Sustainability Management｜Message from Management

Looking back at the challenges we faced, especially the supply shortages in 2021 and 2022, we recognize the strategic adjustments we made in our ongoing journey to become an invisible champion. However, the journey to becoming an invisible champion has no end, and it perfectly aligns with our goal of pursuing business resilience. Every dedicated colleague at Nuvoton Taiwan and Japan has worked diligently to create the best interests for our shareholders and contribute profits back to society. We have a diverse product portfolio spanning eight business groups, with three in Taiwan, including a 6-inch wafer fab, and five in Japan, leveraging unique advantages in product diversification. Therefore, in 2023, despite facing a challenging economic environment and overall market contraction, our team's unwavering commitment and hard work, along with Nuvoton's diversified business group structure, have allowed us to successfully enter 2024, utilizing our unique advantages in product diversification. In the future, we should focus on key concepts that connect our invisible champion status with business resilience, including market share, globalization, and customer proximity. These three key priorities will drive our continued success.

In the face of market uncertainty, we are committed to strengthening our market share, thereby solidifying the competitiveness of our product line and laying the foundation for business stability and predictability. Globalization brings both challenges and opportunities. Our diversified product supply will expand our global presence. Establishing a brand on an international scale and maximizing opportunities through our extensive product portfolio. Customers are at the core of our success, and Nuvoton's value comes from innovative ideas that arise from engaging with our stakeholders, carefully listening to their needs, exceeding customer expectations, and maintaining strong relationships. This is an important component of our strategy.

In addition to striving to maintain our operational strength, starting from 2023, Nuvoton has integrated internal and external resources to drive four development pillars in social engagement and climate change, known as the 4E (Empowered, Engaged, Education, Environment). We continue to invest resources and engage with the surrounding community to uphold our commitment to net-zero emissions and actively pursue our carbon reduction blueprint. We collaborate with external partners and leverage resources to create social impact. We also continuously strengthen our corporate governance structure and establish a robust internal control system. Lastly, through this sustainability report, we demonstrate our performance and commitment in various aspects. We maintain close relationships with stakeholders and continue to cultivate towards a net-zero future.

Nuvoton Taiwan President

In 2023, we faced market volatility and economic recession in the global market. However, through the resilience and teamwork demonstrated by New Tang, we successfully navigated through a challenging year. Moving forward, Nuvoton will continue to:

Adapt to the changing landscape.

The world around us continues to rapidly evolve, and therefore in 2024, we prioritize enhancing our competitive advantage, optimizing internal processes, and improving productivity.

Closer to the market, closer to the customers.

By establishing closer partnerships, we aim to respond to customer needs and desires more quickly. Customer-centric innovation will be our guiding principle. We will adjust resource allocation to develop products and technological advancements, thereby consolidating long-term competitiveness.

Embrace agility, embrace success

In the face of rapid change, be agile and bold, and expand skills to pursue excellence and push boundaries in our work.

Therefore, under the aforementioned direction and planning:

Nuvoton continues to innovate in its existing product line, actively expanding into solutions related to electric vehicles, smart manufacturing, cloud computing, and renewable energy. This optimization of the company's product portfolio showcases Nuvoton's robust capabilities in innovation and technology development. Additionally, Nuvoton views research and development innovation as the driving force for sustainable transformation. Through advanced technology research and development, Nuvoton aims to conserve raw materials, improve product execution efficiency, and reduce power consumption. For example, the new 32-bit microcontrollers have reduced their size by 40% compared to the previous generation, while reducing both execution and standby power consumption by nearly half, achieving advantages in chip power saving and size reduction. Nuvoton has also received external recognition for its product innovation achievements. The high-performance NuMicro® M467 series microcontrollers, which feature network communication and powerful hardware encryption capabilities, have been optimized in combination with Skymizer neural network technology to provide leading inference performance for machine learning in high-efficiency embedded systems. This achievement earned Nuvoton the EE Awards Asia 2023 - Best MCU/Driver IC Product of the Year. Nuvoton will continue to enhance the development path of green products and green processes. While pursuing operational growth, Nuvoton aims to increase product performance and reduce environmental impact through design, adhering to the operational vision of being the "invisible champion of green semiconductor technology enriching human life." This vision serves as the foundation for Nuvoton's long-term strategy and industry layout. Nuvoton is committed to providing responsible feedback to stakeholders such as customers, investors, shareholders, and employees to achieve the company's sustainable business goals.

Nuvoton Japan President

This report is the first to include the activities of our subsidiary, Nuvoton Japan, within the scope of Nuvoton's ESG initiatives. In 2020, Nuvoton integrated the Panasonic semiconductor business which boasts a 60-year history, adding to our global R&D capabilities. Beyond focusing on the integration of finance, R&D, quality, environmental safety and health, and human resources, Nuvoton Japan, as an integral part of Nuvoton's global operations, also actively promotes the participation of our Japanese employees in implementing our three main pillars: commitment to the environment, our customers, and social contribution. This includes achieving a reduction of more than 50% in Scope 1 and Scope 2 emissions by 2030 compared to 2020, and collaborating with suppliers on reducing Scope 3 emissions. We are dedicated to developing smaller, low-energy, high-efficiency environmentally friendly products for our customers, with a goal of reducing new product energy consumption by more than 15% by 2025. We engage with local communities through cleanup activities and also attract potential outstanding employees through scholarships and student loans, with plans to increase the employment rate of people with disabilities in the future, demonstrating Nuvoton Japan's emphasis on and care for society.

Chairman of the Sustainable Development Committee of Nuvoton Taiwan

Nuvoton has set a long-term target of achieving net zero emissions by 2050 and has established short-, medium-, and long-term goals to actively respond to the global trend of net zero emissions. Nuvoton has implemented and certified an Energy Management System (ISO 50001) to reduce indirect CO2 emissions caused by burning fossil fuels during electricity usage through systematic and traceable energy-saving plans. For Scope 1 and 2, Nuvoton reviews its operations and manufacturing processes, installs greenhouse gas treatment equipment to reduce energy consumption, decrease emissions, and improve operational efficiency.

  Nuvoton is also actively increasing its renewable energy capacity, with its installed solar power system expected to generate 880,000 kWh of green electricity annually. In Scope 3, the company continues to collaborate with suppliers to collect greenhouse gas inventory data across the supply chain and helps customers reduce energy consumption during product use through improved product performance, thus achieving energy savings and carbon reduction.On the path to carbon reduction, Nuvoton aims not only to move quickly but also to progress alongside its partners in the value chain. Nuvoton adheres to a "people-oriented" philosophy, considering talent as key capital for sustainable development.

The company emphasizes talent cultivation and development, strives to create a friendly workplace, and provides a safe and healthy working environment. By implementing a comprehensive human resource management system and optimizing human resource integration, Nuvoton continually promotes a people-oriented corporate culture and enhances employees' sense of belonging.Practicing sustainability is a long-term journey.

Nuvoton will continue to enrich human life through green semiconductor technology and actively promote various carbon reduction measures. By collaborating with more partners who share ESG-related values, Nuvoton is committed to becoming a green enterprise dedicated to sustainable development.

Chairman of the Sustainable Development Committee of Nuvoton Japan

NTCJ is committed to environmental, social, and governance (ESG) activities to achieve a sustainable society and aims to be a company trusted by society. The year 2023 marked the beginning of NTCJ's ESG activities, during which we established a new system in collaboration with NTC Taiwan. This system is designed to advance the activities of Taiwan and Japan as a whole. We have established seven major sustainability working groups, each dedicated to disclosing the details of our corporate sustainability activities and performance to all stakeholders in a transparent and open manner to gain understanding and trust.

Through regular integration meetings among the seven working groups, we share progress on various activities and set future short-, medium-, and long-term goals. This promotes a unified direction for corporate sustainability management for both NTC Taiwan and Japan. We anticipate that, through solid planning, we can simultaneously grasp risks and opportunities, laying the foundation for achieving our goals. It is crucial to turn our aspirations into actions, continuously creating value through semiconductors to achieve sustainable development in human society,  and working proactively with a sense of mission.

Nuvoton has a clear vision: "Be a hidden champion in providing sustainable semiconductors to enrich human life." We will continue our efforts to contribute to the realization of a sustainable society.