2023 Environmental, Social, and Governance Report
PDF Solutions, Inc.

April 20, 2024

2023 ESG Report

Contents
Introduction to the Report .............................................. ii

Health and Safety ....................................................... 6

About PDF Solutions ....................................................... ii

Diversity, Equity and Inclusion ................................... 6

Advancing Sustainability Together – A Message from
Our CEO .......................................................................... iii

Impact and Local Communities.................................. 7

ESG Priority Assessment ................................................1
ESG Oversight .................................................................2
Environmental Sustainability ..........................................3
Product Sustainability Strategy .................................. 3
Sustainability Strategy ................................................ 3
Sustainability Oversight and Management ................. 4
Sustainable Operations............................................... 4
Responsible Sourcing .....................................................4
Human Capital Management ..........................................5
Talent Development.................................................... 5

Governance ..................................................................... 7
Corporate Governance ............................................... 7
Business Ethics and Compliance ................................ 7
Board Highlights ......................................................... 8
Our Board Committees ............................................... 8
Data Security and Privacy ........................................... 9
Risk Management ..................................................... 10
Report Conclusion ........................................................ 11
Looking Toward the Future ....................................... 11
Materiality Disclaimer ............................................... 11
SASB Index ............................................................... 12

Employee Engagement ............................................... 5

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Introduction to the Report
This 2023 Environmental, Social, and Governance (“ESG”) Report covers the operations of PDF Solutions, Inc. (“PDF Solutions,” “PDF,”
or the “Company”) for fiscal year 2023, which began on January 1, 2023, and ended on December 31, 2023, unless otherwise noted.
Throughout this report, we define ESG as a way of categorizing factors that impact a company’s performance as well as a strategy for
integrating these factors into the business to operate in a sustainable manner.
The contents of this report are informed by our ESG Priority Assessment, which leveraged leading sustainability reporting standards
and frameworks, including the Sustainability Accounting Standards Board (“SASB”), the Global Reporting Initiative (“GRI”), and theTask Force on Climate-Related Financial Disclosures (“TCFD”).
This is PDF’s second annual ESG Report. It has been prepared in alignment with disclosure topics included in the SASB Software & IT
Services Standard and the Electrical & Electronic Equipment Standard.

About PDF Solutions
PDF Solutions, Inc. (Nasdaq: PDFS) provides comprehensive data solutions designed to empower organizations across thesemiconductor and electronics industry ecosystem to improve the yield and quality of their products and operational efficiency forincreased profitability. Our customers include Fortune 500 companies across the broader semiconductor and electronics industry
ecosystems to achieve smart manufacturing goals by connecting and controlling equipment, collecting data generated during
manufacturing and test operations, and performing advanced analytics and machine learning to enable profitable, high-volume
manufacturing.
PDF Solutions was first incorporated in Pennsylvania in 1992, and we reincorporated in California in 1995. In 2000, we reincorporated
in Delaware, and in 2001, we completed an initial public offering.
From 2000 through 2009, we expanded our technology footprint and our operations in various countries through acquisitions. From2009 to 2019, we primarily focused on the pervasive application of our technology to leading edge logic manufacturing and achieving
yield targets with our clients that maximized Gainshare royalties. In 2013, we leveraged our extensive experience in yield simulation
software and CV® test chip development and started research and development on an e-beam solution for non-contact, inline electricalinspection, and process control for wafer inspection. In a parallel effort, starting in 2014, we re-architected our point-solution softwaretools into a new generation, highly-integrated data analytics Exensio platform, which resulted in accelerated growth in our software
business through 2019. In December 2020, we completed the acquisition of Cimetrix and began providing software products based on
open standards for equipment control and connectivity to equipment manufacturers and factories. We released our first e-beam tool in
2015, the second generation in 2019, and the third generation in late 2022.

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Advancing Sustainability Together – A Message from Our CEO
Dear Stakeholders,
I am pleased to present to you our Environmental, Social, and Governance (ESG) report for the year 2023. At PDF Solutions, werecognize the importance of operating sustainably and responsibly in an ever-evolving world.
As we delve into the report, I want to draw your attention to some key statistics and industry trends that underscore the importance ofour collective efforts:•

Today, the technology industry consumes about 1% of the world's energy production. At the current rapid rate of consumption
growth for the technology industry compared to the growth of energy production, this could surge to over 60% by 2040. 1•

Emissions from Scope 1 (related to activities within the fabs) and Scope 2 (arising from the generation of purchased electricity,
steam, heating, and cooling equipment) of semiconductor companies constitute a substantial 65% of the total GHG emissionsof the semiconductor industry. 1•

The steps that semiconductor companies are now taking are unlikely to achieve the 1.5°C trajectory by 2030. 2

We believe PDF Solutions has an important role in helping to minimize the environmental footprint of the semiconductor industry. Ourinnovative solutions are designed to speed the move to smaller nodes, to improve semiconductor yield, and to improve operational
efficiencies of the manufacturing facilities. Smaller nodes result in lower power consumption when the chip is put to use compared toprevious generation product. Improving yields and operational efficiencies reduces the consumption of power, water, and materials in
the fab, test and assembly facilities – for the same volumes of good die.
Looking ahead, we are excited about the opportunity to partner with our customers in their journey towards achieving climate-related
and other environmental goals. By leveraging our expertise and resources, we aim to be a catalyst for progress and positive change
within the industry.
In conclusion, I want to express my gratitude to you for your support of our mission to provide semiconductor and electronics companies
innovative solutions to create, access, and organize data to enable analysis and control and achieve better time-to-market, yields,
quality, and operational efficiencies.
Thank you for your continued trust and collaboration.
Warm regards,

Dr. John K. KibarianCEO, President, and co-founder

1

2

Tembey, Gaurav, et al. "A Net Zero Plan for the Semiconductor Industry." Bcg.Com, 7 Nov. 2023, www.bcg.com/publications/2023/a-plan-toreduce-semiconductor-emissions. Accessed 15 Apr. 2024.
Goumlke, S., et al. “Keeping the semiconductor industry on the path to net zero.” Mckinsey.com, 4 Nov. 2022,
https://www.mckinsey.com/industries/semiconductors/our-insights/keeping-the-semiconductor-industry-on-the-path-to-net-zero#/. Accessed 15
Apr. 2024.

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ESG Priority Assessment
In 2022, we conducted our first ESG Priority Assessment,
which we use to guide our overall ESG strategy. The ESG
Priority Assessment was designed to identify theenvironmental, social, and governance topics with the greatest
impact on our business strategy, operations, and value
creation, including topics that are important to our customers
and business partners. Going forward, we aim to regularly
assess a wide range of ESG topics to inform our strategy, withthe goal of increasing the scope of our priority assessment in
future reports.

Our priority ESG topics, in order of highest priority to ourbusiness, are as follows:
•
•
•
•
•
•
•
•
•
•
•
•

Data Security
Human Capital Management
Corporate GovernancePublic Policy
Risk Management
Business Ethics
Diversity, Equity, and Inclusion
Sustainable Products
Responsible Sourcing
Impact and Local Communities
Environmental Sustainability
Climate ChangeThis ESG Report describes the initiatives that are in alignment
with the priority ESG topics and includes relevant metrics
aligned with the SASB standards. As we continue to develop
our ESG strategy and goals, our aim is to increase the scope ofour program and our reporting to cover more of our priority
topics.
For more information around the scope and methodology of the
ESG Priority Assessment, please see our 2022 ESG Report.

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ESG Oversight
Given the importance of ESG to the long-term success of our business, our Board and its committees play a critical role in overseeing
ESG matters.

Board of Directors
The Board is responsible for (i) oversight of ESG risks and opportunities and (ii) the integration of ESG into
strategy, to the extent material to the business.

NCG Committee

CHCM Committee

The NCG Committee reviews andoversees our programs, policies,
practices, disclosures, risks andopportunities,
measures,objectives and performance
relating to environmental, socialand governance issues, andmakes recommendations to theBoard regarding the integrationof ESG matters into our businessstrategy and operation.

The CHCM Committee reviews
and oversees our programs,
policies, practices, disclosures,
relevant risks and opportunities,
measures,objectives
andperformance relating to humancapital matters, including but
not limited to matters regarding
culture, recruiting, retention,
careerdevelopment
andprogression, diversity, equity
and inclusion, human health andsafety, and total rewards, andmakes recommendations to theBoard regarding the integrationof human capital matters into
our business strategy andoperation.

Audit Committee
The Audit Committee, on behalf of
the Board, oversees the principal
enterprise risk exposures facing
the Company and the Company’s
mitigation, control and monitoring
efforts in respect of such risks,
including, but not limited toenvironmental and sustainability
risks,
andreviews
withmanagement
the Company’sbusiness continuity and disaster
preparedness planning.
The Audit Committee also reviews
cybersecurity risks, incidents, theadequacy and effectiveness of theCompany’s information and cybersecurity policies and the internal
controls regarding information andcyber security and any other risks
and incidents relevant to theCompany’s
computerized
information system controls andsecurity.

Management-Level ESG Steering Committee
The purpose of the management-level ESG Steering Committee is to (i) establish programs, policies andpractices relating to ESG matters and (ii) assist the NCG Committee of the Board in fulfilling its oversight
responsibilities with respect to ESG matters. The ESG Steering Committee is chaired by the General Counsel.

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Environmental Sustainability
PDF Solutions is committed to addressing environmental sustainability in its
business activities. Our approach to environmental sustainability considers bothour own operations and the significant indirect environmental impact that our
products can have on our customers’ operations. Our products drive efficiencies
for our customers, which can indirectly lower their environmental footprint. In
the future, we may work to identify and measure the direct environmental
benefits of our products.

Product Sustainability Strategy
We work with some of the largest logic semiconductor manufacturers in theworld to help improve the time-to-market and yield of their manufacturing
processes. Our products and services can indirectly help to reduce ourcustomers’ consumption of natural resources, including energy, water, andsilicon, with significant indirect impacts on waste and greenhouse gas (GHG)
emissions.
We implement hybrid or on-cloud solutions for semiconductor manufacturers’
process control and manufacturing analysis. These solutions use less energy
than traditional on-premises IT infrastructure, reduce waste such as paper, andenable remote work, reducing the need for commuting and travel.
We believe sustainability will play an increasing role in our customers’ priorities
as they seek to decarbonize their operations. Helping our customers achieve
their environmental sustainability goals may represent an opportunity for us. In
the future, we intend to review the direct and indirect environmental benefits ofour solutions and to assess opportunities to integrate environmental factors into
the development of new products.

Sustainability Strategy
We strive to protect the environment through sound business and operations
management practices and decisions.

Environmental Challenges in the
Semiconductor Industry
The semiconductor industry faces significant
challenges as part of the transition to a green
economy, including direct environmental impacts
from the manufacturing of ICs.
Large amounts of energy are needed to operate tools
across IC manufacturing, assembly, test, andpackaging processes. Foundries also consume large
amounts of energy to operate cleanrooms with strictclimate and humidity controls. The amount of energy
required at scale is often significant, with someindividual foundries consuming more energy thanmajor cities. More than 80% of semiconductor
greenhouse gas emissions (GHGE) come fromconsumption of electricity.3
Otherdirectenvironmental
impactsfrommanufacturing ICs include the use of GHGs in the
manufacturing process, which accounts forapproximately 13% of the semiconductor industry’s
emissions.3 Other environmental impacts are causedby the significant use of ultrapure water and silicone,
which in turn require large amounts of energy to
produce and transport.
The large amount of GHGE generated from chip
manufacturing account for the plurality of lifecycle
emissions for most consumer electronic devices, withgreater emissions from the IC manufacturing process
than from energy consumption over the lifecycle ofmany electronics. As major purchasers ofsemiconductors transition their own operations torenewable power, GHGE from manufacturing the ICs
that these companies purchase may represent aplurality of their total GHGE. The information andcommunication technology sector as a whole isexpected to account for 14% of the 2016-level global
GHGE in 2040, up from approximately 1% to 1.6% in
2007. 4

We look for opportunities to conserve energy, reduce consumption of natural
resources, preserve air, soil, and water quality, manage waste properly, andreuse and recycle. In 2023, at our headquarters, lab, and cleanroom facilities, we
renewed focus on individual actions to reduce and recycle, including by offering
a learning program for employees and custodians and replacing single-use utensils and coffee cups with more sustainable options. We
continue to look for opportunities to reduce the use of toxic substances in our operations where possible, including in our cleanroom
and lab facilities.

In 2023, our independent safety and environmental consultant, Boretti, Inc., completed its ISO 14001 pre-certification assessment ofour cleanroom facility. When certified this ISO 14001 program will provide a specific framework for implementing our environmental
management system.
In the future, we intend to conduct self-assessments regarding relevant environmental protection measures and to measure andevaluate our use of energy, water, and the generation of waste in our worldwide facilities. At our cleanroom and lab facilities, in 2023,
we recycled 100% of wood, metal, and recyclable plastic waste.
3

Tembey, Gaurav, et al. "A Net Zero Plan for the Semiconductor Industry." Bcg.Com, 7 Nov. 2023, www.bcg.com/publications/2023/a-plan-toreduce-semiconductor-emissions. Accessed 15 Apr. 2024.

4

Belkhir, L., & Elmeligi, A. (2018). Assessing ICT global emissions footprint: Trends to 2040 & recommendations. Journal of Cleaner
Production, 177, 448-463. https://doi.org/10.1016/j.jclepro.2017.12.239

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Sustainability Oversight and Management
Our Board holds the highest level of responsibility related to our environmental strategy. The Board has delegated this responsibility to
the Nominating and Corporate Governance Committee.
Our newly formed management-level ESG Steering Committee, which includes members of our executive leadership team and internal
experts with knowledge of relevant environmental topics, was formed to (i) establish programs, policies, and practices relating to ESG
matters, and (ii) assist the NCG Committee of the Board in fulfilling its oversight responsibilities with respect to ESG matters. The ESG
Steering Committee is chaired by the General Counsel.

Sustainable Operations
We intend, in the future, to look for ways to reduce energy consumption in our worldwide facilities. Some of our facilities, including ourheadquarters, cleanroom, and lab facilities, have been remodeled within the last four years and have features such as LED lighting,motion detector lighting, and smart thermostats. All three facilities are compliant with California’s Title 24 energy efficiency standards.
We track and monitor energy consumption in our cleanroom and lab facilities.
Water is a critical sustainability challenge for our customers in the semiconductor industry but is not material in our own operations.
We do not use water in our product development and manufacturing processes. In 2023, we used water only in connection with kitchensand restrooms, which all have low flow valves at our headquarters, cleanroom, lab, and Canadian facilities.
Our product development and manufacturing processes are inert, producing no off gas or emissions. The only reportable, hazardous
material that we use is in our cleanroom: liquid nitrogen. The liquid nitrogen is stored in a tank external to our building and monitored
using telematics by an independent third-party specializing in such activity. In 2023, we had no reportable incidents related to liquid
nitrogen stored in our facilities.

Responsible Sourcing
We are committed to responsible sourcing in our product supply chain, including ethical production, and the protection of human rights.
Although we are not a member of the Responsible Business Alliance (“RBA”) (formerly the Electronics Industry Citizenship Coalition or
EICC), in 2021 in an effort to further our ESG efforts, we incorporated the RBA Code of Conduct into our Supplier Code of Conduct tosupplement our Code of Ethics, including the specific policies of the RBA Code relating to the five critical areas of corporate social
responsibility: labor, health and safety, environment, management systems, and ethics. A copy of the Supplier Code of Conduct isavailable at www.pdf.com/company/trust-center/working-with-pdf-solutions/supplier-code-of-conduct/.
We request that our suppliers adhere to the RBA Code of Conduct or an equivalent code by flowing this requirement through ourcommercial contracts.
We have a variety of resources available to assist suppliers with reporting questionable behavior or possible violation of our supplierstandards, including our Ethics Hotline and emailing our legal department directly.
We will not tolerate any retribution or retaliation taken against any individual who has, in good faith, sought out advice or has reported
questionable behavior and/or a possible violation.
We are committed to sourcing components and materials from companies that share our values around human rights, ethics, andenvironmental responsibility. As part of this commitment, we support the goals and objectives of Section 1502 of the Dodd-Frank Act(the “Act”).
As part of our compliance with the Act, we perform due diligence and file annual reports regarding the use of conflict minerals in our
products. Accordingly, all of our suppliers are expected to comply with our Supplier Code of Conduct, which includes requirements
relating to conflict minerals and responsible sourcing.
Specifically, we expect all of our suppliers to comply with the Act, and to exercise due diligence on the source and chain of custody of
any tantalum, tin, tungsten, or gold used in the products made for us and make their due diligence measures available to us. Under the
Supplier Code of Conduct, our suppliers are responsible for passing these same requirements on to their suppliers. We seek to source
products only from suppliers that comply with these requirements.

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Human Capital Management
We believe we have a responsibility to foster a healthy, balanced, and ethical work environment for everyone in our organization throughsound ethical and organizational governance, by promoting business ethics and integrity, and by embracing equality, diversity, andinclusion throughout our organization and even extending to the board room.
In February 2024, our Compensation and Human Capital Management Committee and Board of Directors each approved the adoptionof a Human Rights Policy. This Human Rights Policy is rooted in our core values and reflected in our Code of Conduct and other policies
and agreements. In developing this Policy, we leveraged the human rights standards set forth in the Responsible Business Alliance
Code of Conduct and other internationally recognized human rights standards. We are committed to the following guiding principles:
•
•
•
•
•
•
•

Treating all people with respect and dignity.
A workplace free of harassment and discrimination.
An inclusive and diverse workplace.
A safe and healthy workplace, including the right to access water.
Fair wages and benefits.
Protection of personal data from unauthorized access, use, or disclosure.
Zero tolerance for child labor or forced labor, including but not limited to bonded labor, slavery, and trafficking of persons.

As of December 31, 2023, we had 493 employees worldwide, including 157 field application engineers and consultants, 155 in researchand development, 106 in sales and marketing, and 75 in general and administrative functions. Of these employees, 286a re located in
North America, 171 in Asia, and 36 in Europe.
Our commitment to human capital management is embedded in our governance structure.
At the Board level, our Compensation and Human Capital Management Committee is tasked with oversight of the development,
implementation and effectiveness of the Company’s policies and strategies relating to human capital management, including but notlimited to strategies regarding culture, recruiting, selection, career development and progression, diversity, equity and inclusion, humanhealth and safety and total rewards.

Talent Development
We are committed to the development and growth of our employees because we believe this is crucial for our long-term success. This
includes offering training, mentorship, and other development opportunities to further enhance the talent we have today, but alsoentails having the right skill sets for our future.
To this end, in 2023 we deployed a set of online training courses spanning topics such as difficult conversations for managers andtechnical aptitude (e.g., new coding languages), and a promotion process to formalize managerial focus on progressing employees’
careers. We plan to continue to explore and expand our offerings and programs to achieve our development and employee growth goals.
We believe that our team of engineers will continue to advance our market and technological leadership. We conduct in-house training
for our engineers in certain technical areas.
We also fund attendance at continuing education courses, symposia, and participation in professional organizations.

Employee Engagement
Employee engagement is crucial for the overall health of the organization. In 2023, we conducted a large-scale employee survey. In
total, more than 250 employees, or approximately 40% of our global workforce, participated in the survey, and included individuals
with tenure from 2 to 30 years. The Employee Net Promoter Score (eNPS) score is a survey-based method of determining whether
employees are happy, satisfied, and loyal to their workplace, and are used by many employers to take an overall gauge of theengagement health of their organization. Our eNPS based on the survey rated us 3.97 against a benchmark of 4.01 for employers thathad 500-999 employees (source: Qualtrics). We intend to conduct shorter, pulse surveys periodically to continue monitoring overall
employee engagement.

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In addition to our efforts to address employee engagement, we are committed to supporting our employees and creating an engaged
workforce by prioritizing the items below:
1)
2)
3)
4)

Personal growth through training and development
Recognizing and rewarding our people for their commitment to our values and our organization
Flexible work locations and schedules
Providing a sense of organizational community by hosting online as well as in-person events where our people can gather andconnect.

In 2023, we were also included on the Forbes list of America’s Best Small Employers, based on their independent surveys. We consider
these results to be positive indicators of our workplace environment and progress on the above priorities.

Health and Safety
We are committed to ensuring that proper working conditions exist for the safety of our employees, such as developing, implementing,and improving health and safety systems and conditions, and providing appropriate preparation, education, reporting, and controls. For
example, at our headquarters, we have Illness Prevention and Ergonomics Evaluation programs and an Emergency Action Plan for
employee health and safety. We are developing these programs for worldwide facilities. In addition, for worker safety at our lab andcleanroom facilities we have, for example, Lockout/Tag out, Forklift Safety, Electrical Safety, Hand and Power Tools Safety, Ladder
Safety, and Hazard Communication programs.
Our headquarters, lab, and cleanroom facilities use an independent safety consultant for the review of policies, evaluation, assessment,
analysis, development of written safety process, training, reports, and research for resolving safety issues.
We have a safety handbook, and every employee located at our lab and cleanroom facility goes through environmental and lab safety
training. In 2023, employees completed 100% of the required training. Our safety consultant is on-site at our lab and cleanroom biweekly to help oversee our environmental, health and safety management. Our employees take additional safety training if required byour customers for access to their sites. Additionally, at our headquarters, cleanroom, and lab, we host CPR and AED classes every two
years for employees to participate and become certified.
We are proud of our safety record. In 2023, we had no significant work-related injuries to report to the Occupational Safety and HealthAdministration (OSHA) and no lost time due to work-related injuries.

Diversity, Equity and Inclusion
We embrace equality, diversity, and inclusion throughout our organization. We strive to foster an environment where our employees
feel respected, valued, and empowered. We know that diversity of thought and experiences makes our collaboration and results better,and our team members are at the forefront in helping us promote and sustain an inclusive workplace.
We work to ensure that our business practices support diversity and inclusion to build an innovative workforce and to strive towardhaving our organization reflect the complexion of our customers and suppliers.
In February 2024, our Compensation and Human Capital Management Committee and Board of Directors each approved the adoptionof a Diversity, Equity, and Inclusion Global Policy. This policy is intended to encourage a connection between our Company values andour actions by building on a foundation of:••

Respectful communication and cooperation between all employees.
Teamwork and employee participation, permitting the representation of all groups and employee perspectives.

In 2023, we formalized the connection between cash bonus for 2023 performance and consistent practice of our core values. We also
highlighted our values in every quarterly meeting by identifying the specific core value in each case of employee recognition. We also
deployed, as part of a set of online training courses, development modules about diversity, which are now available to employees
worldwide. We intend to continue to strengthen our diversity and inclusion programs with further organization-wide training.
We value a range of diverse perspectives with reference to our business model and specific needs, including, but not limited to, gender,
age, race, language, cultural background, educational background, industry experience, professional experience and veteran and active
armed service status or other similar characteristics. Our Board has adopted a Board Diversity Policy, pursuant to which we arecommitted to actively seeking highly qualified individuals from minority groups to include in the pool from which new Director
candidates are selected. 38% of our Board is gender diverse, and 38% of our Board is racially diverse.

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Impact and Local Communities
We believe that empowering our employees to give back to our community is central to our culture and an expression of our core values.
We believe in supporting initiatives that improve the communities where we work and where our employees live.
One of our most meaningful philanthropic initiatives is our annual holiday charity drive. The holiday charity drive is an organized PDF
holiday gift drive as part of the Family Giving Tree's Holiday Wish Drive. In 2023, we opted for the virtual Giving Tree Platform for thesecond year in a row. The Giving Tree fulfills the wish of a child, adult, or senior in need so they may receive a gift at the holiday time.
Donations can fulfill a gift wish or make a cash donation, so that the wishing tree can purchase the gift on the recipient’s behalf.

GovernanceCorporate Governance
We are committed to the highest standards of corporate ethics and diligent compliance with financial accounting and reporting rules.
Our Board provides independent leadership in the exercise of its responsibilities. Our executive officers oversee a strong system ofinternal controls and compliance with corporate policies and applicable laws and regulations. Our employees operate in a climate of
responsibility, candor, and integrity.
Key highlights of the Board and corporate governance practices are:

6 out of 8 Directors are Independent

Majority Voting for Director Elections

Separate Chair (or Lead Independent Director if Chair isvacant) and CEO100% of Committee
IndependentLimit on Outside Public Company Directorships

Proxy Access Rights

Annual Board and Committee Evaluations



38% of Directors are WomenRegular Executive Sessions of Independent Directors atquarterly Board and Committee Meetings

Stock Ownership Policy for Directors and Section 16
OfficersOn-going Education for Directors for Issues Pertinent to
the Company’s Business (e.g., export)

Stockholder Engagement with Approximately 57% of
the Company’s Outstanding Shares in 2023

ChairsandMembersareBusiness Ethics and Compliance
We are committed to ensuring ethical organizational governance and promoting business ethics and integrity. Our Code of Ethics
describes the expectations for all employees, officers, and directors regarding acceptable ethical behavior at the Company. Our Boardof Directors is responsible for setting the standards of conduct contained in the Code of Ethics and for updating these standards asappropriate to reflect legal and regulatory developments. The Audit Committee is charged by the Board with the authority andresponsibility to assess the code of ethics and recommend any amendments or waivers for approval by the Board.
We promote an ethical organizational culture and encourage all employees, regardless of position or level, to raise questions orconcerns about actual or potential ethical issues and company policies and offer suggestions about how we can make our organization
better to address concerns. We circulate the Code of Ethics annually to all employees. Each quarter, our sales employees attest to
professional conduct in accordance with the Code of Ethics by confirming compliance with our No Side-Letter Policy.
We have a Whistleblower Hotline that includes global telephone and web access together with local language support. The web portal
enables online reporting of concerns about ethics or compliance, where allowed by local law, and a place to ask questions or quickly
access ethics and compliance policies. We believe these efforts strengthen our ethics and compliance efforts and foster an environment
where employees can express their concerns and have them resolved.

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Board Highlights
Board Independence

Board Tenure
0 to 5 Years:
6 to 10 Years:
10+ Years:

Six directors, including our Lead Independent
Director, are independent of the Company andmanagement.

Our directors bring a balance of experience and fresh
perspectives to our Board.

Board Refreshment & Diversity

Age Mix

4100%

New directors appointed
in the last five years.

New directors appointed
in the last five years thatare diverse (gender or
ethnicity).

50-60 Years:
61+ Years:

38%

38%

GenderDiversity

RacialDiversity

Our Board Committees
Our Board of Directors has established an Audit Committee, a Compensation and Human Capital Management Committee, and a
Nominating and Corporate Governance Committee. The composition and responsibilities of each committee are described below. Eachof these committees has a written charter approved by our Board of Directors. Copies of the charters for each committee are available,
without charge, in the “Investor Relations” section of our web site. Members serve on these committees until their resignations or until
otherwise determined by our Board of Directors.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is responsible for, among other things: identifying, reviewing, evaluating, andrecommending candidates to serve as directors on the Board; making other recommendations to the Board regarding affairs related tothe directors of the Board; overseeing the Company’s corporate governance functions on behalf of the Board; and reviewing andoverseeing the Company’s programs, policies, practices, risks and opportunities, measures, objectives and performance relating tosocial and environmental issues.

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Audit Committee
Our Audit Committee is responsible for, among other things: recommending the engagement of the independent registered public
accounting firm and assisting the Board in the oversight of the qualifications and independence of the independent registered public
accounting firm; monitoring the Company’s compliance with legal and regulatory requirements including preparing the audit committee
report that SEC rules require to be included in the proxy statement; monitoring the performance of the Company’s internal and external
audit efforts; monitoring and assessing the integrity and effectiveness of the Company’s financial and accounting organization and theperformance of its system of internal accounting controls; overseeing the Company’s information security functions on behalf of theBoard; and overseeing and reviewing ethics matters on behalf of the Board.
Compensation and Human Capital Management Committee
Our Compensation and Human Capital Management Committee is responsible for, among other things: establishing and administering
the Company’s policies regarding annual executive compensation, including salaries, cash incentives, and long-term equity incentives;
assisting with the administration of the Company’s stock incentive and purchase plans; making recommendations to the Board on nonemployee director compensation; and overseeing the Company’s human capital management function on behalf of the Board.

Data Security and Privacy
Our Approach to Data Security
Information technology and data security, particularly cybersecurity, is a top area of focus for our Board of Directors, who views our
focus in these areas as essential for the success of our company and the broader technology industry in which we operate.
As described in the Audit Committee Charter of the Board of Directors, the Audit Committee is tasked with oversight of certain risk
issues, including cybersecurity. The Audit Committee is comprised entirely of independent directors, two of whom have significant
work experience related to information security issues or oversight. Management reports high severity security incidents to the Audit
Committee after they are discovered. Additionally, management provides a summary four times per year of all security incidents to
the Audit Committee. The full Board of Directors is also provided an annual assessment of our security program, our internal response
preparedness, and assessments led by outside assessors and auditors.
Our Audit Committee is regularly involved in reviewing cybersecurity risk management. At least quarterly, the Vice President of
Operations presents and reviews key security metrics with the Audit Committee including a review of cyber-security events,
cybersecurity initiatives and new or developing cybersecurity risks relevant to the business.
Our cybersecurity risk management and strategy processes are led by our Vice President of Operations and a cross section of subject
matter experts from Information Technology, Exensio Cloud Operations and Corporate Legal and team.
Our Incident Response Policy is reviewed annually and documents the controls and procedures for timely and accurate reporting ofmaterial cybersecurity incidents to the relevant parties, including the Audit Committee when applicable. Our Incident Response Teamleads the response to any reported cybersecurity event and comprises experts from Engineering, Information Technology, Legal,
Cloud Operations, and Data Security.
Cybersecurity Risk Management and Strategy
We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. We have
implemented several cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage suchmaterial risks.
Our process for identifying and assessing material risks from cybersecurity threats operates alongside our broader overall risk
assessment process, covering all company risks. As part of this process appropriate disclosure personnel will collaborate with subject
matter specialists to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential
mitigations. We also have a cybersecurity specific risk assessment process, which helps identify our cybersecurity threat risks.
For more than 5 years, we have not experienced any material cybersecurity incidents and the expenses we have incurred fromcybersecurity incidents were immaterial. This includes penalties and settlements, of which there were none.

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Data Privacy
We respect the privacy rights of our employees and customers and are committed to handling personal data responsibly and inaccordance with applicable laws and regulations. We use reasonable organizational, technical, and administrative measures to protect
personal data from improper access, use or disclosure. Security measures and tools, such as firewalls, access control tools, network
intrusion detection tools, end-point protection software, and anti-virus programs in our primary software and cloud offerings, are inplace to help protect against the accidental or unlawful destruction, loss, alteration, unauthorized disclosure, or access to personal datatransmitted, stored, or otherwise processed. These measures vary based on the nature of the personal data we collect, process, andstore, and the current state of technology.
We also take measures to ensure that third parties that process personal data on our behalf also have appropriate security controls inplace. We only transfer personal data to another country or region as permitted under applicable data protection and other laws andregulations, and only if we can ensure adequate safeguards for any transfers of personal data.
Personal data is retained in accordance with applicable laws or regulatory requirements and for as long as necessary to fulfill the
purposes for which the personal data was collected, plus any additional time periods necessary for the compliance with laws andregulations, exercise or defense of legal rights, and archiving, back-up, and deletion processes.
We do not sell, rent, share, or otherwise disclose personally identifiable information from customers for commercial purposes.
Please see our Privacy Policy, GDPR, and our California Consumer Privacy Act (CCPA) supplements/policies, on our web site.

Risk Management
Enterprise Risk Management
Our overall risk management process is led by our General Counsel who is responsible for initiating and publishing annual risk factors
by taking into account inputs from risk reviewers. The risk reviewers consist of:•••

all members of our leadership team,
all other Vice Presidents; and,any senior manager or director who has been nominated by their department VP as a risk reviewer.

Specific business units manage and mitigate detailed business unit risks following a NIST or equivalent framework. Our CEO, CFO, and
the Audit Committee of our Board approve the risk factors published in the 10-Q and 10-K filings.
The Corporate Legal Department (CLD) conducts a review annually to identify and develop a management plan for potentially new ordeveloping material risks. The CLD also reviews existing management plans for known material risks against occurrences in thereporting period, together with input from finance.
In addition to the yearly risk review, CLD monitors changes by the U.S. government and updates our systems to reflect the status ofcustomers and vendors with respect to regulatory restrictions, risks related to US or other relevant country export controls and otherpublished trade restrictions.
Business Continuity and Technology Disruptions
We maintain a data repository map and a list of business-critical systems. Owners of each critical system and each data repository are
responsible for maintaining a Disaster Recovery plan or documenting compensating controls for the systems and repositories. Owners
that manage significant parts of our data and systems are also responsible for testing backup and systems recovery at least once a year.
Our VP of Operations is responsible for creating and maintaining the Business Continuity Policy. The policy outlines the principles ofbusiness continuity and the parties responsible for maintaining critical business systems.

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Report Conclusion
Looking Toward the Future
Going forward, we aim to continue to advance our ESG program in a gradual and iterative manner, and plan to explore additional waysof sharing our progress.
We intend to leverage the ESG Priority Assessment conducted in 2022 to guide the selection and implementation of ESG workstreams,
the review of potential ESG goals, and the identification of appropriate ESG metrics.
We look forward to continuing to drive value for our company, stockholders, and extended stakeholders through the development of
our ESG program.

Materiality Disclaimer
This report contains “forward-looking statements.” Forward-looking statements in this report are made pursuant to the safe harborprovisions of Section 21E of the Securities Exchange Act of 1934 and other federal securities laws. These statements are based on
management’s current opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or results,
including, but not limited to, our ESG commitments, strategies, and initiatives; our business plans and strategy; and our stakeholder
engagement efforts. These forward-looking statements are only predictions, not historical fact, and involve certain risks anduncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements, and events could differ materiallyfrom those stated, anticipated, or implied by such forward-looking statements. While PDF Solutions believes that its assumptions arereasonable, there are many risks and uncertainties that could cause actual results to differ materially from forward-looking statements,
including the risks discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent 10-Q
filings with the U.S. Securities and Exchange Commission (“SEC”). PDF Solutions undertakes no obligation to update or revise any
forward-looking statement contained in this report, except as otherwise required by law.
Any references to “priority” or “relevant” in this report do not correspond to the concept of materiality used by the SEC.
This report contains human capital measures or objectives that may be different from or are in addition to the human capital measuresor objectives that we are required to disclose in its SEC filings. For a discussion on human capital measures or objectives that PDF
Solutions focuses on in managing its business, please see the “Human Capital” section in our most recent Annual Report on Form 10-K.
We currently do not believe that our ESG initiatives or risks are material for SEC disclosure purposes, except to the extent referenced
in our Annual Report on Form 10-K and subsequent Form 10-Q filings.

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SASB Index
The table below provides content aligning to the Sustainability Accounting Standards Board (SASB) Software & IT Services
Standard and the Electrical & Electronic Equipment Standard, which are most relevant to our operations and aligned with
our priority ESG topics identified in our 2022 ESG Priority Assessment. Unless otherwise specified, the data anddescriptions pertain to year-end 2023.
SASB Code

Accounting MetricResponse

Environmental Footprint of Hardware Infrastructure
TC-SI-130a.1

(1)
Total
energyconsumed,(2) percentage grid electricity,(3) percentage renewable(2) 100% of our electricity is supplied from grid electricity(1) Total water withdrawn, (2) total
water consumed, percentage of each inregions with High or Extremely HighBaseline Water StressIn 2023, we withdrew and consumed water only in connection withkitchens and restrooms. Our largest facilities are located in areas
with low levels of water stress, and we do not use water in our
product development and manufacturing processes.

TC-SI-230a.1(1) Number of data breaches, (2)percentage
involving
personallyidentifiable information (PII), (3)number of users affected

We did not experience any material data breaches in 2023. Whenpublic disclosure criteria are met, material data breaches areincluded in our most recent Annual Report on Form 10-K andsubsequent 10-Q filings.

TC-SI-230a.2

Description of approach to identifying
and addressing data security risks,
includinguseofthird-party
cybersecurity standards

We maintain a robust approach to identifying and addressing data
security risks. See the Data Security and Privacy section of this ESG
report, our 2024 Proxy Statement, and our most recent Annual
Report on Form 10-K, Item 1C. Cybersecurity page 34 for more
information.

RT-EE-130a.1

TC-SI-130a.2(1) 4,760 GJ (cleanroom and lab facilities only)(3) 100% of our energy usage at our cleanroom and lab facilities isfrom renewable and carbon-free sources; we purchase no otherrenewable energy.

Data Security

Recruiting & Managing a Global, Diverse & Skilled Workforce
TC-SI-230a.1

Percentage of employees that are (1)foreign nationals and (2) locatedoffshore

As of December 31, 2023, 3.2% of our U.S. employees are foreign
nationals and 48.5% of our employees were located outside theUnited States.
Our success and competitiveness depend on our ability to retain,
attract, motivate, and strategically locate in our offices around theglobe, talented employees, including some of our key executives.

TC-SI-230a.2

Employeepercentage

engagement

asa

In 2023, approximately 40% of our global workforce participatedin a broad-based survey, including individuals with tenure from 2
to 30 years. Our resulting Employee Net Promoter Score (eNPS)
score was 3.97.

Description of business continuity
risks related to disruptions ofoperations

See the Risk Management section for a description of ourmanagement approach to business continuity.

Managing Systemic Risks from Technology Disruptions
TC-SI-550a.2

Where material, risks related to business continuity are included
in our Form 10-K.

Hazardous Waste Management
RT-EE-150a.2

Page 12

Number and aggregate quantity ofreportable spills, quantity recovered

We did not have any reportable spills in our operations.

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2023 ESG Report
SASB Code

Accounting MetricResponse

Product Safety
RT-EE-250a.1

Number of recalls issued, total units
recalled

In 2023, we did not have any product recalls.

RT-EE-250a.2

Total amount of monetary losses as aresult of legal proceedings associatedwith product safety

In 2023, we did not have any material monetary losses as a resultof legal proceedings associated with product safety. When public
disclosure criteria are met, monetary losses as a result of legal
proceedings are included in our Form 10-K.

Product Lifecycle Management
RT-EE-410a.3

Revenue from renewable energy-related
and energy efficiency-related products

Our products can help improve the time-to-market and yield forour customers, with significant indirect benefits regarding theuse energy, water, and silicon, and significant indirect impacts on
waste and greenhouse emissions. We intend to work to identify
and measure the direct environmental benefits to our customers
of use of our solutions.

Description of the management ofrisks associated with the use of criticalmaterials

We are committed to responsible sourcing and haveestablished processes to identify and assess conflict minerals
in the supply chain and respond to risks.

Materials Sourcing
RT-EE-440a.1

See our Responsible Sourcing section for a summary of ourapproach to ethical production and the protection of humanrights in our supply chain, including requirements related toconflict minerals.
Business Ethics
RT-EE-510a.1

Description of policies and practices
for prevention of: (1) corruption andbribery and (2) anti-competitive
behavior

We have a Code of Ethics that contains policies against
corruption, bribery, and competitive behavior. We also have aSide Letter Policy to prevent undocumented promises tocustomers.
See our Code of Ethics and the Business Ethics and Compliancesection of this report for a summary of our policies andpractices for the prevention of corruption and bribery and anticompetitive behavior.

RT-EE-510a.2

Total amount of monetary losses as aresult of legal proceedings associatedwith bribery or corruption

In 2023, we did not have any monetary losses as a result oflegal proceedings associated with bribery or corruption. Whenpublic disclosure criteria are met, monetary losses as a resultof legal proceedings are included in our Form 10-K.

RT-EE-510a.3

Total amount of monetary losses as aresult of legal proceedings associatedwithanti-competitive
behavior
regulations

In 2023, we did not have any monetary losses as a result oflegal proceedings associated with anti-competitive behavior
regulations. When public disclosure criteria are met, monetarylosses as a result of legal proceedings are included in our Form
10-K.

TC-SI-520a.1

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