGMICRO leverages a highly collaborative and cohesive supply chain as a corecompetitive advantage. By closely collaborating with our suppliers, we haveestablished a standardized process for supplier introduction and evaluation.Our supplier classi?cation system optimizes management, reduces costs, andenhances supplier value. Simultaneously, we prioritize sustainable developmentby integrating product quality management, environmental protection, andsocial responsibility into our supplier evaluation system. We remain committedto avoiding con?ict minerals and promoting sustainability across the industry'ssupply chain.
Build a SustainableSupply Chain
When managing potential new suppliers, we adhere to industrystandards such as ISO 9001, IATF 16949, and ISO 14001. OurNew SupplierEvaluation and Approval Procedureguides the assessment of potentialsuppliers. Key evaluation criteria include ISO 14001 EnvironmentalManagement System certi?cation, QC080000 Hazardous SubstanceProcess Management System compliance, and ISO 45001 OccupationalHealth and Safety Management System. We integrate environmental andsocial responsibility evaluations into the initial introduction and on-siteaudit processes for potential suppliers, directly in?uencing their scoresand evaluation results.
Supplier Management
CategoryCerti?cationPercentage of certi?ed suppliersEnvironment
ISO 14001 Environmental Management Systems100%QC080000 Hazardous Substance Process Management System100%SocietyISO 45001 Occupational Health and Safety Management System100%Quality
ISO 9001 Quality Management100%IATF 16949 Automotive Quality Management System100%At the time of the report, the company has signed codes of conduct and other relevant agreements with suppliers, requiring them to carry out thoroughdue diligence on their supply chains to ensure full compliance with laws and regulations during their business with our company. The areas included indue diligence are, but not limited to, labor rights, health and safety, environment and hazardous substances, ethical standards, business continuity, andinformation security.
TheRisk and Opportunity Assessment Analysis Sheetis regularly reviewedand updated, while the company conducts various risk assessmentsof suppliers and formulates response measures. Through theBusinessContinuity Management Speci?cation, the organization and policies forbusiness continuity management are clearly de?ned.To ensure uninterrupted supply continuity, we have implemented robustpolicies such as theSupply Chain Disruption Business Continuity Plan.We regularly conduct business interruption risks assessments and havecreated theBusiness Interruption Risk Analysis Sheet. Our proactivemeasures to prevent supply chain disruptions include introducingsecondary suppliers for production-related partners based on processtypes, mandating suppliers to establish business continuity plans, andstipulating safety stock requirements for materials.
Sustainable Supply Chain
At the time of the report, our suppliers maintained ecological, social, and quality certi?cations as listed in the table below:
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SGMICRO places signi?cant importance on the annual audit of suppliers as a cornerstone for promoting socialresponsibility. We steadfastly uphold principles of transparency and integrity throughout this process. Our stringentrequirements mandate that all suppliers comply with legal standards and adhere to ethical business conduct.Speci?cally, we expect suppliers to follow local human rights regulations and refrain from engaging in forced orchild labor. Additionally, we are committed to avoiding con?ict minerals and other controversial raw materials.Compliance statements related to environmental standards are integral to our practices. The company establishescompliance agreements with suppliers, conducts thorough performance evaluations, and issues warnings to low-scoring suppliers, allowing them a speci?ed period for improvement. Persistent non-compliance may result indisquali?cation.
Letter of Commitment to
Honesty and Integrity
Environment and quality
related certi?cations
Environmental Management
Complaints
Third-party test reports
(ROSH2.0, HF)
Review ofSuppliers' SocialResponsibilities
The company has a longstanding commitment to promoting responsible supply chain development through ourTransparent Procurement initiative. Our suppliers sign documents such as theLetter of Commitment to Honestyand Integrity, which mandates transparency in all business transactions. They are required to accurately re?ectthese transactions in their business accounts and records. Our procurement process adheres to principles oftransparency, fairness, and impartiality. We continuously optimize our procedures, conducting periodic supplieraudits to ensure compliance with integrity requirements.At the time of the report, the company did not identify any signi?cant illegal or irregular behavior in theprocurement process under our diligent supervision and enforcement process.
Supplier Integrity Management
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Con?ict Minerals ManagementThe company is committed to mitigating the environmental and socialimpact of con?ict minerals. As part of our supplier approval process,we conduct due diligence speci?cally related to con?ict minerals. Thisensures that materials such as tantalum, tin, tungsten, gold, and otherminerals used in our products do not originate from con?ict areas. Wehave established theEnvironmental Restricted Substances ManagementOperation Speci?cation, which de?nes con?ict minerals, outlines theirscope, management methods, and associated commitments. Thisdocument is regularly updated as we make further progress. Additionally,we transparently disclose the use of cobalt and mica in our supply chain,as detailed in the company's EMRT survey report.Following the Responsible Minerals Initiative (RMI) guidelines createdby the Organization for Economic Cooperation and Development(OECD), we use tools such as the Con?ict Minerals Reporting Template(CMRT) to conduct due diligence on all suppliers. Detailed disclosuresof mineral sources and usage and information on related smelters areprovided, ensuring that all relevant suppliers are certi?ed by RMI. TheEnvironmental Agreementsigned by both the company and the suppliersexplicitly states that suppliers must comply with theDRC con?ict-freepolicy under the U.S. Dodd-Frank Act. Furthermore, we have establishedcomprehensive processes to ensure traceability of materials.
The company is diligent in monitoring and assessing the risk of con?ictminerals in the supply chain, closely collaborating with upstream anddownstream businesses to promote responsible procurement practices.In 2023, we conducted audits of all suppliers' hazardous substances andcon?ict mineral management systems. Following the audit, it was foundthat all our suppliers have established con?ict-free metal procurementpolicies. Investigations into con?ict-free metals in downstream supplychains have con?rmed that metals (tin, tantalum, tungsten, mica, gold,and cobalt) procured are from con?ict-free areas.At the time of the report, 100% of the mineral raw materials involved inSGMICRO's supply chain were sourced from RMI-accredited smeltersor countries, and some suppliers have obtained Responsible BusinessAlliance (RBA) certi?cation.Source of the raw material: 100% of the raw minerals used bySGMICRO are sourced from RMI certi?ed smelters or countries.Supplier due diligence rate: 100%Traceability white list rate: 100%Suppliers with hazardous substances and con?ict mineralmanagement system: 100%
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and R&DTogetherWe Thrive
TogetherWe ThriveAppendix
Together We Thrive
Long-term steady development relies on a healthy talent pool. Guided by thephilosophy of "virtue and competence, dedication, the pursuit of excellence,pragmatism and responsibility," SGMICRO is committed to establishing acomprehensive career development platform for all employees and a fair, diverse,and safe working environment. The company places great importance on thewell-being of all our employees. Our unwavering focus on employee wellbeingincludes continuous improvements to our bene?ts system, o?ering advancedtraining programs, and creating a variety of communication channels to supportour employees' aspiration for the future. Together with our dedicated team,SGMICRO strides towards realizing the company's long-term vision.
Recruitment
SGMICRO's ability to growth and expansion hinges on our ability toattract and retain the best talent in the industry. We employ variousrecruitment methods tailored to individuals with diverse backgroundsand experiences, fostering innovation and growth. OurRecruitmentManagement Guidelinesare continuously optimized to enhance thetalent pool's strength and structure. A comprehensive human resourcesmanagement system is in place ensuring a fair, unbiased, and transparentselection process. We strategically build and reinforce our talent reservesto lay a solid foundation for the company's stable and rapid development.At the time of the report, the company received the Annual Best EmployerAward at the 2024 Semiconductor Investment Annual Conference and the2024 Leading IC Company Award.
As our company expands, we are intensifying our recruitmente?orts to maintain a steady talent pipeline. Leveraging diversechannels—including recruitment websites, our o?cial website,and various social media channels—we attract experiencedprofessionals as well as promising industry talent. This strategicapproach not only brings high-quality individuals into our foldbut also forti?es our talent pool and bolsters our technical teamto meet the growing demands for research and development.
Careers
Campus Recruitment
Experienced Recruitment
The company provides diverse job opportunities throughcampus recruitment, leveraging online and o?ine promotionale?orts as well as campus-enterprise collaborations. Thisstrategic approach not only cultivates a pool of talentedindividuals but also ful?lls our corporate social responsibilities,contributing to our reputation as an exceptional employer.
Number of Employees
20231,41520221,24320212020
Male: 65.72%Female: 34.28%
Master's degrees and above: 47.14%Bachelor's degree: 41.27%Bachelor's diploma or under: 11.59%
Over 40 yrs old: 19.51%Between 30 to 40 yrs old: 33.07%Employees under 30 yrs old: 47.42%
Technicians: 74.21%Sales: 14.91%Production: 5.02%
Administration: 4.52%Finance: 1.34%
GenderEducation
AgePosition
The company ensures that all employees sign legally compliantlabor contracts or employment agreements. Additionally,we provide social insurance and a housing provident fundaccording to local regulations, maintaining a coverage rate of
%
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SGMICRO is committed to fostering a diverse and inclusive corporate culture, implementing a non-discriminatory recruitment policy to ensure that decisionsare based on performance and job requirements, without any discrimination based on factors such as race, color, social class, nationality, religion, disabilitystatus, pregnancy, gender, sexual orientation, ethnicity, union membership, political a?liation, age, or marital status. The company strictly prohibits sexualharassment and inappropriate behavior, safeguarding the dignity and safety of our employees.Additionally, SGMICRO collaborates with the China Disabled Person Federation to provide employment opportunities for people with disabilities. At the timeof the report, the company has 13 disabled employees.
The company thoroughly veri?es the age of applicants to ensure that only employees aged sixteen or above are hired in compliance with legal requirements.Employees aged sixteen to eighteen have to con?rm their completion of compulsory education. We value the freedom of our employees to choose theiremployment and have a zero-tolerance policy towards forced labor and human tra?cking. No violations were reported at the time of the report.
Diversity and Anti-discrimination
Labor & Human Rights
Measures for Diversity
Policy-Making
Establishment ofSupervision Mechanisms
Enhanced Communication
and Feedback
SGMICRO has incorporated equalemployment and diversity guidelines intoour management framework, which arecommunicated to employees throughvarious means such as new employeetraining programs and employee assemblies,ensuring the sta?'s understanding andadherence to these guidelines.
The company has established e?ectivesupervision mechanisms led by the HumanResources Department to regularly inspectthe implementation of equal employmentand diversity policies, promptly identifyissues requiring improvement.
SGMICRO promotes and strengthensemployee communication through variouschannels and methods, encouragingemployees to provide feedback andsuggestions on equal employment anddiversity policies.
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Salary and Compensation
The company is committed to o?ering competitive compensation andbene?ts to attract and retain top talent—critical drivers of businessgrowth. Our compensation system recognizes accountability and high-value contributions. Annually, we adjust salaries based on economicperformance, labor market dynamics, and industry benchmarks, whileconsidering individual employee performance. Furthermore, we upholdequal pay for equal work, irrespective of gender.We use various incentive mechanisms, such as performance bonuses,invention disclosure awards, and annual performance recognitions, toboost employee dedication and satisfaction while strengthening ourcompany's competitiveness. Additionally, our ongoing equity incentiveplan helps us attract and retain professional technical and managerialtalents who strongly resonate with our corporate culture and values.Our incentive programs inject vitality into our development. Since beinglisted as a public company, we have introduced ?ve exciting incentiveplans, enhancing our long-term incentive programs. With the company'sperformance linked with employees' personal goals, together, we strivetoward SGMICRO's long-term growth.
The company employs a high-performance management approach, establishingambitious goals to motivate employee performance and foster growth. Beyond relyingsolely on Key Performance Indicators (KPIs), we encourage a holistic perspective—considering team dynamics and organizational goals. Demonstrating proactivityand courage, we embrace challenging objectives. Additionally, our long-term focusemphasizes a balance between performance targets and individual/team development,driving sustained improvement.The company has formulated and continues to optimize thePerformance ManagementGuidelines, which re?ect thorough consideration of the semiconductor industry'sparticularities and the company's own culture. Aligning with long-term strategicplanning and business expansion needs, the company enhanced the performancemanagement principles within the existing performance management structure in 2023.
Performance Management
The coverage rate of comprehensive performancemanagement (including performance evaluation,performance coaching, and performance goalsetting) reached
2023
%
Employee Incentives ExamplesTypes of bonuses
Performance Bonuses, Invention DisclosureAwards etc.Annual evaluationawards
Outstanding Employee Of The Year, EmployeesRecognized For Excellent Performance andSigni?cant Improvement, Best Newcomer Awardetc.
At the time of the report, we implemented the2023 StockOption Incentive Plan, granting stock options to 1,104recipients, including senior management, core managers, andthe backbone members of our technical (operation) teams,covering over 85% of the total number of the company'semployees at the time.
Equity Incentive PlanCase
The photo won theSGMICRO Photography Contest.
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Employee Bene?ts
SGMICRO strictly adheres to national laws and regulations in China, such astheLabor Law,Labor Contract Law, andLaw on the Protection of Minors.Additionally, we comply with international guidelines and standards,including theUniversal Declaration of Human Rights,The Core Conventionsof the International Labor Organization, and theUN Guiding Principles onBusiness and Human Rights, placing signi?cant emphasis on respectingemployees' basic rights and legitimate interests.
The company advocates for work-life balance. We establish and maintainreasonable work hours and leave procedures, ensuring compliance withrelevant laws and regulations such as theLabor Law of the People'sRepublic of China. Employees are entitled to statutory holidays, weekendso?, sick leave, maternity leave, and other leave arrangements.Female employees receive comprehensive maternity bene?ts, maternityinsurance, access to lactation rooms, and special bene?ts on InternationalWomen's Day. A ?rm believer in equal pay, the company provides femaleemployees with equal employment and career development opportunities.
We value the input of all employees and encourage e?ective and smooth communication as part of our corporate structure and culture. To foster an open andinclusive workplace, the company has implemented communication management procedures to welcome diverse suggestions and criticisms while ensuringprompt and appropriate responses. Employees are encouraged to communicate feedback, suggestions, and personal grievances to managers at all levels,who shall actively respond and take responsibility to address them.Additionally, a series of e?ective communication mechanisms are implemented to promote internal communication, convey company culture andmanagement philosophy, as well as solicit employee feedback and suggestions. These mechanisms include:
We have established a comprehensive employee grievance reporting system to o?er multiple channels for directing complaints, including reporting to directsupervisors or department heads; submitting complaints via the company's internal dedicated email; use of suggestion boxes; and directly contacting HumanResources department or company management.Upon receiving a grievance or complaint, we act swiftly to conduct a thorough investigation into the matter, making sure to bring clarity and su?cient evidenceto the case. Employees are regularly updated on the investigation's progress. The company respects employee privacy, strictly maintaining con?dentiality toprevent information leaks throughout the process. Fair and appropriate decisions are made based on the outcomes and ?ndings of investigations.
Work Hours and Holidays
Employee Communication
Employee Grievance Report
Employee assemblies are organizedperiodically that cover policybrie?ngs, performance reviews, andcommunication on future outlook ofthe company. These meetings ensurethat all employees are informedabout the company's strategicdirection, development goals, andmajor decisions, enhancing theirsense of belonging and solidarity.
Employee AssemblyQuarterly Review Meetings
Regular Communicationswith HR
Suggestion BoxIn quarterly review meetings,various departments report ontheir respective areas and exchangeviews. This practice ensures alldepartments are directionallyaligned.
A regular HR communicationmechanism is in place, focusingon facilitating dialogue betweendi?erent employee groups,including new hires, long-timeemployees, frontline sta?, middlemanagers, and key personnel.This approach maintains timelyexchange and feedback across alllevels of the company.
Suggestion boxes are available at
all o?ce locations. Managed by
HR, these boxes collect employee
opinions and suggestions, which
are then forwarded to relevant
departments and individuals for
follow-up.
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Talent Development
Talent is the key driving force behind the company'ssustainable development. SGMICRO is committedto creating an environment where the companyand our employees grow together. With a people-oriented, open, inclusive, and proactive corporateculture, the company also provides great careerdevelopment opportunities stemming fromour rapid growth. We o?er a comprehensivecompensation and incentive mechanism. Theseare important factors in attracting, recruiting,motivating, and retaining our talents.
Based on business strategy and human resources planning, the company continuously improves our job grading system, establishing multiple professional or managerialdevelopment channels. We also facilitate lateral career development pathways between professions, supporting employees' growth and development within the company.With growth of our business, employees can choose to develop their careers in professional, technical, or managerial areas according to their personal strengths and careeraspirations. Moreover, the company has put in place a well-developed promotion system, giving precedence to the professional development of internal personnel thus aligningthe employees' and SGMICRO's growth path.
Career Development Pathways
Our business expansion is driven by e?ectively meeting the ever-growingdemands of our customers and target markets. This will create increasedopportunities for our employees to develop innovative and complexproducts, continually enhancing their technical expertise.
The company provides a smooth promotion path, equal careerdevelopment opportunities for employees who are willing and ableto undertake higher management responsibilities, and allows them tofully utilize their management skills and expertise to ful?ll their careerprogression goals.
Technical and Managerial Path
Technical PathManagement Channel
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The company has established a comprehensive training system to foster an environment that encourageslearning. Our comprehensive talent development plan covers all departments, business functions, and individualtalents.Ensuring training e?ectiveness is a top priority within the company. We have established systematic managementfor each stage of the training process, encompassing needs identi?cation, planning, course development, sessiondelivery, and result evaluation. Leveraging digital tools, we e?ciently oversee a wide range of training resourcesand maintain comprehensive records.At the time of the report, our training system covers operational areas including R&D, marketing, and sales, withcontents encompassing new employee training, professional and technical training, management and leadershiptraining, quality system training, and vocational training.
Employee Training
A Part of Training Programs in 2023
Systematic training programsare organized for various teams,including the sales and R&D teams.These programs are tailored toimprove technical expertise anddrive professional competencywithin our workforce.
To promote in-depth technicalexchanges and discussions withinthe company, we host specializedprograms such as the R&DTechnology Forum.
Our ongoing Mentorship Programaims to enhance the coachingcapabilities of our senior sta?,particularly for guiding new hires.
Comprehensive and systematictraining programs are o?ered to newgraduates joining the company. Theseprograms include both extensivetraining sessions and on-the-jobproject guidance to accelerate theirprofessional development.
Professional DevelopmentProgram
Specialized "Technical Innovation"Project
Mentorship ProgramNew Graduates Training Program
2023Training time on averageper person
hrs
60.5
Training coverage rate
%
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We are committed to harnessing the academic strengths of universities along the industrial talent pool. This synergy fosters deep integration of industry,academia, and research community, propelling talent development in the ?eld of integrated circuits. Through strategic partnerships with universities—through research initiatives and innovation competitions—we address our acute need for innovative individuals with strong practical skills. This collaborativeapproach enables resource sharing and leverages complementary advantages.
Industry-university-research Cooperation
As a leading technology company with a strong focus on R&D, we place a high priority on helping our employees stay abreast of the latest technologicalknowledge and industry trends. This not only boosts our company's capacity for innovation but also quickly enhances the R&D skills of new employees,ensuring our sustained leading position in the industry. To further enhance our capabilities in management, planning, and quality, we collaborate withexternal training institutions. Employees are selected to participate in courses on quality control, management and compliance, strengthening our overallcompetitiveness in these areas.
At the time of the report, we have invited renowned industryexperts to host sessions and organized internal technicalseminars multiple times. These activities aim to deepen ourtechnical sta?'s understanding of cutting-edge industry trendsand provide a platform for knowledge exchange and skillenhancement. Interactions with experts and in-depth internaldiscussions help broaden technical personnel's perspectives,stimulate innovative thinking, and inject vitality into thecompany's continuous development.
Expert LecturesCase
To improve the professional quali?cations of our employees,we have partnered with renowned training institutions toobtain certi?ed process auditor training for automotiveindustry (German Association of the Automotive Industry,VDA6.3). Several employees have successfully receivedcerti?cation, enhancing our quality management capabilitiesin the automotive industry and improving our productcompetitiveness.
Quality Excellence Journey: VDA 6.3Certi?cation Enhancement ProgramCase
The company is committed to cultivating talent in the microelectronics ?eld. Through initiatives such as "SGMICRO in Campus," we host technicaland career development lectures at various universities, with seasoned experts sharing industry knowledge to enrich students' experiences.We also organize company tours for academic faculty members and students, where in-depth exchanges with our engineers add to students'understanding of the real-world work environment in the industry.The company actively participated in the 2023 China College Students IC Innovation and Entrepreneurship Competition, providing real-worldproject design cases, arranging for senior design managers to o?er on-site guidance, and assisting students in proving their innovative, practical,and professional skills. We aim to nurture the next generation of industry talent for sustained development.
Bridging the Future: Microelectronics Talent Development ProgramCase
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Care for the Employees
SGMICRO highly cares of employees, striving to create an environment ofjoy and ease for our employees in both work and life.
Comprehensive employee bene?ts and care are provided to facilitatework-life balance.
Employee activities play a signi?cant role in strengthening team solidarity, enhancing employee satisfaction, and stimulating creativity. By regularlyorganizing diverse cultural events, we not only provide employees with opportunities to showcase their individual talents but also facilitate communicationand collaboration among team members. This creates an environment of openness, vitality, and proactive engagement, which is conducive to fosteringinnovation.Employee Bene?ts
Employee Activities
?We maintain a ?exible working hour and establish dualo?ces in various cities to help with employee commute andenvironmental protection.?Various sports events and team-building activities areorganized regularly to enhance team solidarity and employeesatisfaction.?Annual health check-ups and group accident insuranceare also in place with 100% coverage for employee healthexaminations.
?Additional paid sick leave is o?ered to all employees to ensuretheir physical well-being.
?Customized holiday bene?ts are provided with personalizedchoices available for employees.?Shuttle services and employee cafeterias are o?ered in somecities, bringing convenience and ease for employees.?For employees a?ected by major illnesses and their families,we o?er condolences and care.
Every year, the company organizes a photography contest to encourageemployees to share the beautiful moments in their lives. The themefor the contest revolves around "blossoming," "light," and "limitless",capturing the environment, children, nature, urban landscapes, andculture through camera lenses of our employees.
Di?erent sports activities are organized based on site availability,promoting the physical and physiological health of the employees. Thesports include football, basketball, badminton, Ping Pong, mountainclimbing, among many others.
A diverse array of team-building excursions are organized in variouslocations. The employees go on hiking trips together while immersed inbreath-taking natural scenery. Through team-building exercises such asgroup competitions and group games, these outings foster understandingand trust among colleagues while enhancing solidarity and morale.
A rich selection of food and beverages is available for tea breaks,helping employees to recharge and relax.
Photography contest
Sports activity
Team-building
Tea breaks
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Health and Safety
SGMICRO attaches great importance to the health and safety of our employees,continually strengthening our occupational health and safety management systemto provide a safe and friendly working environment.
We have established theOccupational Health and Safety Manual, continuouslyoptimizing the safety management system and operational processes, clarifyingthe responsibilities, authorities, and relationships of various levels of positions.Following the PDCA (Plan-Do-Check-Act) management model, we are constantlyimproving the company's system as well as the performance on occupational healthand safety. Additionally, we conduct regular safety inspections and maintenance atproduction facilities and workspace to ensure timely identi?cation and eliminationof potential safety hazards.
Safety
Measures to Raise Employees' Safety Awareness
?Fire drills are regularly carried out to help employees learn basic safety knowledge and skills, master the use of ?re?ghting equipment,and enhance response to emergency ?re situations. Drills help us promptly identify and address potential issues and areas forimprovement, ensuring rapid and e?ective emergency response when unexpected situations occur.
?Safety reminders are posted in lounge areas, restrooms, and waterdispensers across o?ces in di?erent locations.?Fire?ghting equipment is placed in the workplace in accordance withregulations to ensure clear access to ?re exits.
?Environment, Health, and Safety contents are speciallyreferenced in onboarding training.
?Safety reminders are provided during each employeeassembly and holiday leave noti?cation.
Company Occupational Health and Safety Policy
Safety ?rst
Prioritizeprevention
Putting people?rstScienti?cmanagement
Energy-saving
and reducedconsumptionControl pollution
Honesty andcomplianceContinualImprovement
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The company is committed to creating a healthy and safe working environment. We place great emphasis on managing facilities procurement, decorationmaterials selection, and other aspects related to the work environment, and various safety measures are in place for the use of company laboratories. Thereare also multi-functional areas in the workplace to ensure employee welfare along with health and safety.
Health
Facilities ProcurementWork EnvironmentFirst Aid Supplies
Materials Selection forDecorationLaboratory Safety
MeasuresWe prioritize the purchaseof environmentallyfriendly materials andequipment to mitigatepotential impacts onemployee health fromthe work environment.We avoid the use ofharmful materials, andreduce air and noisepollution. Additionally,regular inspections andmaintenance of facilitiesare conducted to ensureproper business operationand reduce the risk ofequipment failure.
Areas for leisure, dining,and other functionsare available to helpemployees relax andunwind in betweenbreaks from work. Wepay attention to themaintenance of ouremployee drinkingwater systems byregularly replacing water?lters.
First aid kits andcommonly used traumamedications are availablein o?ces across di?erentlocations for promptemergency responsein case of employeeaccidents.
We use environmentallyfriendly decorationmaterials to reduceharmful substances,ensure indoor airquality, providea healthy o?ceenvironment, and haveprofessionals carryout air puri?cationto optimize the workenvironment.
There are establishedlaboratory usagepolicies that stipulatedetails on installing airpuri?cation equipment,regularly replacing?lters, soundproofroom set-ups, as wellas anti-static andequipment groundingmeasures, to ensure airquality, reduce noise,and prevent safetyaccidents.
Occupational Health and Safety Management Measures
At the time of the report, SGMICRO's performance in occupational healthand safety management is as follows:
Key Performance IndicatorsAmountRecordable work-related accident0Work injuries of serious consequences0Work-related injury resulting in death0Number of occurrences of occupationalhealth hazards
Employee health examination rate100%Occupational health and safety risks
Signi?cant source of risk isZero
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Taking Social Responsibility
SGMICRO is committed to sustainable development. We recognize thesigni?cance of social responsibility and actively engage in charitableevents. By our concrete actions, we aim to spread love and hope,contributing to the creation of a harmonious society.We believe that the long-term sustainable development of an enterpriseis profoundly connected with continued social progress. We arecommitted to keeping our endeavors in a series of philanthropic causesand make increasing contributions to our social responsibility ful?llment.Through tangible actions, we will actively contribute to the realization ofsustainable development objectives.
In 2023, the company participated in the "99 CharityDay" organized by the China Social Welfare Foundation,demonstrating its commitment to supporting the education ofstudents in impoverished mountainous areas.At the time of the report, we have extended support to thedevelopment of microelectronics-related education inuniversities, aiming to foster top-tier talents. This supportincluded the provision of scholarships and teaching grants tostudents and faculty in multiple universities.
Charity and DonationCase
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Appendix
About this Report
PurposeCompilation ProcessReliability Guarantee
ScopeVersions and AvailabilityBasis for Compilation
Data
This report (the "Report") is the secondEnvironmental, Social, andCorporate Governance (ESG) Reportreleased by SG Micro Corpand our subsidiaries (referred to as "SGMICRO" or "the company","company", "we" or "us"). The purpose of the report is to facilitatea transparent dialogue between SGMICRO and our stakeholdersregarding our environmental, social, and governance practices andto address their expectations with a comprehensive and structuredapproach.
This report is based on our company's ESG practices, followinga process of "project setting and research, informationcollection, drafting and revision, executive review, boardreview, and public release." At some stages, we engage withrelevant stakeholders to discuss and validate the report'sframework and content, ensuring transparency and alignmentwith our corporate values.
The report contains no false representations, misleading statements ormajor omissions, and takes responsibility for the truthfulness, accuracyand completeness of the contents.
The disclosure scope of this report is consistent with that of the?nancial information in the company's 2023 annual report, andsome information may involve policies and practices from previousyears.
The report can be accessed and downloaded from the o?cialwebsite of SGMICRO (http://cn.sg-micro.com), the ShenzhenStock Exchange website (www.szse.cn), the CNINFO website(http://www.cninfo.com.cn). The Report is available in bothChinese and English. In case of any discrepancy, the Chineseversion takes precedence. We welcome feedback for the ESGreport. Please do not hesitate to reach out to us at Investors@sg-micro.com if you have any questions or comments.
Global Reporting Initiative'sGRI StandardsThe Chinese National StandardGuidelines for the Preparation of SocialResponsibility Reports(GB/T 36001-2015)The Chinese Academy of Social SciencesGuidelines for the Preparationof Corporate Social Responsibility Reports(CASS-ESG 5.0)The Shenzhen Stock ExchangeGuidelines for the Social Responsibility ofListed Companies on the Shenzhen Stock Exchange2030 UN Sustainable Development Goals (SDGs)ISO 26000:2010Guidance on Social ResponsibilityThe report quotes data from various sources, including thecompany's operation information, publicly available governmentdocuments, annual ?nancial reports, internal statistical reports,among others. Financial data in this report is presented in Chinesecurrency RMB. In cases where discrepancies arise between thisreport and the ?nancial statements, the ?nancial statements shalltake precedence.
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Appendix
Key Performance Indicators
Business PerformanceEnvironmental Performance
SectorDisclosure ItemUnit2023
EconomicPerformance
RevenueRMB '0002,615,716.4Net pro?t attributable to shareholders of the
listed company
RMB '000280,768.3R&D investmentRMB '000737,074.1R&D investment percentage%28.18R&D personnelNumber1,029R&D personnel percentage%72.72%
Dividend (with tax)RMB '000107,846.5Basic earnings per share1 RMB/share0.6011
SectorDisclosure ItemUnit2023
Energy
Natural gas consumptionm34,217.00
GasolineLiters970.00Power UsagekWh6,734,013.00GreenhouseGas
Total greenhouse gas emissions (Scope I + II)tCO2e3,851.63O?ceOperation
Water consumptionm310,148.00
1. The disclosed data are collected from some of the company's operating regions.
2. In 2023, due to the inclusion of testing facilities in the statistical scope and factors such as the expansion of o?ce spaces and
increased numbers of equipment and personnel in certain regions, there is a signi?cant increase in the company's electricity andwater consumption compared to 2022.
3. The emission of greenhouse gases represents the sum of Scope 1 and Scope 2 greenhouse gas emissions. The emissions from
Scope 1 are calculated based on the consumption of natural gas, gasoline, and corresponding emission factors. The emissionsfrom Scope 2 are calculated based on purchased electricity and corresponding emission factors.
Note:
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Appendix
SectorDisclosure ItemUnit2023
Patents
Total number of obtained patentspiece(s)229
Newly applied patentspiece(s)230Total number of invention patents licensedpiece(s)57
New registration of IC designpiece(s)112
Employee
Number of total employeesNumber1,415
Male Sta?Number930Female Sta?Number485Over 40 yrs old:Number276Between 30 to 40 yrs old:Number468Employees under 30 yrs old:Number671Master's degrees and above:Number667UndergraduateNumber584Bachelor's diploma or under:Number164Production sta?Number71TechniciansNumber1,050
Sales sta?Number211Finance sta?Number19Administration sta?Number64
DisabledNumber13Average training time per year per employeeHours60.5
Social insurance coverage rate%100
Corporate Governance Performance
SectorDisclosure ItemUnit2023
CorporateGovernance
Number of board membersNumber5
Male directorsNumber2Female directorsNumber3Independent directorsNumber2Non-independent directorsNumber3
Social Performance
SectorDisclosure ItemUnit2023
SafetyNumber of people with work-related injuriesNumber0
SupplyChain
The number of suppliers identi?ed as havingactual or potential signi?cant negative social
impacts
Number0The number of suppliers identi?ed as having
actual or potential signi?cant negative
environmental impacts
Number0The percentage of new suppliers that werescreened against environmental criteria
%100The percentage of new suppliers that werescreened against social criteria
%100The percentage of RMI certi?ed supplier%100Supplier due diligence rate%100Traceability white list rate%100Suppliers with hazardous substances andcon?ict mineral management system
%100
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Appendix
GRI StandardsDisclosure ItemCorresponding Chapter
GRI2: GeneralDisclosures 2021
2-1Detailed information about the organizationAbout this Report2-3Reporting period, frequency and contact pointAbout this Report2-7EmployeeTogether We Thrive2-9Governance framework and composition
Enhance GovernanceStructure2-12
In terms of governance impact, the supervisory role of the
highest governance body
Enhance Governance
Structure2-14
The highest governance body's role in sustainability
reporting
Enhance SustainableGovernance Systems2-22Statement on sustainable development strategy
Enhance SustainableGovernance Systems2-29Approach to stakeholder engagement
Enhance SustainableGovernance SystemsGRI 3: Substantiveissues 2021
3-1The process to determine substantive issues
Enhance SustainableGovernance Systems3-2List of substantive issues
Enhance SustainableGovernance Systems3-3Management of substantive issues
Enhance SustainableGovernance SystemsGRI 201: EconomicPerformance 2016
201-1The directly generated and distributed economic value
Key Performance
IndicatorsGRI 205: Anti-corruption 2016
205-2
Communication and training about anti-corruption
policies and procedures
Business EthicsGRI 302: Energy2016
302-1Energy consumption within the organization
Key PerformanceIndicators
GRI StandardsDisclosure ItemCorresponding Chapter
GRI 303: Water ande?uents 2018
303-1The interaction with water as a shared resource
Waste and MaterialManagement303-2Management of water discharge-related impacts?303-3Water consumption
Key Performance
IndicatorsGRI 306: Waste 2020
306-1Waste generation and signi?cant waste-related impacts
Waste and MaterialManagement306-2Management of signi?cant waste-related impacts
Waste and MaterialManagement306-3Waste generated
Waste and MaterialManagementGRI 308: SupplierEnvironmentalAssessment 2016
308-1
New suppliers that were screened against environmental
criteria
Build a SustainableSupply ChainGRI 401:
Employment 2016
401-1
The percentage of new employee hires and employee
turnover
?401-2
Bene?ts provided to full-time employees (excluding
temporary or part-time employees)
Care for the Employees
GRI 403:
Occupational Healthand Safety 2018
403-1
Occupational health and safety management system
(OHSMS)
Health and Safety403-3Occupational health servicesHealth and Safety403-4
Occupational health and safety topics: Workerparticipation, consultation, and communication
Care for the EmployeesHealth and Safety403-5Worker training on occupational health safetyHealth and Safety403-6Promote worker health
Care for the EmployeesHealth and Safety403-7
Prevention and mitigation of occupational health andsafety impacts directly linked by business relationships
Health and Safety403-10Work-related healthHealth and SafetyGRI 404: Trainingand Education 2016
404-1Average hours of training per year per employeeTalent Development404-2
Programs for upgrading employee skills and transition
assistance programs
Talent DevelopmentGRI 405: Diversityand EqualOpportunity 2016
405-1Diversity of governance bodies and employeesRecruitmentGRI 414: SupplierSocial Assessment2016
414-1New suppliers that were screened against social criteria
Build a SustainableSupply Chain
GRI Index
Instructions
SG Micro Group reported the information quoted in this GRI content index according to GRIstandards between January 1, 2023, and December 31, 2023.GRI 1 usedGRI1: Foundation 2021
SGMICRO ESG Report 2023
| Message from the Chairman | Company Overview |
GreenComes First
GreenComes FirstScienti?cGovernance
Scienti?cGovernanceInnovationand R&D
Innovation
and R&DResponsibleProcurement
ResponsibleProcurementTogetherWe Thrive
Appendix
GlossaryFeedback Form
TechnicalTerms
De?nitionsADCAnalog to Digital Converter
DACDigital to Analog Converter
DC/DC
A DC/DC converter is a converter that transforms a direct current power source into anotherdirect current power source with a di?erent voltage or current.LED
Light Emitting Diode, a solid-state semiconductor device with diode characteristics that canconvert electrical energy into light energy.SVHCSubstances of Very High Concern
RoHS
The restriction of the use of certain hazardous substances in electrical and electronicequipmentREACHRegistration, Evaluation, Authorization and Restriction of Chemicals
This report is the second Environmental, Social, and Governance (ESG) report of SGMICRO publicly released tosociety. In order to improve the company's ESG management and enhance our performance in ful?lling ESGresponsibilities, we sincerely ask for your opinions and suggestions. Please ?ll in the feedback form and choose oneof the following methods to send:
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SGMICRO ESG Report 2023
| Message from the Chairman | Company Overview |
GreenComes First
GreenComes FirstScienti?cGovernance
Scienti?cGovernanceInnovation
and R&D
Innovation
and R&DResponsibleProcurement
ResponsibleProcurementTogetherWe Thrive
Appendix
SG Micro GroupAddress: F11, Building DNo. 87, North Third Ring Road, Haidian DistrictBeijing, ChinaPhone: 010-88825397Email: investors@sg-micro.com