Recently, Intel released the "Corporate Social Responsibility Report 2022-2023", which shows that Intel has completed its goal of $2 billion in procurement expenditures from diversified suppliers eight years ahead of schedule . In this regard, Jackie Sturm, Vice President of Global Supply Chain Operations of Intel Corporation, wrote an article, sharing the strategy adopted by Intel to achieve its goals, emphasizing the important value of a diversified supply chain, and explaining that in the future, it will continue to promote supplier diversification and build a more inclusive supply chain.
Three years ago, Intel announced an ambitious goal: to increase annual purchases from diverse suppliers worldwide to $2 billion by 2030. Today, we proudly announce that in 2022, Intel's annual diversified supplier procurement amount has reached US$2.2 billion, achieving the goal eight years ahead of schedule. This achievement has increased by nearly 15 times compared with the total annual procurement when the supplier diversity plan was launched in 2015, and doubled compared with 2019.
Intel has always been committed to building a more inclusive supply chain, and it is thanks to this that we can give full play to our procurement capabilities and contribute to addressing social disparities in the practice of pursuing business fairness.
Intel's incentive programs and incentives for diverse suppliers are key to achieving these goals ahead of schedule. In addition, the rapid expansion of Intel's global manufacturing business in the past few years has also created favorable conditions for us to introduce more supplier resources.
Promote the construction of a diverse and inclusive semiconductor ecosystem
In 2015, Intel launched a supplier diversity program. At that time, semiconductor manufacturers did not clearly realize the positive effect of diversified suppliers on the entire supply chain. Intel has become a leader in diversity expansion initiatives across the semiconductor industry through incentives and partnerships with the largest non-diversified supplier and industry groups.
In 2016, Intel began to formally invite manufacturing and construction industry suppliers to join the supplier diversity program to jointly create a more inclusive supply chain. Intel uses a "Supplier Report Card" to evaluate supplier performance, and report card points are a prerequisite for selecting the Intel Preferred Quality Supplier Award. We encourage suppliers to establish their own supplier diversity programs through report card points and disclose procurement of diverse subcontractors by Intel contract suppliers. The initiative started on a modest scale, but today accounts for 45% of Intel's full-year 2022 diversity sourcing report total.
In 2018, Intel and the three major cooperative suppliers jointly led the establishment of the International Semiconductor Industry Association (SEMI) Manufacturing Enterprise Diversity (MOD) working group, striving to further deepen the industry's understanding of supplier diversity and explore new development opportunities. Now, the working group, which includes more than 70 companies, diverse businesses and certified NGOs, has defined the first semiconductor supplier diversity baseline standard for the semiconductor supply chain. In addition, the MOD working group is also actively promoting the development of SEMI standards to provide common definitions and best practices for supporting global supplier diversity.
The Multiple Values of a Diverse and Inclusive Supply Chain
Intel's technology impacts people's lives, but beyond that, we also strive to have a positive impact on Intel's supply chain and communities. For historically underserved groups, the development of a diverse semiconductor ecosystem will provide them with an equal opportunity stage, thereby promoting the growth of their communities. By cooperating with diversified suppliers, while improving the resilience of its own supply chain, Intel is also creating new value for the global supply chain system and the communities in which it operates.
Similarly, a diverse and inclusive supply chain is also conducive to stimulating competition and promoting innovation. The different perspectives of diverse suppliers have proven to lead to innovative solutions for Intel customers and stakeholders. In 2022, when a large supplier was unable to provide a key component, a female enterprise supplier successfully filled the supply gap, helping Intel to fulfill its commitment to customers.
Since launching its new Supplier Diversity and Inclusion (SD&I) commitment in 2015, Intel has also seen the direct impact of the escalation of competition within corporate supply chains. 80% of diverse suppliers outperform competitors on Intel's Supplier Report Card program list.
Continue to promote supplier diversification
Since focusing on a multi-supplier strategy in 2015, Intel has gradually exceeded its original commitment. Today, the 2030 goal of diversified supplier procurement that we have achieved ahead of schedule has become a thing of the past, and our steps will not stop. For Intel, supplier diversity does not mean an increase in workload, but has become the way we work.
Intel's procurement team will consistently include at least one diverse company in the bidding process with each new procurement round. For large-scale contract projects that cannot guarantee diverse supplier candidates due to lack of corresponding scale or professional skills, Intel will also clearly state our expectations for diversified procurement during negotiations. Doing so may result in a commitment to diversify sourcing beyond our expectations. For example, the first general contractor for the Ohio project committed 20 percent of its procurement to diversity, exceeding the 10 percent expectation outlined in our supplier diversity strategy. The internal diversified procurement target will continue to be an integral part of Intel's annual employee bonus, emphasizing the importance of diversified procurement not only at the procurement level, but also throughout all aspects of Intel's business.
The business market we are in is still quite severe. At the same time, Intel is also actively implementing the transformation strategy that has been deployed for many years. We should not only set new goals according to the constantly updated progress, but also continue to insist on steady development, and help Intel better realize enterprise transformation by creating more opportunities for diversified suppliers and subcontractors.
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