2019 Supplier List
The NXP Supplier List represents 98 percent of procurement expenditures for materials, manufacturing, and assembly of our products worldwide for fiscal year 2019.
NXP has a strong commitment to sustainability and social responsibility. NXP pursues mutually beneficial relationships with its suppliers and contractors in a collaborative and consultative approach to their continuous commitment to observe the applicable rules of law and to support and respect ethical business, environmental and human right practices. NXP is committed to ensuring that working conditions in our supply chain are safe, that workers are treated with respect and dignity, and that our products and processes are environmentally responsible.
NXP has business relationships with more than 10,000 suppliers globally. Regardless of region, NXP recognizes that innovative thinking, collaboration, and transparency creates long term sustainability. We proactively work with our suppliers to:
Our suppliers range from external manufacturing partners, direct materials suppliers, labor agents, tool and machine manufacturers as well as logistics, packaging services and onsite service providers for NXP facilities and the supplier’s facility. We hold our suppliers accountable for responsible conduct and performance by requiring them to comply with applicable laws and regulations as well as the NXP Supplier Code of Conduct.
NXP’s suppliers commit in all their activities on behalf of NXP to operate in full compliance with the laws, rules, and regulations of the countries in which they operate. In addition, NXP's suppliers are expected to comply with the NXP Supplier Code of Conduct.
The NXP Supplier Code of Conduct is based on the NXP Code of Conduct and the NXP Auditable Standards on Social Responsibility, and draws on internationally recognized standards to advance social and environmental responsibility. The NXP Supplier Code of Conduct consists of standards relating to labor and human rights, health and safety, environment, business ethics, and elements of an acceptable system for managing code conformity. The NXP Supplier Code of Conduct uses the structure and contains language from the Responsible Business Alliance (RBA) Code of Conduct, version 6.0 and recognized standards including the Universal Declaration of Human Rights (UDHR), the International Labour Organization (ILO) standards, Social Accountability International, OECD Guidelines for Multinational Enterprises and the Ethical Trading Initiative (ETI). Using the listed references, the NXP Supplier Code of Conduct also includes elements, modifications and clarifications from our audits conducted internally and externally according to best practices found.
The NXP Supplier Code of Conduct is owned by the Sustainability Office and is approved by the Social Responsibility board, consisting of executive and non-executive NXP leaders. The Supplier Code of Conduct, last updated in 2018, is reviewed annually to determine the need for revision based on changing social and regulatory landscape, industry changes or customer requirements and expectations.
The NXP Supplier Code of Conduct consists of standards relating to labor and human rights, health and safety, environment, business ethics, and elements of an acceptable system for managing code conformity.
Suppliers must adopt or establish a management system that is related to the content of the NXP Supplier Code of Conduct. The management system must be designed to ensure (a) compliance with applicable laws, regulations, and customer requirements related to the supplier’s operations and products; (b) conform to the NXP Supplier Code of Conduct; (c) identify and mitigate operational risks related to the NXP Supplier Code of Conduct; and (d) communicate the requirements to their suppliers.
Our goal is to have 100% of our key suppliers sign our statement of conformity to the NXP Supplier Code of Conduct, to conduct annual risk assessments across the supply chain and audit our key suppliers that are identified as high priority using a third-party audit firm. All corrective actions identified in the supplier audit must be closed at a minimum 80% closure rate within the agreed upon time frame. It is also our objective to collaborate and provide guidance on best in class opportunities for our suppliers. Responsible sourcing of minerals must have 100% certified smelters.
Looking forward, our goal is to continue to decrease the number of audit non-conformances, and more importantly, priority violations. These results help determine the effectiveness of our standards within the supply chain.
NXP’s purchasing policies require our suppliers to commit to the NXP standards and with the laws of the country or countries where such suppliers conduct business. In 2015, NXP inserted language into our supplier contracts that require suppliers to abide by the NXP Supplier Code of Conduct. Suppliers submit a signed conformance letter stating that they abide by the NXP Supplier Code of Conduct prior to conducting business with NXP. If no contract is in place, or the contract does not contain the Supplier Code of Conduct language, because the contract was executed prior to 2015, then NXP asks for a separate signed document that requires the supplier to abide by the NXP Supplier Code of Conduct.
Key suppliers go through an annual Supplier Risk Assessment and we identified 160 suppliers that were considered high-priority suppliers. High-priority suppliers may be required to complete an NXP Self-Assessment Questionnaire and participate in an onsite audit.
NXP works with suppliers to meet our standards. We provide suppliers with opportunities to rectify problems and implement a corrective action plan. It is our goal to collaborate with our suppliers to make an impact within the supply chain. In the rare instance that a supplier is unable or unwilling to meet our requirements and work on a corrective action plan, NXP will escalate according to management processes to determine the business relation status with the supplier, which could lead to termination of the business relationship.
NXP suppliers must have adequate and effective written recruitment and employment policies and procedures that take measures to ensure compliance with laws in the sending and receiving countries. Suppliers must ensure workers are not required to pay fees, deposits, or have debt repayments for their recruitment or employment. Suppliers cannot require workers to participate in any form of forced savings or loan program where repayment terms are indicative of debt bondage or forced labor. Suppliers must provide the worker, prior to departure or hiring, with accurate written details of working conditions in the host country, including nature of work, wages, benefits, and duration of contract in the workers' native language. Suppliers must not require workers to surrender personal documents. Suppliers must also ensure the same with its employment agencies. Suppliers must ensure that workers are free to leave their employment upon giving reasonable notice, with no penalty. Suppliers must not place unreasonable restrictions on movement of workers and their access to basic liberties. Suppliers must clearly communicate the NXP’s Supplier Code of Conduct or comparable requirements pertaining to recruitment of workers. Suppliers must regularly evaluate the employment agencies on their performance and conformance against these requirements.
NXP has adopted an Employer Pays policy in the recruitment of workers. This policy is a clear contractual agreement with partners in our supply chain. The NXP Employer Pays policy requires that the supplier is responsible for payment of all recruitment fees and expenses. Such fees and expenses include, but are not limited to expenses associated with recruitment, processing, or placement of workers.
Additional details on NXP’s efforts to investigate ethical recruitment practices is available in our ethical recruitment documentary.
NXP is required to provide information and evidence to its customers of compliance to the European Union‘s Directive on the Restriction of Hazardous Substances (RoHS), and other product regulations such as Registration, Evaluation, Authorization and Restriction of Chemicals (REACh). Suppliers must meet the requirements of the NXP “ECO-Products Substance Control for Products and Packaging requirements. The supplier must provide NXP with full material content declarations and provide annual analytical test reports performed by a third-party laboratory certified to IEC 62321. For all material groups, specific substances are analyzed annually at a homogeneous material level to verify compliance with the NXP requirements. NXP’s halogen-free initiative specifically targets materials that should not contain halogens and antimony oxides above the established limits. Suppliers must certify that they have gathered and verified information about substances present in raw materials, parts, or products it supplies to NXP using appropriate methods (i.e. internal design controls, declarations and analytical testing) to ensure its accuracy and completeness and attest that such information is true and correct to the best of their knowledge.
Suppliers must have a policy to reasonably assure that the minerals in the products they supply are responsibly sourced around the world. Suppliers must exercise due diligence, in accordance to the Organization for Economic Developments Due Diligence (OECD) Guidance, on the source and chain of custody of these minerals and make their policies and due diligence measures available to NXP upon request. In addition, suppliers must submit a valid conflict mineral reporting template, and or another template to NXP when requested.
All suppliers, approximately 10,000, are included in our annual risk assessment analysis. The risk assessment identifies suppliers that are at risk of having human rights issues such as forced/bonded labor, migrant worker index, decent wages, humane treatment, child labor risks and health and safety.
As part of our annual risk assessment, NXP engages with Versik Maplecroft and Verité Cumulus to identify forced labor and human trafficking risks in our supply chains. Versik Maplecroft provides NXP with a screen of our supply chain for inherent risk and predictive models in areas such as forced labor, child labor and working conditions. Verité Cumulus provides NXP online technology to identify forced labor and human trafficking risks with our labor agents. Cumulus maps and assesses our labor agents in both the receiving and sending countries and their recruitment practices.
Three risk criteria are considered when assessing a supplier: geographical risk, product risk and business criticality. Each criterion has a scale of maturity of 1 (lowest risk) to 10 (highest risk). All criteria are scored and a product of the three is the overall risk score of a supplier.
Our high priority suppliers below are mostly in Asia where the top four high risks countries are Taiwan, China and Malaysia.
NXP’s social responsibility audit is a collaborative and consultative process aimed at guiding suppliers and ensuring they meet the NXP Supplier Code of Conduct and the requirements of the NXP auditable standards. The NXP auditable standards apply to all NXP suppliers, contractors onsite service providers, labor agents and external manufacturers.
Audits of our suppliers can be announced or unannounced and are conducted by an approved 3rd party audit firm and accompanied by, at a minimum, a NXP certified RBA Lead Auditor. It is NXP’s principle to understand the issues that arise during an audit, verify that the audit is conducted per the NXP auditable standards and provide consultation after the audit if the supplier has challenges.
NXP supplier audits analyzes three main aspects: 1) documentation reviews, 2) management and private worker interviews and 3) physical inspection of facility and dormitories (if applicable). Audits also include interviews with labor agents and onsite service providers for that supplier facility such as janitorial, canteen, security and others. The NXP Social Responsibility Audit program is conducted in accordance with the following process flow:
If you’d like more information regarding our audit program, please watch our video about the Social Responsibility Audit.
Training is focused on our suppliers and the suppliers onsite service providers. The mode of training can be a one-to-one consultation training, a 2-hour classroom training or through a webinar session, conducted by the NXP Social Responsibility team with support from the site subject matter experts. The training is the full requirement of the NXP Supplier Code of Conduct. Supplier training is done:
Coaching the supplier of best practices and providing RBA’s eLearning academy are also a part of our supplier trainings.
Each year we report publicly on our supplier’s annual top audit non-conformances. Each month key performance indicators are reported to the Sustainability Office on topics such as violations and non-conformances from the supplier audits, signed conformance letters from our supply chain, corrective action plan closure rate and quarter over quarter risk indicators within our supply chain.
Reports are reviewed by the Social Responsibility Board, composed of NXP executive and non-executive leadership annually. The board meeting discusses the progress that has been made, areas for improvement and new targets. Quarterly reviews are conducted with the Ethics Committee. Monthly reviews are conducted with the Quality leadership team. Monthly meetings are conducted with purchasing managers (sometimes weekly) to discuss key supplier audit results, the corrective action plan and their progress towards closing out their non-conformances.
NXP monitors improvement by measuring the number of priority violations, repeat audits, frequency of non-conformances, and the closure rate of all violations.
NXP measures our supplier’s improvement by monitoring and approving the Corrective Action Plan. The Corrective Action Plan is a tool for communication to NXP on how issues will be remediated. An effective Corrective Action Plan includes remediation plans that fix the violation and create a management system to prevent the issue from reoccurring.
NXP is committed to work with our suppliers and their workers to remedy any adverse impacts through collaboration.
Suppliers are required to have workplace grievance mechanisms in place that ensure the confidentiality, anonymity and the protection of whistleblowers. The grievance mechanism must be available in the workers languages. Suppliers must train their workers on the grievance mechanism and communicate the process to their workers, so they can raise any concerns without fear of retaliation. Suppliers must state in a policy that it shall not tolerate any retaliation by management or any other person or group, directly or indirectly, against anyone who, in good faith, makes an allegation of misconduct or wrongdoing, or helps management or any other person or group investigate an allegation. Suppliers grievance mechanism must also be made available to their suppliers.
During a supplier audit, the auditor tests the grievance mechanism thoroughly. During a private worker interview, questions regarding the knowledge of ways to report a grievance is discussed. After the interview, the auditor provides the worker with the NXP 3rd party grievance card in which they can use at any time for any reason and can report in local language anonymously. NXP acknowledges that we are putting the worker in a vulnerable situation by privately interview, where potential negative impacts could occur, such as retaliation or discrimination. NXP addresses this by providing the NXP grievance mechanism and an agreement with the supplier that retaliation or discrimination will not occur. Any cases of retaliation reported will initiate an investigation and if substantiated, NXP will take the appropriate measures that may involve termination of business with that supplier.
In Action: Engaging with the foreign migrant workers prior to departure and after arrival is another opportunity for NXP to listen to the workers voice as well to verify that our standards are being followed. NXP conducts interviews with the workers prior and after arrival to NXP to gain more knowledge of the recruitment process, if fees were paid, if they were trained, understand their contract and know who to contact for any concerns.
We monitor and assess compliance and investigate each allegation. All reports are brought to the attention of the NXP Ethics Committee. The Ethics Committee then puts together an investigation team with experts not connected to the people or business involved. The investigation team shares its findings with the Ethics Committee, which subsequently works together with the relevant business owners on possible follow-up actions. When a problem is detected, we analyze the root cause and modify the relevant internal control system to prevent a possible recurrence. Acknowledgement of complaints are sent as soon as possible after receiving the complaint and are updated regularly.
We track the company's compliance performance and report progress on a quarterly basis to the Chief Financial Officer, General Counsel, Human Resources and the Audit Committee of our Board of Directors.
100% of key suppliers, whom have been identified through the annual risk assessment based on key commodities, have a purchase amount greater than $500,000 USD and are in the Maplecroft risk profile, have committed to the NXP Supplier Code of Conduct. We once again conducted the annual supplier risk assessment to determine our audit schedule for high priority suppliers.
In 2013, NXP began auditing suppliers and has since audited 158 suppliers, with 17 announced audits occurring in 2019, 4 of the 17 audits were verification audits. During an audit, worker interviews are conducted in private and at random in which we take the square root of the worker population to determine the number of worker interviews to be conducted. During our 2019 audits, 286 random worker interviews were conducted with 31.1% male and 68.9% female population with varying length of service and age range.
The trend of non-conformance in our supplier audits shows a consistent decrease since 2016.
Freely Chosen Employment, Emergency Preparedness and Wages and Benefits represents the top three non-conformances.
While the top non-conformances are an indicator for NXP to improve on within our supply chain, it is also valuable to understand which category the priority violations are falling within. Investigating the number of priority violations found in 2019, it was clear that No Fees was the highest priority violation in our analysis. Three of the four suppliers have repaid the fees to the workers. Dialog with the remaining supplier is ongoing to close out this finding.
The analysis below shows that our average number of findings and our average number of priority findings are decreasing since 2016. Our standards are making a difference as our suppliers are implementing them into their business practices and management systems.
In 2018, we set a goal to close out 80% of our supplier non-conformances within the 90-day timeframe. We chose this key performance indicator as a baseline threshold for 2018 as we are aware that some corrective actions take longer than the 90-day requirement due to those non-conformances that require monetary investments to comply with the NXP standards. Since the beginning of the supplier audit process, our closure rate was approximately 40%. With continuous collaboration with our suppliers, our closure rate for 2019 has increased to 85% compared to 71% in 2018.
NXP takes responsible mineral sourcing seriously and we have taken the steps to trace the relevant raw materials used in products back to the smelter level. We promote responsible sourcing and address risks associated with mining operations in high-risk and conflict-affected areas.
Responsible sourcing also requires due diligence to ensure the materials we use meet our standards. NXP does not generally use minerals in their raw form or purchase them directly from mining companies or smelters so we engage with our suppliers to prevent human rights abuses and other negative impacts associated with the mining of minerals.
The suppliers that we audited had 100% compliance to the provisions of our auditable standards. These standards require suppliers to exercise due-diligence in accordance with a recognized due diligence framework such as the Organization for Economic Developments Due Diligence Guidance (OECD) to assure minerals do not contribute to human rights abuses in high-risk and conflict-affected areas.
In addition to our standards, NXP follows the OECD Due Diligence Guidance and participates in multi-stakeholder initiatives such as the Responsible Minerals Initiative and the European Partnership for Responsible Minerals (EPRM), which provides tools we use to map the minerals and verify that smelters and refiners source minerals ethically.
NXP discloses our smelters names and country origin in our CMRT as well as actions taken and due diligence in the Form SD. In addition to our SEC filings, our commitment and policy can be found on our website as well as various industry associations we are actively participating in to address the human rights associated with the mining of these minerals. Based upon the information obtained, NXP does not knowingly use minerals derived from conflict regions that directly or indirectly benefit armed groups that are perpetrators of serious human rights abuses.
Going above and beyond our legal requirements of 3T&G, NXP is also assessing the use of mica and cobalt in our products. As of 2019, NXP products do not use mica and only small amounts of cobalt. We are in the process of mapping our cobalt supply chain to determine if any human rights issues are present.