Governance and Ethics
Ethics and Suppliers
ADI designs, manufactures, and markets a broad line of high-performance integrated circuits (ICs) that incorporate analog, mixed-signal, and digital signal processing technologies. We produce and market several thousand products. Information on our products can be found in our latest Form 10-K report filed with the SEC and posted on our website.
Our goal is to develop a meaningful and lasting relationship with ADI suppliers. Our products require a wide variety of components, raw materials, and external foundry, assembly, and test services, much of which ADI purchases from third-party suppliers. We have multiple sources for many of the components and materials that are purchased and incorporated into our products. However, a large portion of our external wafer purchases and foundry services are from a limited number of suppliers—primarily Taiwan Semiconductor Manufacturing Company.
The ADI Purchasing Council has a procedure for purchasing materials from its suppliers. Approximately 40 of the material suppliers are considered to be key suppliers. Where appropriate, raw materials and critical indirect materials are either dual sourced or have an identified second source. The ADI Purchasing Council, in conjunction with the Subcontractor Management Organization, oversees the work of Taiwan Semiconductor Manufacturing Company and the test and assembly subcontractors in Asia. ADI has developed a series of specifications to define the ADI Supplier Management Policy for materials and services.
ADI expects suppliers to adhere to the same business ethics and human rights standards ADI has set for itself. ADI’s policy is to perform FCPA (Foreign Corrupt Practices Act) checks on all new suppliers being added to ADI’s supplier master file, and ADI provides new suppliers with a copy of the ADI ethics statement and requests acknowledgment from the supplier. The Agreement on Responsible Business Conduct which includes human rights clauses is implemented broadly to all suppliers. 100% of our suppliers have signed an Agreement on Responsible Business Conduct.
ADI suppliers must demonstrate proven quality, effective process controls, financial stability, competitive pricing, on-time delivery, and commitment to continual improvement in all aspects of their business. Suppliers are audited for conformance with ADI requirements and other purchasing conditions. This audit schedule is determined based on a risk management process. All new suppliers are audited prior to their acceptance.