80th

ANNIVERSARY

SMIC CSR REPORT

2017- 2018
Senju Metal Industry Group CSR Report

Senju Metal Industry Co., Ltd.
Senju Hashido-cho 23, Adachi-ku, Tokyo 120-0038, Japan
TEL. (81)3-3888-5151 FAX. (81)3-3870-3032
www.senju.com/en/©2018 Senju Metal Industry Co., Ltd. All rights reserved.

CONTENTS

LOOK AT THE WO R L D
SMIC is commemorating its 80th anniversary in 2018.
During the past 80 years, we have contributed to global manufacturing industry with1
3
4

Editorial Policy and Table of Contents
Message from the PresidentManagement Philosophy

		 Special Topic

5913

Future Expectations Toward SMIC

19

What Changes, What Doesn't change,
and What Must Not Change

23

Disclosure of Information on Key
Challenges, SMIC Group CSR Basic Policy

A Brief Look At The Past 80 Years
The Products
That Became a Turning Point		 Economy

our original soldering technology, with the corporate vision of fulfilling our mission as a25

public institution by supplying our own products to the world.

Corporate Governance and Financial
Status		 Society

We will continue existing as a company that makes social contributions with a global

26

perspective, connecting our future to the world of 90 or 100 years ahead.

27
28

Relationship Between Customers andEmployees

Relationship with Suppliers
Relationship with Local Community

		 Environment

29
30

Editorial Policy

SMIC strives to report on key challenges and topics of high social importance in order to determinemateriality. We declare that this report complies with the "core" requirements of the GRI standards.
Furthermore, SMIC presents its reports on: "society", "environment" and "economy", and provides
reporting of results of the business activities that aimed to solve social problems.
Note: The photographs published on the cover and this page were taken in August 2018 at the Kinugaoka Plant.

CSR Information of SMIC

www.senju.com/en/csr/

Email address

web@senju.com

Period covered
Scope of report

April 1, 2016 – March 31, 2018 (includes some information from April 2018 and later)
26 group companies (includes non-consolidated subsidiaries and associated companies):
Note that SMIC's environmental initiatives are listed separately.

Changes in this period One (1) non-consolidated subsidiary closed.
Membership
RBA, JWES, JIEP, JEITA, JAPIA, TEA, JCCI (Note)
Note:
		
		
		
		
		
		

Publication history
Current issue
Next scheduled issue
Reference guidelines

1 RBA: Responsible Business Alliance
2 JWES: Japan Welding Engineering Society
3 JIEP: Japan Institute of Electronics Packaging
4 JEITA: Japan Electronics and Information Technology Industries Association
5 JAPIA: Japan Auto Parts Industries Association
6 TEA: Tokyo Employers’ Association
7 JCCI: Japan Chamber of Commerce and Industry

November 2018 ( previous issue: October 2017 )October 2019
GRI standards, Environmental Reporting Guidelines, ISO26000*The GRI standards comparison table will be posted on our CSR website.

1

SMIC CSR REPORT 2017-2018

Eco-Factories

Activities for Preserving Biodiversity

Disclaimer This report contains descriptions of plans and strategies
pertaining to the future activities of SMIC, as wellas predictions and forecasts related to its businessperformance. Such descriptions include estimates,
judgments and opinions formed by information gathered
and analyzed based on what're available at the current
time. Please be aware that SMIC and its relatedcompanies will assume no responsibility whatsoever fordamages or losses occurring directly or indirectly from theuse of the information or content included in this report.
Also, the original text of this report is written in Japanese
language and has been translated into English language.
If there are any discrepancies between the Japaneseversion and the English versions, the Japanese version
shall supersedes. Please be aware that SMIC assumes
no responsibility whatsoever for any and all damages
occurring from translated version other than Japanese.

SMIC CSR REPORT 2017-20182

M essag e fro m th e Pre s id e nt

Management Philosophy

Perform our mission as a socially valued institution via providing
universally beneficial products

Look at the world── Connecting the future ──
President Ryoichi Suzuki“company” is a place where all employees share core values and are able to use the lines of communication
as a “dojo” for the mastery of oneself. It is our strongest desire that company growth is directly interwoven
with employee happiness – materially and spiritually. In the face of modern society, as the foundation of acompany’s existence, we are expected to continue to provide universally beneficial products year after year.
Our management philosophy is to harmonize societal goals with employee desires, thereby enabling our
mission to be a valued institution sharing peace, happiness and progress to all of society.
Three key pillars are necessary under this philosophy in order to advance company development and ensure
the success of our mission: Ability, Integrity and a Fighting Spirit. These pillars are the three sacred treasuresthat form the cornerstones of every aspect of life.

This year we are celebrating our 80th anniversary. After the establishment of the company as Senju Lead WorksCo., Ltd. in 1938, we experienced a variety of turning points in our journey to become a global business.

When these pillars are indomitable inside our institution, a bright, peaceful and vigorous workplace will
naturally emerge. We are confident that with this workplace as a driving force we will overcome any challenges
and the company will continue to grow as long as this pioneering spirit is encouraged each and every single
day. Together, let’s take this philosophy to heart and embrace it as our belief, and build a bridge of peace andfriendship across the entire corporate landscape while progressing into joyful, healthy lives.
The late Mr. Senju Sato
Honorary Chairman

The CSR report for this fiscal year is a special edition that commemorates our 80th anniversary and takes you

As president:
As chairman:
As honorary chairman:

through our corporate journey of the past 80 years. With the theme "Look at the World ─ Connecting the Future",
we look at the our natural environment, economic climate, technological breakthroughs, and human resources on a
global scale as a company that continues to be a social contributor while connecting us to the future.

June, 1960 – June, 1978
July, 1978 – May, 2008
June, 2008 – October, 2008

June, 1960

Sustainability and Value Creation
As a global enterprise, SMIC contemplates how to coexist with nature. We promote the expansion of our eco-friendly
products such as lead-free solder M705 series and halogen-free paste, in addition to energy-saving production activities,

Sekido Museum of Art

The Sekido Museum of Art located at the SMIC headquarters and is operated by The Satoh Artcraft Research & Scholarship Foundation.

zero emissions waste products, and chemical management. We have also made our products by sourcing conflict-free

The Foundation was established in May 1979 with the startup capital from SMIC and its then president the late Mr. Senju Sato, and etminerals to promptly comply with the U.S. Dodd–Frank Act enforced in 2013. Furthermore, we minimize overheating in

al. The mission of the Foundation is to promote international cultural exchange, mutual understanding, and promotion of our national

our soldering applications as much as possible and promote the use of products such as low temperature solder paste

culture through exhibiting art and craft.

that suppresses the CO2 emissions.

As part of the efforts to promote cultural activities, the Sekido Museum of Art was opened on April 15, 2006. The museum exhibits

We have made sustainability of our environment, society, and economy our major theme, and we promote theprimarily earthenware from around the world, pottery and Buddhist sculptures, bronze ware, and jade stone as well as many "Nishiki-e"creation of added values through our business activities.

or multi-colored woodblock printing by Katsushika Hokusai and Utagawa Hiroshige that are associated with the Senju area, where theNow, we are looking forward to welcome a new era by expanding our outlook on diversity and by promoting themuseum is located.

hiring of candidates with disabilities.

Work-style Reforms for Bringing Energy into our Corporate Management
There is a pressing need to create a comfortable workplace for all and to train the human resources by promoting
work-style reforms in Japan. We will make every effort to reduce overtime work, which is a major issue especially inJapan, and make further improvements to our work environment and enhance various benefit programs.
As a company we are providing support for child and elderly care to achieve an optimum work-life balance andoffering opportunities for various educational programs to enrich and fulfill the needs of not only existing employees
but all dedicated employees, regardless of gender or experience.
Furthermore, to improve both the work environment and experience, we will automate our manufacturing
equipment, adopt IoT technologies, and incorporate AI wherever necessary and appropriate.
We have been creating high quality products together with our customers and supplying eco-friendly products toprotect our society and environment for a long time. We are committed to continue making contributions to oursociety by forging ahead toward our 90th and 100th anniversaries.

3

SMIC CSR REPORT 2017-2018

SMIC CSR REPORT 2017-2018

4

TALK SESSION

Future Expectations Toward SMIC
Since its establishment, SMIC has been contributing to the industries for 80 long years.
A group of researchers had met to discuss the future of the company as well as their own with Chief Executive
Advisory Engineer Toshihiko Taguchi (of Taguchi Laboratory), who is leading our technology sector.
The bridge in the background in the picture is the Great Senju Bridge (Senju Ohashi) directly behind our headquarters.
Senju Ohashi was built in 1594, soon after Tokugawa Ieyasu entered Edo, and has been in existence now.
Throughout our history from the past to the present and to the future, we continue supporting the lives of the people.

expertise and experience.

Taguchi: Ms. Asami, I learn you are active in fundamental research.

Taguchi: It's important to listen to customers' feedback. Do you

We have great expectations from you! One of our key strengths isregularly communicate with your overseas customers?

how we flexibly respond to customer needs, and that's impossible

Muraoka: Yes, my focus is on the Chinese market. So I regularly

without a solid basic research. Another merit of our company is how

communicate with Chinese people during business trips and the like.

we value teamwork.

It is indeed challenging to effectively communicate with the overseas

Asami: I agree. It is fun to work in a team and there are a lot of things

customers.

we can learn from each other. In addition to work being enjoyable,

Taguchi: I can imagine the stress and the sense of responsibility

the environment is encouraging and I gain different perspectives

when representing the company in front of the customers. But I

about my work from other team members.

believe experiences are important, because those experiences result

Miyagi: I primarily work in developing solder paste. SMIC developedin "being developed while being nurtured by customers."

Taguchi: Yes, that's right! While we are working on developing a

the product M705-GRN360 during the time when the industry was

new product, nobody can predict whether it will sell. By the timetransitioning to lead-free products, and this product has been trusted

the developed product is in the market, I am already working on

by customers for almost 20 years now. Product development is notModerator: I would like to know from our young researchers,

something else. So I often find out about a product is a hit after I had

at all simple. Perhaps there are many difficulties to overcome, but mywhat kind of aspirations or dreams do you have while working

forgotten about it. We are researchers, so it is the development thatgoal is to develop a new quality product that surpasses this product.

Moderator: Are there any more questions to our Chief Executive

at SMIC?

we enjoy the most. It is rare for a developed product to sell well right

Taguchi: The higher your goal is, the better the outcome will be.

Advisory Engineer Mr. Taguchi?

Sugii: Our products such as solders and bearings are indispensableaway. Besides, sometimes the products we aren't confident about

Our customer demands shape our developmental objectives andMuraoka: Have you ever experienced unhappiness or dissatisfaction

products for manufacturing of electronic appliances, electronics,

during development phase turn out to be successful selling well.

willingness to respond to their needs are important. Besides, wewith your R&D work to the degree you experienced strong workand automobiles. Although our brand may not be widely known,

Therefore, perhaps a good approach is to invest all of one's energy

are having to respond to increasing diversified demands from ourrelated pressures? How did you cope with it?

our products are used in almost all products used by commonand focus on development and be confident that the product will

customers. I believe our product line will also be increasing more

Taguchi: One of the most difficult times I recall was when I working

households. I am extremely proud of that fact, and I wish that thesell well at some point. We must also remember that the after-sales

diverse to meet these demands.

with solder development for camcorders. The demands fromproducts developed by my team be widely used everywhere in thefollow up with customers is critical to our business. Hence, it is also

Muraoka: I work with flux coated preforms. My objective is to help

the customer at that time far exceeded our existing production

world. Mr. Taguchi, as the Chief Executive Advisory Engineer atnecessary for us to continually improve the products to make sureincrease SMIC's earnings and manufacture the products that cantechnology. The inability to fully meet their demand put me in

SMIC, you have been instrumental in development of a variety ofthat the products we develop are successful.

be popular among customers and be beneficial to the society, ingreat distress knowingly that I was the person responsible for the

products, in particular, solder pastes are now used throughout the

Asami: SMIC has constantly challenged itself to develop new

addition to be able to increase profit for the seller (beneficial fordevelopment of the product.

world.

technology and provide new products to the world. I, too, dream tosellers, buyers, and the society). I wish to work harder to expand my

Muraoka: What exactly was needed? Did you feel collaboration with

We challenge to develop new technology andproviding new products to the world.

Manabu Muraoka

5

reach out to the world with revolutionary products developed by me.

SMIC CSR REPORT 2017-2018

Ai Asami

Toshihiko Taguchi

Chief Executive Advisory Engineer

Hiroshi Sugii

I want our engineers to experience
the fun working with metals.

Nanako Miyagi

SMIC CSR REPORT 2017-2018

6

TALK SESSION Future Expectations Toward SMIC

the manufacturing technology team essential?

interesting and intriguing discovery for me. I even found that their

Taguchi: Yes, that's right. I, along with my colleagues from thecolor and gloss change according to the composition of metals. The

Manufacturing Department, rolled up our sleeves, through many trials

unique gloss of the tin and lead based solder those days arousedand errors and finally we come up with a product that met needs of

Ai Asami

customers. We learned the importance of failing among other things

Joined SMIC
in 2010. Currently involved in the development of solder
paste at the Solder
Technical Center.
PROFILEto learn know-hows. It was a profoundly moving experience when we
finally launched the camcorder, it turned out to be a huge success.
Every cloud has a silver lining! At the time, camcorders were an

my curiosity about them. When the analysis results turned out as
expected, it was exhilarating. I definitely would like all of you toexperience it first hand and pass down knowledge you gain throughyour experience.

advanced product comparable to today's smartphones, every
household had one to capture images of children as they competed

It is necessary to create an environment

in athletic meet in schools.

that embraces diverse talent.

Sugii: As it is apparent from the story you've just shared with us,

Moderator: The number of female researchers recently has

the customer demands and needs are diverse. How do you decide
where to begin?

Asami: Were there any occasions when you could not come up withincreased remarkably. What do you think about this?

Taguchi: In believe it is through exhaustive research study. Ifanything groundbreaking as such? Did it frustrate you or did you feel

Taguchi: I think it's great. If I am not wrong, our hard-working

you gather all available data and study them including related

loneliness?

employee Ms. Asami is a mother of two. I'm really impressed by her

technologies, you will eventually find ways that will lead to resolution.

Taguchi: As I just mentioned, I always did an exhaustive researchability to manage multiple demands.

When I was young, I had to go all the way to the National Diet Libraryon whatever I worked on. But if that didn't lead to a breakthrough, I

Asami: Thank you. Not only I am a mother, but also I am a

to gather data, but it's much easier now, thanks to the Internet. One

shifted my focus on something else.

researcher, it is important for me to generate results of my hard work.

great thing about SMIC is that there are no departmental barriers.

Asami: It's stressful when things don't go as expected.

I am thankful to everyone around me for providing an environment inThis enables everybody in the company cross departmental andTaguchi: Yes, that's right. Therefore, when I reach a dead end, I

which I can continue working and being productive while raising myfunctional communication with others in the company and we

immerse myself in my hobbies or have drinks with friends.

children.

can ask questions to employees from other departments whose

Asami: Mr. Taguchi indeed tries to strike up a conversation with us

Miyagi: Nowadays, there are quite a few working mothers, and somewhen he sees us being stuck. It helps us a great deal in redirectingof them even work at managerial positions. The work environment

our attention to something else.

at SMIC is conducive for women workers to build their career as a

Taguchi: SMIC is like our extended family. The long-cultivated SMIC

professional.

company culture prevails today, even though the company employs

Taguchi: I am glad to hear that. A strong family support is essential

is friendly to women is one of such workplaces.

greater number of employees. I think we have great company culture

to reaching one's full potential at work. Maintaining the balance in

Taguchi: Even though women, may be only able to work reduced

and definitely would like for it to be passed down.

one's personal and professional life is critical not only for a person

workhours, but if they put forward their best effort, that is all that can

Miyagi: Mr. Taguchi, what do you enjoy and treasure most about

but also to the company. I hope SMIC continue striving by fostering a

be expected. Having said that, I don't believe I am conscious in mymetals?

workplace where everyone can realize their potential.

daily interaction and communication with others whether the person

Taguchi: I didn't know anything about solder until I joined SMIC,

Muraoka: I agree. Both men and women may have personal issues,or people I am interacting or communicating with are women or men.

and had never heard of flux. Through observation, I learned thatand I feel the company can create a supportive working environment

Sugii: SMIC is certainly a good workplace for us men as well. When

metals melt and harden at a relatively low temperature. That was anthat all employees are valued. My understanding of a workplace that

we decide on work priorities in our schedule, we based them on

Hiroshi Sugii
PROFILE Joined SMIC
in 2010. Currently involved in the development of flux andsolder paste in theFlux R&D Dept.

Toshihiko Taguchi

Chief Executive Advisory Engineer
P R O F I L E Joined SMIC in 1958. Has held thepositions of Executive Director and General
Manager of the Development & Engineering Div.
Received the Science and Technology Agency
Award in 1990, and the Medal with Yellow Ribbon in
1992. The Taguchi Laboratory was founded in 2008
in the honor of his contributions to the company,and he became the first Director of the laboratory.
Received The Japan Welding Engineering SocietyAward in 2011.

work itself. Sometimes, manager will offer an advice by suggestingthat it can be later.
Taguchi: When it comes to making work related improvements,
practices may be different. It's also important to study products ofour competitors. One of our associated companies has a specialized
analytical body called the Industry Analysis Center. I want everybody
from the company to know about them and utilize their resourceand expertise. Additionally, in previous time, engineers developed
documentation for patent application and I would recommend
everyone to try writing them as it helped me a great deal.

7

how managers get involved is important. It is responsibility of a

Nanako Miyagi
Joined SMIC
in 2012. Currently involved in the development of solder
paste at the Solder
Technical Center.
PROFILEManabu Muraoka
PROFILE Joined SMIC
in 2009. Currently involved as a researcher in the development of flux coatedpreforms at the Moka
Laboratory.

manager to make sure that she/he fosters a work environment
where researchers can strictly focus on what they are interested instudying. On the other hand, there may be a conflicting demand from
customers. It will take company wide effort to decide on how best
to develop the work environment that is conducive to efficiency andproductivity.

Sugii: Patents... I have never done one myself.

Moderator: We strive to be a dynamic and growing company

Taguchi: I definitely recommend giving it a try. You will learn a lotthat offers the superior customer service and products.

from it.

Thank you for your valuable time.

SMIC CSR REPORT 2017-2018

SMIC CSR REPORT 2017-20188

1957: Analysis Room and the then researchers

SPECIAL PROGRAM

A Brief Look
At The Past

80

1969: Tochigi Segment

Special program taking you throughSMIC's 80-year journey based on the timelineof important events in the company's history
and photographs from the past.
The program will take you through the 80 years into thehistory of a company that has underpinned the global
electronics industry and our society.

1956

1938

1939

Started the production of wire solder, solder bars,
flux cored solder, and water lead pipes

1950

Founding of
Senju Lead Works Co., Ltd. 1944

1952

Established the Automotive
Bearings Division

1955

Changed the company name to SENJU METAL INDUSTRY CO., LTD.

1938
〜1959

Developed the first
domestically produced
two-layer rolled bushing
Developed solder cream

Completed the development
and started the productionof sparkle solder for TV andradio connecting wires

1966: Started the Tochigi Segment

1960
〜1979

EpisodeYears

1938: Founding of Senju Lead Works Co., Ltd.

Started the manufacturing and sales of sprinkler heads in the
1960s, and developed the first domestically produced sprinkler
heads in 1963. In 1974, the company span off of SMIC to form aseparate company called Senju Sprinkler Co., Ltd. The Souka Plant
opened in August 1962, and the Tochigi Segment in November
1966 as part of the solder business, thus expanding the solder
manufacturing factories. Established a new Industrial Equipment
Division in the 1970s, and developed solder products for electronicmaterials such as solder balls and solder pellets.

1977

1963

Developed the first domestically
produced sprinkler head

1960

Received Type 1 approval
from the National ResearchInstitute of Fire and Disaster

1960

Successfully mass-produced
the sparkle solder

1972

1966

Established a plantin Moka City, Tochigi, Japan

1965

Completed building a laboratory
affiliated to the company, in Souka

1970

Episode9

SMIC CSR REPORT 2017-2018

known as the Equipment Div.)

1970

1974

Sparkle printdevelopment

Founding of
Senju Sprinkler Co., Ltd.

1979

Developed oilless
Clean Metal
bearings

1973: 35th anniversary of founding

1961: Solder manufacturing activities at the headquarters factory

Senju Metal Industry Co., Ltd., founded in April 1938 as Senju
Lead Works Co., Ltd., initially manufactured the products suchas water lead pipes, lead plates, solder bars, and tinfoil. Openeda laboratory in 1950, which was rarely seen at the time. Devised
a technique for clarifying the blending ratio of tin and lead withsimple measurements. This was highly regarded by the customers.
In 1955, the company started the production of Japan's first
flux cored sparkle solder, which was used in black and white TV
sets which were in vogue at the time, thus making remarkable
contributions to the development of Japan's electronics industry.

Established the Specialized
Equipment Sales Div. (currently

Developed the silver coredsolder balls
Completed the first fully
automatic soldering machine
Developed and began the
production of electronicmaterial preforms

1958: 20th anniversary of founding

1962: Opened the Souka Plant

1972: First business QC publication meeting
Note: QC: Quality Control

1976: Senju Sprinkler Co., Ltd.
Manufacturing activities at the Shibajuku Plant

1976: Senyu-kai 20th anniversary athletic meet

SMIC CSR REPORT 2017-201810

Special program A Brief Look At The Past 80 Years

2008: Held a celebration
to commemorate
the 70th anniversaryof founding

2007: The late Mr. Issaku Sato, SMIC's Chairman,
and the Governor of Miyazaki prefecture
at the completion ceremony of Senju Giken Co., Ltd.
1997: AT&T (the largest American telecommunication company)
visits Senju Comtek Corp.
1990: Ceremony to commemorate the anniversaryof the founding of Senju (Malaysia) Sdn. Bhd.

Episode

1980
〜1999

1992

Finished the development of the first reflow oven
Developed flux WF-70 for
molten solder coat applied on DIP ICs

P.17

1980

Completed the first fully automatic
soldering machine

Commercialized and released sparkle
EX series for fast and efficient work

1989

1982

1980

In the 1980s, the electronic device sector took off with risingdemand for PCs and the like. We started expanding to America
where the semiconductor and computer market was centered, andestablished manufacturing plants and sales sites in the 1990s in
Asia, North America, and Europe. In 1996, we developed solderthat does not contain the lead that is harmful to environment andhumans. It was the era when Senju Metal Industry Co., Ltd. went
global and adopted an ecological outlook.

1986

Developed
the flux coredsolder TSURU22 forsoldering robots

1990

Developed the ZN series
sprinkler head

P.18

Opened the Kansai Segment

1994

Developed andcommercialized
heat-resistant solder
LL pure alloy

Developed a high reliability,
no-clean flux cored solder RMA22

Developed
Clean Metal
CB90
P.18

P.15

Established manufacturing
and sales bases in Malaysia
Established the new Iwate Factory (Marumori)(Senju Sprinkler Co., Ltd.)Started sales of the leadfree soldering material M705,
which became a JEITA
standard material.

Expanded the supply andincreased the productionof BGA sparkle balls

P.13

EstablishedSenju Comtek Corp.
Established Senju Metal(Hong Kong) Ltd.

Commercialized
environmentally friendly
lead-free ECO SOLDER series
Developed automatic
soldering machine SPD-300
Established Senju Manufacturing(Europe) Ltd.

2005

2001

1997

1996

Developed N2 reflow oven series

2005: Completion of new headquarter premises

P.16

1995

1990

2015: Set up our boothat SEMICON China

2000
1998

Established
Senju
Electronic
Corp.
Received theISO14001
certification
Tochigi
Segment

2003

Developed the local
soldering device
SOLZEUS

P.17

2002

Developed
lead-free paste
M705-GRN360

P.14

Lead-free soldering material withhigh workability and low spattering
Development of flux cored solder ESC series
Received the
ISO/TS16949
2006
certification
Developed preforms
Bushing Div.
containing Ni balls
CompletedP.15
the constructionof new
Established Senju
headquarter
Metal Korea Co., Ltd.
building

2010

2010

2004

Received the ISO/TS16949
certification Solder Material
Div.
EstablishedSenju (Thailand) Co., Ltd.

Established Senju Micro Institute ofTechnology Co., Ltd. (currently known as
Senju Giken Co., Ltd.).

2013

P.16
Started the mass production of tin-zincalloy wires for anti-corrosive water pipes

Won the ASE GroupBest Supplier Award

2011

2014

Became a member of RBA(formerly know as EICC)

Low-silver lead-free solder alloy
M40
Received Technological
Development Contribution Award(Second Place) by Panasonic
Corporation

2009
2007

Developed ECO SOLDER M24
Achieved significant dross reduction and switchedto resource saving

Samsung Electronics Co., Ltd. publicly recognized our Tochigi
Segment and Senju Metal Korea Co., Ltd. as "A-grade factories" andSenju Metal Industry Co., Ltd. as a "Superior Quality Enterprise"

Gained full membership of RBA/RMI (formerly known as CFSI)

2015

Declared the complete
elimination of conflictminerals from our products

2018
80 years since
founding
2017

Senju Manufacturing(Europe) s.r.o. started operations in Czech Republic
Won the Intel SCQI
Awards 2016 (consecutively
since 2009)

1989: Tochigi Segment

2001: Founding of
Senju Metal(Tianjin) Co., Ltd.

1982: Opening of Souka Plant, 20th anniversary party

2000
1983: Disaster training at headquarters

11

SMIC CSR REPORT 2017-2018

1987: Technical partnership with a Chinese company
for the solder manufacturing plant

1988: Tochigi Segment
The ribbon cutting ceremony to celebrate
the completion of Houyoku-Rou

to present

2017: Completed the constructionof our new building of Senju
System Technology Co., Ltd.

2003: Trained the quality control inspectorof Beijing Senju Electronic
Materials Co., Ltd. at the Tochigi Segment
Analysis Center

Episode1989: Set up our booth at Internepcon

At the dawn of the 21st century, as environmentally friendly products came in demand due to
EU environmental regulations, we developed lead-free solder M705 in 2001. The product set
the Japan Electronics and Information Technology Industries Association (JEITA) standard
material for lead-free solders. This flagship product of SMIC then went on to become theindustry standard solder used around the world. In 2005, the new hexagonal building of SMIC
headquarters was ready. After becoming a member of RBA (Responsible Business Alliance,
formerly EICC) in 2011 and RMI (Responsible Minerals Initiative, formerly CFSI) in 2014, thecompany was successful in supplying conflict-free materials to the industry.

SMIC CSR REPORT 2017-2018

12

FEATURE
M705-GRN360 significantly backed
the global shift to lead-free products

The ProductThis product was developed at the start of the global shift tolead-free products (the Japanese electronics manufacturers
being particularly influential in this shift to lead-free products)
together with customers by leveraging the overall strength of
our company in terms of technology, manufacturing, and sales.
With its high degree of perfection, the product became popularthroughout the world. Everything right from development of newhighly reliable materials to development of the manufacturing
technology and soldering process will help us make the nextgeneration solder products available in a variety of forms.
Examples include heat/fatigue-resistant solder alloys for vehicle
applications and paste made for fine solder powder for small,light, and thin products.

That Became aTurning
Point

Solder paste
M705-GRN360
Back during the shift to leadfree, the solder paste hadpoor wettability, aged quickly,
and was not easy to use. To
solve these issues, a leadfree "M705-GRN360" solder
paste for surface mounting
was developed in 2002. Manyof our customers around theworld chose the solder pasteover other products for its
excellent wettability, stable
printing performance, anduser-friendly characteristics
such as a six-month productguarantee.

Throughout its 80 year history, SMIC has beencreating a variety of breakthrough products.
On this page we have described each product,
and asked the concerned parties about theideas or background behind those products,
the history, and future outlook.

Director
Tochigi Segment

Tetsuya Okuno

The development of M705 began when it was necessary to
manufacture soldering material suitable for the outer atmosphere

Executive Advisory Engineer
Taguchi Laboratory

Rikiya Kato

When we first began working on the development of "M705", we researched thefundamental properties of solder alloys and paste/flux for use as lead-free solder
suitable for JAXA (Note) applications. As we were a small team, the non-technicalpeople such as Mr.Hasegawa were also involved. I remember we worked days
and nights as we to tackled with the problems. Development of new mounting
applications, low-temperature mounting, high heat-resistance, and the use of resin
in mounting will play a critical role in the evolution of "M705" in days to come.
Note: JAXA = Japan Aerospace Exploration Agency

The lead-free solder modernized into a global standard solder
Back when lead-free solder was a rare item, the tin-silver-copper solder developedby SMIC's Executive Advisory Engineer Mr.Kato in collaboration with the customers
was in the spotlight for its high reliability and ability to be transformed into various
shapes. Japan's industry, government, and academia jointly suggested it as theglobal standard. Following the endorsement by ISO and IEC (Note) standards, itsoon replaced the tin-lead solder that had dominated the industry for a long time.
Currently, the lead-free solder is the global standard for soldering.
Note: ISO = International Organization for Standardization, IEC = International Electrotechnical Commission

General Manager
Moka Laboratory

Kaichi Tsuruta

The pioneering and unparalleledmass production of tin-silver-copper solder

Senju Metal (Huizhou) Co., Ltd.
Plant Manager

Shigeo Funayama

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SMIC CSR REPORT 2017-2018

When M705 was a new player in the industry, tin-lead was the predominant solder.
Hence, M705 was manufactured by melting silver and copper with tin to make amaster alloy. However, due to productivity issues, we launched a project together
with the Research Division to find the conditions in which they could be melted
directly. This discovery was the key to the mass production of M705. M705 is areadily castable and workable alloy. I hope SMIC continues to develop M705-based
products combining technology, manufacturing, and sales.

ECO SOLDER
M705
Lead-free solder was developed in the second half ofthe 1980s for use in communication satellites. Later, theassorted lead-free solders
were properly assessed, anda national project led by JEITA(Note) was launched to select anindustry standard. A tin-silvercopper base was chosen for its
well-balanced composition. In
2001, SMIC launched the leadfree solder in the market under
the product name "M705". At
present, the patents heldby SMIC at the time havebeen widely published,thus making SMIC's leadfree solder an industry
standard soldering material
used throughout the world.

The "lead-free project", a boundary-pushingcross-departmental collaboration
Turning M705 into a paste was an urgent task to change with the times
that demanded lead-free products. It was difficult to develop the originalideas and system to achieve what was needed, and at times we fellbehind the market. However, thanks to sincere efforts of manufacturing,sales, and technology departments, we could achieve an unprecedented
collaborative system, information dissemination speed, and several
technological breakthroughs through substantive, cross-departmental
discussions (the lead-free project). Market approval of M705-GRN360,
which was a product of those efforts, brought us great value beyond justwinning the market.

The "M705-GRN360" paste was something that I knew
our American customers would definitely like

Note: JEITA = Japan Electronics
and Information Technology
Industries Association
Solder Technical Center
General Manager

Masato Shimamura

It was used by many of our customers in North America, where I was
stationed at the time. I have always had confidence that customers would
choose our products over competitors, which were suitable for a variety ofusage applications. I remember always being excited about what results could
be obtained. Any new technology can quickly become outdated as soon as
another new technology emerges. Hence, it is important to constantly seek
ways to improve and continually upgrade existing technology.

Divisional General Manager
International Business Div.

Satoru Akita

SMIC CSR REPORT 2017-2018

14

FEATURE The Product That Became a Turning Point
We invested in a dedicated rolling mill for in-house productionof Ni balls, to be used in premium HEVs
In 2003, we proposed a product for in-vehicle
p owe r s e m i c o n d u c to r s . P r e f o r m s m a d e byinserting Ni balls in pellets to stabilize the heightand position after soldering were our first product.
T h e m a i n a i m wa s to u s e th e m i n p re m i u m
HEVs. However, the first sample did not meetthe customer requirements for rolling technology
and quality of Ni balls. Hence, SMIC's Chairman
The late Mr. Issaku Sato decided to invest in a
dedicated rolling mill and develop the Ni balls
in-house. SMIC successfully met the customer
requirements and used these in-house developed
Ni balls in the premium HEVs.

Preform
Preforms
containing Ni balls
Mounting of parts in power
semiconductors is a challenge in terms of improvement of heat dissipation
properties. Our "Preforms
containing Ni balls" use an
original technology in which
Ni balls are evenly dispersed
throughout the solder tocontrol the tilt following
the mounting. To improved
the heat dissipation in
power semiconductor s,
we secured the contact
of semiconductors withthe heat sink. It is used inmost of the power module
products including ecocars such as HEVs (Note) and
EVs. SMIC will continue toexpand globally to cover thefields such as EV, IoT, AI, andserver-related (information,communications, infrastructure).
Note: HEV: Hybrid Electric Vehicle

Divisional General Manager
Solder Material Sales Div.

Mitsuyoshi Hirayama

The pursuit of rolling technology throughcollaborative development with the customer

General Manager
Electronic Materials Div.

The request for manufacturing the performs containing Ni balls came from thecustomer while we were developing the preforms for fluxless soldering. At the time,
rolling was all about making a piece thin. However, the presence of a lot of voids (Note)in the product resulted in repeated rejections by the customer. Therefore, during
the collaborative development with the customer, the entire process was revised toreduce the voids and to shape the product in its present form. Completion of thesehigh-quality preforms triggered the development of preforms containing Ni balls.

BGA balls changed everything...
sales, development, manufacturing, and inspection
In the early 2000s, we started delivering solder balls to leading
semiconductor companies and gained the top market share, thus
profoundly changing the R&D approach, manufacturing technology,
and the inspection and quality control system linked to sales. This
ensured our safe entry into the semiconductor business. However, atthe present time, when it is difficult to differentiate between good andbad quality, it is impossible to outdo the competitors without giving
equal consideration to cost, delivery time, capacity, and flexibility torespond to market demands. SMIC will also bolster its ties with thecustomers to excel in the market.

Koji Watanabe

We carefully listened to the customer requirements
and continued to forge on into new areas

Senju Electronic Corp.
Divisional General Manager
Production Div.

Iwao Chiba

Naoki Hisamoto

RMA22

General Manager
Moka Laboratory

Kaichi Tsuruta

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SMIC CSR REPORT 2017-2018

Daisuke Souma

The solder balls that findtheir roots back in 1977
are more than 40 years old
now. However, in thosetimes, their use was limited
to only a few applications
and were manufactured insmall amounts. However,their demand suddenly rosewhen a package substratecalled BGA (ball grid array),in which solder balls arearranged in a grid, was created in 1994. To meet thisgrowing market demand,
SMIC, too, increased the
production at fever pitch,and grew into a leading business catering to the market
demands.

Supervisor
Central District Sales Office

Flux cored solder

When working on the development of RMA 22, which demonstrates highsolderability and reliability while assuring minimum corrosion, we exhaustively
evaluated all kinds of chemical materials. The whole development team wasoverjoyed when we discovered the material that had the desired properties.
However, it was when the material was used in American automobile PCBs that we
experienced the joy of embarking on a global journey. Currently, we are improving
the existing and developing new flux cored solder products for information,communication and on-board applications to develop special products such as
Macros featuring a soft residue.

General Manager
Ball Manufacturing Div.

Looking back at how we made the "BGA balls", I remember our struggle whenswitching from lead cored to lead-free. In contrast to the essentially labor-intensive
process flow of the past, we are coming up with ways to promote mechanization
and automation to make improvements. Specifically, we are developing andpromoting a mechanism with which the ball diameter can be adjusted automaticallyby remote monitoring, as well as a visual inspection system. SMIC is working
towards bolstering its production system to manufacture the products that will
make our customers happy, and on further automation of work for manpower
reduction.

Cast iron pipes
for water

The flux cored solder RMA22,
which opened our doors to the world

BGA ballIn the days to come, automation will be the key to cater tothe diverse needs of customers, and SMIC will do precisely that

Note: Voids reduce the bonding strength of components and PCBs

Initially, we did not have an R&D Sector or technical documents like for otherproducts. Hence, while getting pointers from the customers, consulting withthe on-site factory workers, and continuing to forge on into new areas, a project
team was formed. Thanks to our speedy response to customer requirements, ourproduct was finally approved by the customer. Through this industry-first productthat let us continue to grow together with customers, we established a sales stylefor Japanese automobile giants. By including EVs in this unique attempt, we wish
to expand our reach to new areas, and continue to carefully listen to customer
requirements.

Solder balls

RMA22 is our first RMA
type flux cored solder thatcomplies with US standard
QQ-S-571. We developed
it at the start of the 1990s
when the demand for
RMA22 in information,communication, and invehicle applications tookoff. Back then, a shift to noclean was gaining grounddue to CFC regulations.
This required that the solder
wettability be secured while
maintaining its insulation
proper ties. RMA 22 metthese requirements. Hence,
the technology that went
into its making has been
passed down to the present.

We challenged ourselves to pioneer the development of a uniquealloy to prevent the corrosion of water pipes for 100 years

Anti-corrosive
coating alloy(zinc-tin-magnesium alloy)

Surface treatment of castiron water pipes with "zinctin-magnesium alloy" isexactly what was essential
to making of water pipes thatwill last 100 years. During theinitial stages of development,
the wire would not draw properly. But after trying for two
consecutive years, we finallysucceeded in establishing
the mass production technology in 2013. The productthen went on to support thesocial infrastructure.
We are currently leveraging
this technology to upgrade
the existing mass production
technology involved in
the production ofsprayed alloy wires
for capacitors andsolder products.

General Manager
Bearing & Bushing Sales Div.

Masafumi Seino

Many water pipes laid in the period of high economic growth of Japanese economic
history had exceeded their service life, but had not been replaced with the new
ones. This highlights the need to use long-lasting (100 years) water pipes featuring
the presence of "zinc-tin-magnesium alloy". At the time when not many companies
or groups were competent enough to come up with a solution to this, SMIC daredto take up the challenge of mass production of the "zinc-tin-magnesium alloy". It
was difficult; I am happy that, in two years, we could devise a new manufacturing
technology for mass production, no matter what kind of challenges we faced.

The development of the"zinc-tin-magnesium alloy" started fromthe development of brand new machinery
As the "zinc-tin-magnesium alloy" has a large rangeof melting temperatures, it is prone to segregation,
becoming stiff and brittle, which makes it difficult towork with a conventional extrusion-based machine. We
invested more than a year to study the problem in termsof machinery, and used the knowledge in the developmentof the continuous casting and rolling method of alloys. As
our current flagship product is packaged in the units of
400-kg, we implement strict controls to ensure that it isfree of defects and does not break easily. In addition, we
process the waste material collected from our customers
and reuse it.

Executive Advisory Engineer
Advanced Product Engineering& Development Div.

Takashi Hori

SMIC CSR REPORT 2017-2018

16

FEATURE The Product That Became a Turning Point

Flux

Our halogen-free flux underpinned
the mass production system for semiconductors

WF-70

The molten solder plating of the lead frames caused repeatedcuts in aluminum wires due to the presence of chlorine. As acountermeasure to this problem, we thought of developing a
halogen-free flux. We created "WF-70" in joint development
over two years, and contributed
to e s t a b l i s h i n g a wo r l d w i d emass production system forsemiconductors.
As the trend is shifting fromthe use of lead frames tosolder balls, we are transitioning to WF6000. In thenext few decades, the 3D
technologies will take overthe industry and necessitate
the development of flux suited
Executive Directorf o r f u r t h e r te c h n o l o g i c a l
Yuji Kawamata
evolution.

In the 1980s, the lead framesof ICs (Integrated Circuits)
were plated predominantlywith molten solder toimprove solderability. If theflux used was highly active,
the circuit board members
would get damaged. "WF70" reduced the damage tocomponents, while achieving
good wettability. Many customers used it as a specialized flux for molten solder
plating.

Clean Metal

CB90 is a product of racking our brains every day
about how to reduce bearing friction

CB90
It is a bearing product thatstarted with the development of bushing for scooters in 1952. Before the shift
to lead-free bearings started
in 2007, the lead-free threelayer slide bearing CB90 was
developed in 1995. Its excellent friction characteristics,
thanks to SMIC patent technology, are highly regarded
by the customers. The product has been used as a
guide bushing for shock
absorber s. Many of ourcustomers are still using the
product.

Osaka University,
National University Corporation

CB90 is a lead-free bearing created by instantly putting into practice an inspiration.
Every day I made a modest effort to think of ways to reduce the bearing friction. It isa long-selling product that is still in demand by the customers over 20 years after its
development. Despite of a variety of Clean Metal products being manufactured inlimited quantities according to the application, Clean Metal is positioned as a criticalstrategic product for bearings.

Naoki Sato

Collaborative development with customers
is and will remain inevitable
CB90 was first used in the motorcycles. The next target was automobiles, but its use
in automobiles was difficult considering that it was used only in motorcycles till then.
Therefore, to prove its performance to the customers, we conducted endurance tests inlaboratories of automobile manufacturers. CB90 is currently used in many automobiles,
low-friction characteristics being one of its key strengths. For this, it was necessary todevelop the evaluation methods in collaboration with the customer.

Manager
Bushing Manufacturing &Development Div.

Kenzo Tadokoro
From the development of a solder pot
to soldering system equipment

Executive Director

Soldering machine

When the vehicle ECUs started having a high heat capacity, it was challenging toprevent solder wicking during through hole soldering of the PCB components whenworking with a dipping machine. The development of a single solder pot eventually
led to the development of a soldering system equipment possessing an automatic
loader and unloader. Currently, it is the Equip't Div. that provides systemequipment suited to materials. SMIC will continue to accommodate thechanging requirements of the industry by manufacturing newer products,
digitizing the equipment, and training global talent.

Isamu SatoFirst lead-free, then reflow soldering, and now EVs...
SOLZEUS is making great strides with time
Following the shift to lead-free solder triggered by environmental issues, "SOLZEUS",
which uses flow soldering for local mounting, was developed and launched in2003 as a post-soldering method for weakly heat resistant components. Later, thesurface mounting with reflow soldering became more and more common, but, somecomponents did not support surface mounting. Hence, SOLZEUS gained further
attention for its ability to retrofit parts with pinpoint accuracy. With the automotive
industry shifting to EVs and driverless cars, SOLZEUS is gaining more and more
importance in the market.

The heart and soul of SOLZEUS is its jet pump,a microcosm of our unique know-how

Senju System Technology
Co., Ltd. (SST)
Deputy Counselor

Noboru Hashimoto

The jet pump is the heart and soul of "SOLZEUS". Thisjet pump is called a continuous flow pump, and wasdeveloped roughly over a period of two years. Over thecourse of 20 years, it became the heart and soul of notjust SOLZEUS, but SST as well. There is a constantdemand for this product one after the other, the chiefclientele being automobile-related manufacturers. Thisis because, we take pride in not just getting repeat
customers, but reliably suggesting modifications andnew mechanisms to shape the product into something
perfect for the customer.

Deputy Counselor

Toshimaru Sumiyashiki

SOLZEUSThe name SOLZEUS
means" god of soldering".
"SOLZEUS" is a compound
word combining "SOLDER"
and the chief god "ZEUS"
from Greek mythology. By
fundamentally reviewing
common knowledge aboutc o nve n t i o n a l s o l d e r i n g
machines with a focus on
Archimedes' principle, wedeveloped a brand new
molten soldering machine.
The machine feeds a cons t a nt a mount of solde r
at constant pressure to
realize stable high-quality
solders, hence serving fora variety of applications in
on-board electrical components.

Turning Higashiyama into the Silicon Valley of sprinklers!

Senju Sprinkler Co., Ltd.
President

Mitsuaki Kikuchi

The development of the "ZN type" sprinkler heads was a turning point for SMIC. The
industry-leading automated line enabled its subsequent mass production, raising ourindustry share to 70%. With the falling birth rate and aging population, the numberof buildings in Japan is predicted to decrease. But the global demand is 100 million
buildings/year. Hence, to realize the dream of "turning Higashiyama into the Silicon
Valley of sprinklers! (Note)" as The late Mr.Issaku Sato, SMIC's President, would say, weare supplying the world with peace of mind and security.
Note: Higashiyama refers to Higashiyama-cho Ichinoseki City in Iwate
prefecture in which our Iwate Segment is located.

The strength of ZN type sprinklers is still being harnessed
As new structures and technologies were adopted to miniaturize the ZN sprinklers,
they became more expensive than multi-type sprinklers (Note), making cost
reduction an issue. To solve this issue, the shape and material of its parts wererevised, and the parts were increasingly produced in-house, gradually making ita highly profitable product. The traditional ZN sprinklers have given way to the Ktype sprinklers, their domestic successors. But the structure of the decomposition
section, the essence of the ZN sprinkler, has been carried over into SMIC's otherproducts. The RC series products are a representative of this, and are sold every
month throughout the world.
Note: Multi-type refers to our MF series sprinkler heads.

17

SMIC CSR REPORT 2017-2018

Senju Sprinkler Co., Ltd.
Executive Advisory Engineer

Tetsuro Kikuchi

Sprinkler
ZN type
SMIC was the first to gain
domestic cer tification,in 19 6 3 , for a spr ink le rhead, an applied solder
product, that detects firea n d s p r i n k l e s wa te r to
extinguish it. "ZN t ype"
wa s m a d e f o c u s i n g o nmass production, andwas the first product ofits kind whose production
wa s fully automate d toachieve a stable supply
while securing a large
p r o d u c t i o n vo l u m e . 2 0years since its release in1986, the product is still inthe market as the longest
selling product of theseries, raising our industry
share to 70%.

SMIC CSR REPORT 2017-2018

18

CHANGE THE SOLDER OF THE WORLD BASEDON AN UNCHANGING CORPORATE VISIONEXECUTIVE TALK

What Changes,
What Doesn't Change,
andWhat Must Not Change

No matter how much the times change, thecorporate vision will not change

paste products changed depending on the moisture content in theatmosphere. Mr. Nozawa sealed the walls of the new factory with
Cedar wood to prevent the moisture from seeping in. Cedar is an

Moderator: Can you first tell us what is unchanging at SMIC?

effective moisture-absorbent. The late Mr. Issaku Sato learned thisHasegawa: Our corporate vision (see P4) created by the Honorary

when he visited a brewery in Akita, and told the same to Mr. Nozawa.

Chairman The late Mr. Senju Sato has not and will never change. He

Nozawa: Besides, the wood imparted a nice look to the factory. The

How should SMIC best change in this age of full-fledged
globalization? On the other hand, what is unchanging?
What must not be changed? SMIC's Representative
Director Mr. Eietsu Hasegawa and Director Mr. Iwao
Nozawa, who together pioneered sales and manufacturing,pulled SMIC along for many years. We got a chance to
speak with them today.

once sent me a birthday message saying "your brain is like a spring,customers were impressed. By now, the solder paste for SMT isand the company is counting on it." In later years, when I became aalready a key product of SMIC, and the rolling plant, which was moved

manager, I realized that we had an exceptionally strong foundation.

to Kansai Segment, has also been supporting our business, even

Employees being the asset of any company, training and development

though it has been away from the spotlight. In order to produce betterof human resources will always remain important.

and better products, it is essential to secure right environment at the

Nozawa: I, too, think it is our corporate vision that will never change.

right place and right moment.

Eietsu Hasegawa

As correctly said by Mr. Senju, "A company is a place where all

Note: SMT: Surface Mount Technology

individuals are able to attain self-actualization, a place like a "Dojo", aModerator: Mr. Hasegawa, what do you think?

space for immersive learning.” In other words, we are fundamentally an

Hasegawa: Our Chairman The late Mr. Issaku Sato always said,

employee-based company. So SMIC will always provide opportunities"Listen to the customer's voice". In other words, we can learn a lot

for employees to grow as a human being. Of course, being a company

from our customers, and if we try to know what exactly they want and

we need to be in pursuit of profit. However, these values have been

act accordingly, our projects will be beneficial for our own growth.

and will be at the foundation of the company in any era.

For example, preforms containing nickel balls. This idea itself wasModerator: Interesting. Is there anything else you feel is unchanging?

presented by a customer, but was technologically challenging at the

Nozawa: The perspective of customers, I would say. Acrosstime.

departments, the customer-centric approach is deep-rooted.

Nozawa: SMIC has been an industry pioneer in development andCustomers often visit our Tochigi segment to see our Tochigi plant

manufacturing under the Representative Director Mr. Hasegawa.

from inside. As "seeing is believing", actually viewing the factory builds

It was under his able leadership that the preforms became a coretrust.

product of the company. It's now an important product that has

Representative Director

Iwao Nozawa
Segment Director

opened up on-board applications.

A turning point that gave us a chance
to grow a lot through work
Moderator: What was it that gave you an opportunity to grow as ahuman being?
Nozawa: It was when we launched the Solder Paste Factory for SMT(Note). The current solder paste plant of Tochigi Segment was once a

Hasegawa: One more case is when we implemented computer
control in our melting plant as suggested by the customer. Customers
saw the system and praised it as a ground-breaking effort for a solder
manufacturer.

Development of global standard lead-free solder,which contributed to major growth of SMIC

rolling plant, mainly manufacturing solder tape for radiators. When

Moderator: What do you think was a major growth milestone in theorders fell during a transition period due to technological innovations,80-year history of the company?

Our Chairman The late Mr. Issaku Sato asked me if I had any ideas toHasegawa: It certainly was the development of M705, which

boost the sales. I suggested him that it would be better to produce

became the standard composition of lead-free solder in 2001. The

the solder paste, which was more promising than the solder tape fromenvironmental regulations to promote lead-free products originatedthe production volume and sales perspective, at the rolling plant ofin the EU, and it was deemed to be an urgent task by the Japanese

the Tochigi Segment and to shift the production of the solder tape toadministration. In 1999, the Ministry of Economy, Trade and Industry

the Kansai Segment that had just started its operations. In addition,of Japan launched the "lead-free national project", and, as part of

I proposed to keep the solder paste factory open to the customers

this project, initiatives towards using lead-free solder soon started

so that they can visit the plant if they wish to. An emergency board

everywhere in Japan. Each major Japanese manufacturer agreed withmeeting was convened the next day and my suggestions wereand joined this movement. SMIC also participated as an observer. It

accepted.

was an incredibly good project.

Hasegawa: Just after that, we noticed that the viscosity of the solder

Moderator: Why was SMIC able to join the movement as a member?

Note: The discussion was held in June 2018. Hence, the titles and positions used here are valid as of June 2018.

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SMIC CSR REPORT 2017-2018

SMIC CSR REPORT 2017-201820

E X E C U T I V E TA L K

EXECUTIVE TALK What changes, what doesn't change, and what must not change

BUILDING
A "CUSTOMER PERSPECTIVE"
IS NEVER OPTIONAL

and machines producing the conventional lead cored solders fromno power for over 10 days. Luckily our in-house power generation

those producing the lead-free solders, divided the work areas, andworked, but we could only run at 40% of our normal capacity. Everydeveloped and invested in the machines suited to the respective

morning the General Manager-level executives gathered to discuss

manufacturing processes as fast as possible. All of these contributed

the challenges ahead of us. By deciding which production lines

to our growth.

to prioritize and allocating power supply to the high-priority lines,

THE COMPANY CULTURE OF
MUTUAL TRUST AND
COOPERATION MUST NOT CHANGE

they managed to partially start the production activities. We wereEmployees banded together to overcome the Lehman
Shock and Great East Japan Earthquake crises

Representative Director

Eietsu Hasegawa
P R O F I L E Joined SMIC in 1966. Starti n g f ro m a S a l e s M a n a g e r of th e
S o l d e r D i v i s i o n, h e h a s a s s u m e dseveral positions in the company. He
was appointed as SMIC's Represen
tative Director and President in 2008,as a Chairman in 2014, and as a Representative Director and Senior Advisor in2016. His favorite motto is "There is nodifference in the abilities of people; if at
all any, it is in their motivation."thrilled when power supply was resumed to the special high-voltage
substation equipment so that some of the hampered production
activities could be resumed. While other issues such as food, gasoline,

Moderator: There was growth and there were crises. What kind ofand disaster-affected families of employees were yet to be solved,

crises were there? How did SMIC overcome them?

thanks to our employees who worked 24/7 for plant restoration. Had

Hasegawa: During the 2008 Lehman Shock, no businessthey not been with us, things would have been all the more difficult.

restructuring was needed. We survived because of the joint efforts put

Hasegawa: We got to experience their unity and cooperation when weby all the SMIC employees. When many companies had to undergo

launched the BGA balls. With orders sharply increasing, and machines

restructuring, the conditions in SMIC were quite stable. This would not

not yet automated, all the employees worked on manufacturing for one

have been possible without the cooperation of all the employees whowhole year, giving up their New Year holiday. I was in sales at the time.

shared the pain.

We teamed up to create solder balls. We must pass on this company

Nozawa: Much the same way, our employees and affiliates became

culture of being united at critical times.

our greatest strength after the Great East Japan Earthquake. Tochigi

Nozawa: Here, the most important element is to build bonds ofexperienced a magnitude 6 earthquake on March 11, 2011 (Fri.) 2:46

trust between supervisors, subordinates, colleagues, and affiliatep.m., roughly for five minutes. A period of 5 minutes may seem small

companies to bring the employees together to support the company inotherwise, but it is not easy to withstand such a huge earthquake

critical times. SMIC's company culture of mutual trust and cooperation

for that long. For a moment, we had lost hopes of survival. The

is something that must not change, just as Mr. Hasegawa said. On

aftershocks continued. But I knew that the octagonal structure of thethe other hand, it is important to bring revolutionary changes such as

Tochigi Segment, which acted like a paper umbrella, had superior

automation through time.

Segment Director

Iwao Nozawa
P R O F I L E Joined SMIC in 1967. Before
assuming the position of Operating
O f f i c e r of th e To c h i g i S e g m e n t &Manufacturing Sector in 2009 andits Director in 2010, he has served as
the Manufacturing Manager of theSolder Mfg Div., Bush'g Mfg & Dev Div.,and Industrial Machinery Div. of thecompany and the Officer responsible for
Quality Assurance. His favorite motto is"Where there is a will, there is a way."

Hasegawa: SMIC had already proven its technological capabilities

earthquake-resistance. Because of my confidence in the structure, I

as its soldering material was already used in the satellites. A satellite

managed to cheer everyone. Further, Mr. Hasegawa, SMIC's President

becomes hot when it comes in contact with the sunlight, but attains

at the time, rushed to the Tochigi plant the next day. He was reallysubzero temperatures when the earth forms a shadow over it. SMIC's

happy to see the plant with his eyes, and his happiness boosted theModerator: Lastly, what do you think is important for the SMIC

factories, and some customers demand that they want speakers ofsolder was used in satellites because it could withstand the temporary

morale of all Tochigi Segment staff.

employees to play an active role on a global scale?

their language, not interpreters, to guide them through the factory.

changes of this harsh space environment. This was about ten years

Moderator: What sort of damage did the Tochigi Segment suffer?

Hasegawa: It's a global stage, but welcoming customers to ourThis is the next skill we all must learn, regardless of which department

before the lead-free project came into the spotlight.

Nozawa: The worst part was that the electricity was out and thefactories can definitely help build a relationship of trust, like Mr.

we are from. Customers come to our Tochigi Segment from all over

Moderator: This lead-free solder was highly regarded in the industry.

manufacturing machines had come to a dead stop. The special high-

Nozawa said at the beginning. Hence, the global expansion of our

the world. Everyone at the plant must strive to provide global support

Hasegawa: Yes. The "lead-free national project" recommended thevoltage substation equipment was damaged too, and there wasJapanese factories, such as the Tochigi Segment, is extremelyin order to be a good host to our existing or prospective customers.

important.

Message to the world with respect to the future of SMIC

Nozawa: For language support during such visits, we will needmulti-lingual professionals. Many overseas visitors come to visit ouruse of tin-silver-copper lead-free solder M705, whose shared patents

Hasegawa: I want SMIC's next generation to know that even thoughwere held by Panasonic and SMIC, as a standard product and thesolder is not an attractive product as such, many of our customers

information on the product was disclosed to public. In conjunction

are the most leading companies in the world. Because we have suchwith this, we decided to license M705 to competitors to promote its

special audience, I want you all to go global with the sense of shaping

spread. Later, this composition became the international standard in

new trends in the solder industry. The fact that we have received theJIS, ISO, and IEC, gaining popularity throughout the world.

SCQI award (Note) from Intel eight years in a row since 2009 is a proof

Moderator: Mr. Nozawa, what according to you was the turning pointthat the quality of SMIC product is being globally renowned. Now weof growth?

are sending more and more employees in their twenties and thirties toHasegawa: I also think it was the lead-free solder. The change in theEurope and the Americas so that they can be globally active throughmanufacturing method from conventional lead cored solder to lead-the solder business established by their predecessors.

free solder was the turning point even from our manufacturing point

Note: The SCQI award is the most prestigious award by Intel Corporation presented to the companies
for their excellent performance.

of view. Our flux cored solders, solder paste, solder balls, solder

Moderator: I am sure that your words will pave the way for the 90-

bars...everything changed. We segregated our manufacturing lines

and, eventually, the 100-year anniversary of SMIC. Thank you forsharing your valuable insights with us.

21

SMIC CSR REPORT 2017-2018

SMIC CSR REPORT 2017-2018

22

Disclosure of Information on Key Challenges
The international guideline for sustainability reports, the Global Reporting Initiative (GRI), amended its guidelines in May
2013 to G4 and in October 2016 to GRI Standards with the goal of changing their approach of information disclosure from an
exhaustive one to the one focused on key challenges (material aspects).
In order to disclose the sincerity of our management through people, and to disclose how we communicate globally with
our stakeholders, SMIC is identifying the materiality (key challenges) of the five aspects stipulated in the code of conduct of
the RBA (Responsible Business Alliance: renamed in October 2017 from EICC) and of contents reported in the monthly CSR
meetings, based on the following four-step flow recommended by GRI.

Step 1 . Identification of key issues and events

Step 3 . Validation● GRI aspects and important RBA self-audit items● A ssessing the scope, impact, and period of GRI● Identification of the range of impact

aspects● Approval and disclosure by the management team

Environment
1. W e fully comply with all relevant legislations in all areas in which we operate and to set our own environmental targets toadopt responsible environmental practices.
2. W e assess, evaluate, quantify and monitor our business activities that may or may not have affect and impact theenvironment:
1) Energy and resource conservation preservation
2) Appropriately manage disposal of contaminated water and reduction of wastes
3) Reduction in the use of hazardous chemical substances4) H azardous substances/materials and wastes are properly identified and handled according to the related hazardous
materials regulations
3. To protect the Earth's ecosystems such as wildlife habitat, forests, oceans, and to conserve biodiversity, we will
participate in environmental preservation activities such as tree planting.
4. W e work diligently to build and maintain relationship with the community to protect and sustain environment.

Competitions and Fair Trading
1. W e comply with relevant laws and regulations to engage in free competition and conduct business with the highest
standard of ethics and integrity.
2. W e endeavor to establish a management system in order to implement and maintain confidentiality of internal andexternal business information.

Step 2 . Prioritization

Step 4 . Review● S everity assessment for stakeholders and the● D istribution and disclosure of documents incompany● Q ualitative and quantitative assessment in themonthly CSR meeting

hard copy and soft copy (Japanese, English, andChinese versions)● A nalyze and report opinions in the monthly CSR
meeting, and use them in the future meeting

3. We will make certain that all disclosures made in financial reports and public documents are full, fair, accurate, timely
and understandable.
4. W e fully comply with relevant laws and regulations to properly handle import and export transactions.
5. W e respect the intellectual property rights of others and will not infringe any third parties rights.
6. W e will not have any interaction with any group or faction that threatens the public safety or security.
7. We avoid engaging in any actions that creates a perception that illicit gains are made in exchange for offering or
receiving money, gifts or personal business courtesies.
8. Transactions with individuals or groups or factions that directly or indirectly support or assist military conflict or
terrorism shall be forbidden, and thorough measures shall be taken to ensure that conflict minerals are not used where it
is appropriate.
9. W e set up an anonymous reporting channel for unethical and/or illegal behavior within the organization.

SMIC Group CSR Basic Policy
We have basic policy(based on Management Philosophy) that governs maintaining of a balanced and harmonious relationshipwith stakeholders including customers, employees, suppliers, local communities, financial institutions and governments.
We strive to fulfill the following commitments to achieve the highest possible level of standards.

Human Rights and Labor Standards
1. W e adhere strictly to relevant employment and labor laws to ensure compliance with human rights standards, includingchild labor and forced labor.
2. W e strive to value and respect the differences among individuals in the workforce. We are an equal opportunity
employer and do not tolerate any form of harassment or discrimination based on age, race, color, religion, sex, national
origin, disability status, protected veteran status, or any other characteristic protected by law.
3. We strive to maintain positive work environment by communicating frequently with our employees.

Health and Safety
1. W e ensure to be compliant with federal and local labor law standards and health and safety legislation to achieve thestandards of good practices and to create comfortable and hygienic working environments.
2. B y establishing and implementing a Management Systems for Health and Safety, we provide sufficient resources toprotect our employees and to ensure that risks are effectively managed and alleviated.

Product Quality and Safety
1. W e comply with customer requirements, related laws and regulations, and strive to improve customer satisfaction
continually through the supply of products and services with excellence in quality and safety.
2. A ccording to the Quality Manual, we develop, implement and maintain a management system, and continually improve
its effectiveness.
3. In addition to activities necessar y to maintain our quality policy for achieving quality goals, we review and amend
the management system on a regular basis and evaluate (interval, frequency, scene) opportunities for additional
improvement.
4. W e assess the need for improvement of the quality management system. If any amendment is required, we will makenecessary changes while maintaining the adequacy of management philosophy.

Information Security
1. W e take highly advanced protective measures against cyber threats on our computer network and manage our computer
system to safeguard it so that no harm will come to others and our own.
2. I n order to prevent breach of confidentiality and possible loss of personal information of customers, third-party and our
employees, we implement various security measures to manage and protect their information properly.
3. I n order to prevent breach and loss of confidential information received from a third party and customer, we manage andprotect their information appropriately.
4. W e acknowledge that use of social media presents certain risks and carries with it certain responsibilities, and strive toproperly utilize social media as a responsible and mature member of the society.

Social contribution (Community Engagement)

3. W e adopt and implement appropriate preparative measures for emergencies.
4. We strictly comply with all applicable laws and established standards to prevent accidents and injuries from occurringin the workplace by actively promoting good health and adopting safe practices.

23

SMIC CSR REPORT 2017-2018

We strive to actively participate in social contribution activities and to build long-term relationships with community
neighbors and partners.

SMIC CSR REPORT 2017-201824

EconomySociety

Corporate Governance andFinancial Status

SMIC holds a General Meeting of Stockholders and Board of Directors as required by law, and strives to strengthen its
governance through the placement of auditors including external auditors and tax audits, as well as the establishment ofcorporate bodies such as a CSR Committee, or convening meeting such as the Management Meeting and Strategy Meeting.
ReportGeneral Meeting ofStockholders
Information disclosure

CSR Committee(Information Security
Committee)

Instruction

Suggestion

Examination, report and stipulation
Submission ofof corporate ethics
agenda items

Information Disclosure
Procedures

Examination, report and stipulationof information disclosure

SolderMaterial Div.

● Sales Div.

● Solder Mfg Div.

The board consists of five directors and two
auditors (of which one is an external auditor),
and as the ultimate decision-making bodyof SMIC business management, it handles
the appointment and dismissal of operating
officers and votes on resolutions concerning
the submission of agenda items from theManagement Conference, in compliancewith the relevant laws and regulations andthe Articles of Incorporation.

Approval

Issue suggestion

Instruction

Equip'tDiv.

Stipulation and instruction of
corporate regulations

BCP Control
Procedures● Sales Div.

● Sales Div.

● Electronic

Dev Div.
● Adv Prod Eng &Dev Div.

● FA Mfg Div.

Risk Management
Procedures

Stipulation and instruction of
measures against emergencies

Reference and reporting ofimportant matters● Bush'g Mfg &Management Conference

Int'l BusinessDiv.

● Sales Div.

T h e m e e t i n g c o n s i s t s o f d i re c t o r s ,auditors, and operating officers who
deliberate on legal matters and decide on
or approve important matters concerning
the company's business operations.
In addition, it submits to the Board of
Directors the agenda items concerning
the business operations that the Board of
Directors should deliberate and make adecision on.

Dev &Eng Div.

Mfg EngDiv.

Acct'g &Finance Div.

● Solder Technical● Ball Mfg Div.

● Acct'g & Finance● General Affairs Div.

● FA Technical Center● IMS Office● IS Div.

● Environ'l Mgmt Div.

Center● Flux R&D Dept.
● NEW GP● HR Div.

Dept.

● Powder Mfg Div.
● Mfg Eng Div.

● Law & IP Section● Security Export

Ctrl Office● CSR & PR Div.

● Moka Laboratory

Auditors

Two auditors (of which one is an external
auditor) are elected. They conduct auditsof day-to-day management activities
including the execution of duties bydirectors. The auditors attend the Boardo f D i re c t o r s a n d t h e M a n a g e m e n t
Conference to fulfill their responsibilities
for preventing illegal or highly improper
decisions as well as conduct activities inconformity to the laws and regulations.

Fraud Prevention

The employee office regulations stipulate
the importance of compliance. Employees
sincerely observe these regulations tomaintain order in the company. We also
prohibit acts of bribery to comply with"fair trade and ethics" of SMIC's CSR
basic policy and "ethics" of "CSR Goals"
in order to prevent corruption.

[SMIC's Business Areas]

Senju Metal Industry Co., Ltd.
DUNS# 690663091
Address of Headquarters
Senju Hashido-cho 23, Adachi-ku, Tokyo 120-0038, Japan① Manufacturing and sales of alloy, casting, extension and processed goods[Countries and offices where we have established our business]
UK, Thailand, Czech Republic, Germany, Philippines, America, Malaysia, Mexico,South Korea, Taiwan, China( Major Japanese domestic customers: 570 companies Major overseas customers:
1,100 companies)[No. of sites by region]
Japan: 20 (including 8 manufacturing sites)
Overseas: 32 (including 15 manufacturing sites)

25

SMIC CSR REPORT 2017-2018

Middle manager

54 %

9%

Contract
employees• English conversation

Total hours

23,806.5
Total numberof participants:

928

16%

classroom• In-house product

Salesperson

Engineer

7%
Mid-level
employees② Manufacturing and sales of metal powder, and bearing and bushing products③ Manufacturing and sales of soldering solvent and adhesive④ Manufacturing and sales of soldering equipment⑤ Manufacturing and sales of fire extinguishing and explosion prevention equipment
and materials (Affiliate business)⑥ Manufacturing and sales of equipment related to the products above

Overseas

Gender ratio

72 %( 643 )

Total numberof employees

2,337

Men

65 %

Domestic

28 %

Men

( 1,694)

Women

35 %

1,520
Women

817

• Diversity workshop

26 %• Junior management

training

Total hours

4,847

Total numberof participants:

252
Total hours

17%

2,940.5
Manufacturing

Total numberof participants:

35 %

185

Social contribution activities
For contributing to the local community, promoting arts, and training the next generation, the Senju Metal Industry Group provides financial
assistance to 57 organizations at various sites in Japan and overseas by sponsoring their various activities. For example, we donate to medical/
welfare organizations such as Medecins Sans Frontieres (MSF Japan). Our Taiwan branch has been financing the schools and children in need, in
addition to making financial contributions to disaster relief funds, etc. We are socially active at several sites in China including Tianjin. In addition tobringing about the economic growth of these areas, we hope that our financial help will cater to the cultural education of the budding generation andboost the creative power of the society.

Securing and confirming the safety of employees
If the Senju Metal Industry Group's Emergency Disaster Control Headquarters are established to deal with any emergency occurring in any of its
companies, the Emergency Disaster Control General Headquarters shall be housed in the SMIC Headquarters, from where necessary assistance shallbe provided to the affected business establishment. The Emergency Disaster Control General Headquarters shall be responsible for coordinatingwith whomsoever concerned, making appropriate decisions, and issuing instructions, etc. to check the condition of the affected establishment andensure smooth execution of the restoration efforts. Furthermore, to secure the means of communication with disaster affected plants in the event ofan emergency, we have arranged for satellite mobile phones at our main plants to confirm the safety of our employees while they are not in the officeand to make emergency calls from one plant to another. We have also kept stockpiles of disaster goods and emergency supplies for use in casesomeone is trapped in an elevator.
In order to protect the life of employees in earthquakes and fires, SMIC periodically conducts evacuation drills, fire drills, and lifesaving lessons under
the direction of the fire department.

Results of administrative audit

Employee ratio
Domestic/overseas ratio

workshop

New employees

5%3%GeneralAffairs Div.

[Company Information]

Sales: 76,772 million yen (April 1, 2017–March 31, 2018)
Capital: 400 million yen (as of March 31, 2018)

General employees

12%

Other training

10 %New employees

Financial Situation[Scale of Operations (Group Consolidated Basis)]Group training
Management

6%

Junior managers

Stipulation and instruction of
measures for risk management

Business operations

Bush'g & Adv
Products Div

e-Learning

Office Regulations

Strategy Meeting andManagement Meeting
Instruction anddirection

Employee training

Senior managers

Reference and reporting ofimportant matters

en/csr/society/

The Senju Metal Industry Group develops and manufactures safe and reliable products. Furthermore, in order to provide
the product information promptly and accurately, we aim to disseminate the latest information through exhibitions andevents, in addition to the customer support by the Sales Division and Service Division, and have opened an online customer
consultation service from our website.

Quality Audit
Office *2

Reportwww.senju.com/

SMIC's basic educational policy is aimed at making all its employees to be in constant pursuit of knowledge and to train the human resources assuch that they can make reasonable decisions by utilizing a broad perspective. Together with e-Learning, group training and other education, 1,365
participants attended 31,594 hours of lectures in the FY2017.
Employees involved in manufacturing participated in an on-site improvement training, following which a debriefing was conducted to discuss what
they learned from the training.

Tax Auditors(outside)

Formulation and implementationof management policy

Instruction anddirection

Materials Div.

Board of Directors

Instruction

Relationship between
Customers and Employees- As a program to train the best human resources, we aim to train the human resources so that they acquire "ability, sincerity, and fighting spirit" -Business
Audit Office *2

Instruction

Operating Officer

Senyu-kaiDiv.

Auditors

ReportManagement
Conference * 1

SMIC Branch Labor Committee● Quality Assurance

ReportDecision making on
management
Election

Quality
Assurance Div.

Audit

President and COO

CSR & Public
Relations Div.

Code of Ethics

Election and dismissal

Board of Directors*1 Include the management of subsidiaries*2 Include the monitor of subsidiaries

Electionanddismissal

Reference:
Our responsibility tosociety

In 2017, we conducted a total of 119 audits at all our plants and sales offices,
domestic affiliates, and 11 overseas sites, regarding CSR and security
exports. The CSR audit, which is conducted in line with the CSR Basic
Policy and Goals that are based on the RBA Code of Conduct, is composedof seven segments, namely "human rights and labor”, "health and safety","environment", "fair trade and ethics", "quality and safety", "information
security”, and "social contribution". The audit that covered about 260 points
was aimed at confirming that the company has continuously maintained asound management system while protecting the occupational health andsafety, and confirmed that corporate compliance was upheld.

(Unit: Number of audits)

Auditedlocations

Business
audit

Security
exports

Specifiedshippers

SMIC

47

30

10

Group
Companies
In Japan16

23Overseas
locations

11

0

0

Total

74

32

13

SMIC CSR REPORT 2017-201826

Society

Relationship with Suppliers

Society

Relationship with Local Community

The Senju Metal Industry Group actively engages in the initiatives to contribute to local communities through culture, sports,
and a number of business activities at our sites around the world.

Assistance for basketball tournament for the mentally handicapped

Our Path to "Conflict-Free Sourcing"Ever since January 2011, when we became a member of the RBA (Responsible Business Alliance, Formerly EICC), we have been
attending the RBA General Meeting held around the world, and have established close relationships with the client companies listedon the US market. As a member of the RMI (Responsible Minerals Initiative, formerly CFSI) since 2014, we have actively encouraged
the smelters to participate in RMAP (Responsible Minerals Assurance Process, formerly CFSP) and get third party certification. In
February 2015, we reported that all our smelter partners were RMAP certified. From the third year on, when stricter compliance with
SEC final rules was required, we have continued to call on all smelter suppliers to renew certification with RMAP.
We aim to sustain the safe and reliable supply chain of SMIC products such as solder bars, flux cored solder, preform, anode, paste,
and balls.

Procurement Activities - Promotion of Supply Chain Assessment Senju Metal Industry clearly states its basic approach in the form of the purchase policy (have a high regard for etiquette towards

business partners, fair and sincere procurement) and the following CSR procurement policy for procurement from suppliers.
We also ask our suppliers to fulfill 14 items based on the ISO9001 and ISO14001 requirements and the supply chain assessment
guidelines established by the RBA, as our basic approach towards procurement from suppliers.
Audit activities for our Japanese and overseas business partners are carried out according to the annual plan by the Development
and Production Div. that are associated with the Procurement Div. In the FY2017, with cooperation from our domestic and overseas
suppliers in supply chain assessment, we confirmed that our supply chain complies with the SCM requirements.

Basic Stance on Requirements for Suppliers① Compliance with laws, regulations, and social
standards② Promotion of sound business management③ Priority on product quality, delivery, and reliablesupplies④ Priority on Business Continuity Plans (BCP)⑤ Environmental considerations⑥ Prohibition of procurement from regions with social
conflict

CSR Procurement Policies① SMIC “Quality and Safety Policy”② SMIC “Environmental Policy”③ SMIC “Purchasing Policy”④ SMIC “Basic Stance Required of Suppliers”⑤ IATF16949 (Note) Requirements for Consideration
regarding Delivery Items⑥ Environmental Management Requirements for
Consideration regarding Delivery Items
Note: IATF16949: Automotive Quality Management System standard⑦ Priority on VE (Value Engineering) activities⑧ Priority on providing information⑨ Priority on initiatives to shorten material procurement
periods⑩ Strict compliance with confidentiality⑪ Priority on promoting IT application⑫ Information security⑬ Exclusion of antisocial forces⑭ Social contributions

27

SMIC CSR REPORT 2017-2018

Visit to the Peru-based smelter minsur[Event date: October 28, 2017] (Senju Metal Industry Co., Ltd. Kaohsiung Branch, Senju electronic (Taiwan) Co., Ltd.)
Taiwan's social welfare organization "Syinlu
Social Welfare Foundation" has been organizing
basketball tournaments for mentally handicapped
persons since 2011, with the aim of enriching theirlives and providing them opportunities of growth.
In this tournament that was held with approval fromSMIC Kaohsiung Branch and SENJU ELECTRONIC( TAIWAN) CO., LTD., 52 local staff members
volunteered at the 7th Nice Day Ball basketball
tournament held at the Kaohsiung City YouthBasketball Courts in Taiwan, guided the players ofeach team and supported the tournament.

CONCERT in MUSEUM[Event date: July 10, 2017] (Sekido Museum of Art)

In the arts and crafts exhibition area at the Sekido
Museum of Art located inside our headquarter,"CONCERT in MUSEUM" is organized ever yyear in cooperation with the Adachi Lifelong
Educational Promotion Corporation as an activity
where locals can enjoy music and art at the sametime.
In 2017, animal-themed songs were played oncello, contrabass, and violin, while animal-themed
ceramics, metalwork and stonework pieces fromaround the world were exhibited as part of the"Sekido Zoo" theme. The live performance wasgraced by about 60 guests.

CSR Committee Launch (Senju Comtek Corp.)
In 2017, Senju Comtek Corp. launched the CSR
Commit tee aimed at local contribution andvolunteering activities.
The main activities conducted by the committee
included:● Donation of food items to food bank organization● Sponsoring the coat donation movement of major
US clothing retailers● Donation of toys to the local fire department● Donation of stationery to Catholic charitable
institution● Donation to charitable organizations such as theJapan Society for the Prevention of Cruelty to
Animals and YWCA (Note)● Cleaning activities for environmental protection andrestoration of local rivers● Local forest reserve conservation activities
Note: YWCA: The Young Women's Christian Association

SMIC CSR REPORT 2017-201828

Environment

What are SMIC eco-factories?

Eco-Factories

In addition to complying with laws
and regulations and reducing therisk of environmental, we conduct
energy conservation and 3R(reduce, reuse, recycle wastes)
activities at our plants.

The Senju Metal Industry Group not only develops and manufactures products, but also promotes the introduction of
eco-friendly facilities at all our production sites, promotes the reduction and reuse of waste, and engages in eco-friendly
production activities.

Prevention of global warming

Environment

Activities for Preserving Biodiversity

At the United Nations Conference on Environment and Development (Rio de Janeiro Earth Summit) held in 1992, a treaty was
signed for the prevention of global warming and conservation of biodiversity. The Senju Metal Industry Group considers it tobe an essential task to maintain the earth's ecological balance, declares it as one of the CSR goals, and participates in theongoing local activities to preserve the biodiversity. A total of 165 employees and their families participated in the FY2017.

- Environmental emissions from business activities in the FY2017 -We quantitatively monitor and measure the environmental burden associated with our business activities to track input and output
information such as the amount of energy used and the amount of emissions. We have implemented environmental improvement
efforts to reduce energy consumption, reduce, reuse and recycle wastes, and reduce the amount of specifically defined chemical
substances used by us.
GHG (greenhouse gases) emissions at all our domestic sites in the FY2017 reached -6.8% (total emissions being 17,427 tons), to beat ourtarget of -2% compared to 2011.

The 21st Ishizaki Beach Clean [Event Date: May 20, 2017] (Senju Giken Co., Ltd.)A local volunteer organization "Miyazaki-no-kaigan-wo-minnade-utsukushiku-suru-kai—The association to make the Miyazaki
coast beautiful" studied how to use the coast in an eco-friendly
way and engaged in improving the manners of the coast visitors
along the coast of Miyazaki, where rare plants and animals
such as loggerhead turtles live. Every year when the loggerhead
turtles hatch, cleanup activities are conducted at Ishizaki
Beach in order to remove garbage and driftwood which hinder
the movement of baby turtles returning to the sea. In 2017, 19
people from Senju Giken Co., Ltd. participated in the activity.
Note: Loggerhead turtles are designated as an endangered species and natural
treasure in Miyazaki prefecture.

The 68th Nationwide Tree-Planting Festival Toyama 2017 [Event date: May 23, 2017 ] (Senju System Technology)
The Nationwide Tree-Planting Festival has been held as themain event of the National Afforestation Campaign since 1950
by the National Land Afforestation Promotion Organizationin collaboration with the cities and prefectures where theevents have been held every spring in order to deepen thenational understanding of forests and afforestation. 6 people
from Senju System Technology participated in "The 68th
Nationwide Tree-Planting Festival Toyama 2017" attendedby Their Majesties the Emperor and Empress. As part of
the activities designed to combat cedar pollen allergy, thenon-pollen cedars "Tateyama, the brilliance of the forest"
researched and developed in Toyama were planted.

Mangrove planting [Event date: October 21, 2017 ] (Senju (Malaysia) Sdn. Bhd.)
Mangroves are supposedly effective in preventing
global warming, because they absorb carbon
dioxide, store a lot of carbon, and emit oxygen. The
local NGOs plant mangroves every year in the Kuala
Selangor Nature Park located to the northwest of
Senju (Malaysia) Sdn. Bhd. In 2017, 22 people from
Senju (Malaysia) Sdn. Bhd. participated and planted
250 mangrove seedlings.
The input and output chart for our Tochigi Plant, which accounts for the majority of all emissions in our Japan facilities

Carbon dioxide emissions due to transport
We are monitoring the items required in scope 3 by calculating
the emissions from logistics in 2017 based on the consigned
domestic cargo transport volume calculated for each productcategory, from the transport zone and distance. We also
monitor the carbon dioxide emissions pertaining to employee
commute.

29

SMIC CSR REPORT 2017-2018

Carbon dioxide emissions due to transport"The Sea is longing for the forest" tree-planting festival

Satetsu River Cleaning [Event date: April 14 and 15, 2017]

Creating a healing space in Moka

Satoyama Conservation Volunteers[Event date: June 3, 2017] (Senju Sprinkler Co., Ltd.)- Creating wooded areas suited to modern times [Event date: March 3, 2018] (Tochigi Segment)(Senju Electronic Corp., Senju Sprinkler Co., Ltd.)[Event date: September 30, 2017](Kansai Segment)

SMIC CSR REPORT 2017-201830