with suppliers to grow and scale for the future.
Lam’s advanced technologies rely on specialized materials and components. To source them, we collaborate with thousands of suppliers around the world. We invest in supplier relationships built on shared values of open communication and trust. Our Core Values drive us to take ownership for upholding responsible, ethical practices and continuously improving our supply chain performance over time.
Our supply chain focus areas include climate action, human rights, supplier diversity, and responsible mineral sourcing. To increase supplier engagement across these areas in 2022, we matured our supply chain management processes and grew our Supply Chain ESG team. We also surveyed our suppliers on their climate performance and helped them accelerate progress toward their sustainability goals. By the year’s end, more than half of our top 100 suppliers (by spend) acknowledged our Climate Pledge. Together, we can collaborate toward mutual ESG progress and long-term, sustainable business growth.
Responsible supply chain1
|Goal: Achieve more than 90% compliance with our social and environmental expectations across our top-tier suppliers
|Goal: Engage with at least 50% of our top-tier suppliers on environmental sustainability opportunities
|Goal: Increase engagement with all suppliers on social and environmental topics through assessment, training, and capacity building
|Goal: 46.5% of suppliers measured by emissions will set SBTs2
Launched our supplier
Engaged suppliers at Lam’s
inaugural Supplier ESG Forum
Received Lam Climate
from 53% of top 100 supplier
Leveraged RBA tools
to assess supplier performance
Our strategy for mutual success
Lam’s supply chain is extensive, so we employ strong oversight and governance to facilitate comprehensive supply chain management across the globe. Our Supply Chain ESG team leads our direct supplier risk assessment efforts, with a focus on driving continuous improvements. Lam also has cross-functional supply chain teams that collaborate to share best practices around supplier engagement.
Embedding ESG across our supply chain
We manage and monitor ESG performance throughout our supply chain through a strategic framework built on five pillars:
We believe it is vital that we prioritize innovation, competitiveness, collaboration, and supply chain security to maintain U.S. leadership in this critical global industry.”
president and CEO of Lam
speaking about U.S. semiconductor competitiveness during his testimony before the U.S. Senate Committee on Commerce, Science, and Transportation.
Managing the supplier lifecycle
Lam engages suppliers early in the supplier lifecycle and continues to manage and facilitate their progress over time. We evaluate suppliers based on multiple factors, including known human rights risk indicators, geography, and spend. Upon selection, we encourage suppliers to become RBA members and contractually require that every supplier adheres to our Global Supplier Code of Conduct (GSCC), the RBA Code of Conduct, and applicable laws and regulations. Throughout the supplier lifecycle, we continue to conduct due diligence using a risk-based approach. This process may include RBA audit reports, inspections, and corrective actions as needed.
spend by region
of origin in 2022
In 2022, we leveraged additional RBA tools to better quantify risks in the regions where our suppliers operate. This included requesting and collecting RBA self-assessment questionnaires (SAQ) and audit assessments via RBA’s Validated Assessment Program. Through the process, we identified three high-risk countries for child labor and migrant labor. We use country-level risk data to inform our overall supplier engagement and assessment strategy. And, for any specific supplier risks, we apply the RBA guidelines to address those on a case-by-case basis by requesting corrective action plans and that follow-up closure audits are completed.
Our supply chain by the numbers
of our top 100 suppliers have established SBTs
of our top 100 suppliers are RBA members
- Represents spend of direct and indirect suppliers.
Leveraging plug-and-play technology to expedite direct material shipments
Supply chain challenges in 2022 led to significant delivery delays for certain tools. As the team worked to address these challenges, one opportunity that was identified led to reduced delivery time for some shipments by more than 50%. How did we do it? A cellphone-sized device that costs about $40.
The idea came from Joe Picciocchi, who joined Lam’s Livermore, California, site in 2021 as senior manager of logistics. At the time, it took about 12 days for a shipment from our supplier in Guadalajara, Mexico, to arrive at our Tualatin, Oregon, site. Realizing Logistics had no way of tracking a package’s location, Joe launched an initiative to equip critical shipments with inexpensive trackers that provide real-time location data. This empowered Logistics to optimize manufacturing schedules and hold transportation vendors accountable.
As a result, the shipping time from Guadalajara, Mexico, to Tualatin, Oregon, now takes just four to five days. Currently, Logistics is tying its shipment-tracking data to Lam’s Transportation Management System. In the future, the system could leverage predictive analytics and artificial intelligence to automatically plan and dispatch shipments.
Conducting due diligence at key steps
Lam’s top direct material suppliers are assessed on human rights, environmental impact, and other known risk indicators including business volume and geographic location.
New direct suppliers are required to acknowledge Lam’s GSCC.
Existing qualified suppliers are contractually obligated to comply with the GSCC as well as the RBA Code of Conduct.
Critical suppliers are assessed though our Quality Management System (QMS) with a focus on new regional suppliers supporting Lam’s Asia manfacturing locations.
Our top suppliers are eligible to be awarded bonus points on their monthly Supplier Scorecard for diversity, ISO-14001 certification or RBA membership.
We ask our top suppliers to acknowledge Lam’s Climate Pledge and provide carbon emissions data via our supplier engagement platform.
We offer supplier support to build environmental knowledge and capabilities that includes webinars and resources from academic institutions and subject matter experts.
Beyond supporting our business and customers, our supplier relationships are intrinsic to our net zero targets. Upstream activities contribute to our Scope 3 emissions, so if we want to reduce them, we need top suppliers on board.
In 2022, we engaged with 100% of our top-tier suppliers (by spend) on environmental sustainability opportunities, exceeding our goal of engaging at least 50% of our top-tier suppliers on these topics by 2025. We also made progress toward our 2025 goal by supporting 46.5% of top suppliers (measured by emissions) in setting SBTs.
During the year, we surveyed our top suppliers to better understand their climate progress and encouraged them to commit to climate action by acknowledging our Climate Pledge. We also began asking suppliers to take a carbon footprinting class through the RBA. By engaging suppliers on these issues, we are encouraging them to measure and manage important areas of their environmental impact. This supports mutual progress toward our respective ESG priorities and goals.
2022 ESG supplier survey & pledge results
survey completion and 53% acknowledgement of the Lam Climate Pledge by top 100 suppliers.
suppliers completed energy audits.
of our top 100 suppliers published annual sustainability reports.
of supplier survey respondents indicated they are using renewable energy.
- Based on ESG survey responses from 62 suppliers. Data have been rounded.
Upholding human rights
When it comes to safe, dignified, and lawful working conditions, no one should be left behind. We are committed to protecting and supporting human rights—both in our supply chain and in our global operations. Not only is this a compliance issue; it aligns with our Core Values of honesty, integrity, mutual respect, and mutual trust. We expect our suppliers and sites to comply with laws including—but not limited to—the U.K. Modern Slavery Act of 2015 and the California Transparency in Supply Chains Act of 2010.
Lam published its first Human Rights Policy in 2022, which outlines our expectations to uphold internationally recognized human rights. This policy applies to all employees and we expect our suppliers, as well as our business and community partners, to adopt similar practices. The policy aligns with the RBA’s Code of Conduct and builds on expectations outlined in our GSCC. Additionally, our Global Employment Practices Statement declares our support of workers’ rights to freedom of association and collective bargaining, to the extent permitted under local laws. These documents are distributed via email, published on our intranet, and made publicly available on our website.
Regular training is an important part of our human rights program. And in 2022, we had 269 global supply chain management employees complete human rights training. We also requested our top suppliers to complete RBA’s online human rights module.
Learn more about how
we uphold human rights
in our supply chain
Ensuring responsible sourcing of minerals
Raw minerals are the building blocks of semiconductor technology, and we are committed to ensuring that they are ethically and responsibly sourced. Lam is a member of the Responsible Mineral Initiative (RMI), a multi-stakeholder organization that helps address egregious human rights issues in the mining of tin, tantalum, tungsten, gold, and other minerals of concern. Since 2012, we have used the Conflict Minerals Reporting Template developed by RMI to assess our suppliers. In 2022, we expanded our due diligence efforts related to minerals of concern to include cobalt and mica, as recommended by RMI.
Cultivating a diverse supply chain
Inclusion and diversity are part of our Core Values at Lam, and we recognize the value that our relationships with diverse suppliers bring. During our supplier onboarding process, we implement measures to identify diverse suppliers, including minority-, women-, LGBTQ+-, and veteran-owned businesses, as well as businesses owned by people with disabilities. We also include diverse qualifications in our Supplier Scorecard and track and report spending with diverse direct material suppliers on a periodic basis. Our diverse supplier spend totaled $123.3 million in 2022.
Learn more about our approach
to cultivating a diverse supplier
Our Supply Chain ESG team engages suppliers to understand their challenges, priorities, and needs. They also reach out with best practices and resources to help suppliers build capability to make progress on social and environmental goals. In addition to rolling out our supplier engagement platform in 2022, we launched:
- An ESG-focused webinar series and a monthly newsletter, which we shared with nearly 200 direct and indirect suppliers
- A dedicated email address for supplier queries
- An ESG portal to provide suppliers with additional support and resources
We also offered additional training sessions and tools to help suppliers calculate their GHG emissions.
Celebrating and connecting with top suppliers
Semiconductors are strategically important to the world. Throughout 2022, our suppliers played a key role in ensuring that the semiconductor ecosystem could continue to meet heightened demand. We presented our highest-performing suppliers with Excellence Awards during our annual Supplier Day at the end of October, recognizing their accomplishments across several categories.
In conjunction with Supplier Day, we held our inaugural Supplier ESG Forum where we presented XP Power with our Supplier ESG award. The event included an expert panel with Lam’s supply chain leaders, a keynote speaker from our customer Intel, and a presentation from a key supplier, Celestica. The forum was a catalyst for relationship-building and prioritizing environmental initiatives.
There’s a reason why open communication is one of Lam’s Core Values—we believe it translates to mutual success. This holds true for our approach to engaging suppliers to drive joint progress on climate action, human rights, and other issues related to ESG. By investing in close, collaborative partnerships, we can build a stronger semiconductor ecosystem and future for all.”
chief operating officer at Lam