POWER INTEGRATIONS, INC.
Conflict Minerals Report
For The Year Ended December 31, 2020
Introduction
This is the Conflict Minerals Report of Power Integrations, Inc. (“Power Integrations”) for the calendar year ended December 31, 2020, presented to comply with Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”). The Rule was adopted by the Securities and Exchange Commission (“SEC”) to implement reporting and disclosure requirements related to conflict minerals as directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) Section 1502. The Rule imposes certain reporting obligations on SEC registrants whose manufactured products contain conflict minerals which are necessary to the functionality or production of their products. Conflict minerals are defined as cassiterite, columbite-tantalite, gold, wolframite, and their derivatives, which are limited to tin, tantalum, tungsten, and gold (“3TG”) for the purposes of this assessment. These requirements apply to registrants whatever the geographic origin of the conflict minerals and whether or not they fund armed conflict.
Company Overview
Power Integrations designs, develops and markets analog and mixed-signal integrated circuits (“ICs”); and other electronic components and circuitry used in high-voltage power conversion. Our products are used in power converters that convert electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases this conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa, reducing or increasing the voltage, and regulating the output voltage and/or current. In addition, we offer insulated-gate bipolar transistor (“IGBT”) drivers containing multiple ICs, electrical isolation components and other circuitry - used to operate arrays of high-voltage, high-power transistors. Power Integrations primarily relies on its contract manufacturers and direct suppliers for the manufacturing of its high-voltage analog integrated circuits, IGBT drivers and modules.
Conflict Minerals Policy
Power Integrations’ policy statement regarding conflict minerals has been made available on its website since March 2013. The policy in place during the reporting period was as follows:
On August 22, 2012, the SEC adopted the conflict minerals rule pursuant to Section 1502 of the Dodd-Frank Act, requiring all publicly traded companies to disclose the use of “conflict minerals” necessary to the functionality or production of their products manufactured or contracted to be manufactured.
The term “conflict minerals” refers to:
that may or may not originate from the Democratic Republic of Congo (the “DRC”) or adjoining countries (the “Covered Countries”).
Power Integrations has considered the Rule’s requirements, related guidance from the Organization for Economic Cooperation and Development (“OECD”), the Responsible Business Alliance and the Global e-Sustainability Initiative and is committed to complying with this legislation.
Tantalum, tin, tungsten and gold, or 3TG, minerals are necessary to the functionality or production of the products contracted to manufacture by Power Integrations. However, Power Integrations does not purchase these minerals directly from the smelters or mines. Power Integrations relies on its manufacturing partners for the manufacturing of its products. The requirement to source such minerals from the list of conformant smelters and refiners per www.responsiblemineralsinitiative.org/conformant-smelter-refiner-lists has been communicated to all manufacturing partners including the direct suppliers and distributors through the use of the Responsible Minerals Initiative (“RMI”) Conflict Minerals Reporting Template.
Power Integrations requires its manufacturing partners including the direct suppliers and distributors to have a purchasing policy/supplier selection program to ensure that all products manufactured or sold by Power Integrations that contain tantalum, tin, tungsten and gold are conflict-free or sourced from the list of conformant smelters and refiners.
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CONFLICT MINERALS DISCLOSURE
Reasonable Country of Origin Inquiry
Products Containing Conflict Minerals:
Based upon Power Integrations’ internal assessment, the products we sell contain 3TG minerals. Tantalum may be present in some capacitors, high-power resistors and sensors used in IGBT drivers. Tin is used in solder paste, printed circuit board surface metallization and external lead plating. Tungsten is either used in via contacts, as a sputter target or in the gas tungsten hexafluoride during the manufacturing process, while gold is typically used for wire bonding that provides electrical connection between the silicon chip and the external leads of integrated circuits, for printed circuit board surface metallization, and in the plating for jumpers and connectors.
Inquiry Process:
Power Integrations has adopted the Conflict Minerals Reporting Template developed by the RMI. All contract manufacturers either receive and sign a “Manufacturing Partnership Manual” agreement that informs our suppliers about the conflict mineral requirements and /or the RMI Conflict Minerals Reporting Template. We send the RMI Conflict Minerals Reporting Template (“Supplier Survey”) to all contract manufacturers, Printed Circuit Board assembly suppliers and distributors, and resend it whenever there is a template revision.
Power Integrations performs the following related to the Supplier Surveys:
| • | Evaluates the responses from the suppliers and provides training when necessary; |
| • | Compares the smelters and refiners identified by the direct suppliers against the reasonable country of origin (“RCOI”) list provided by the RMI’s independent third-party smelter audit program; |
| • | Reviews the Supplier Surveys for completeness and follows up on incomplete information or information that would lead us to believe material is not DRC conflict-free for all products except the IGBT Drivers; |
| • | Summarizes all responses into a Conflict Minerals Reporting Template; and |
Results of Inquiry
As of the date of this filing, based on the RCOI responses and analysis of such responses, as it applies to the calendar year ended December 31, 2020, Power Integrations cannot ascertain the source mine and country of origin of all of the relevant conflict minerals or 3TG minerals and/or their derivatives that are necessary to the functionality or production of our products. Therefore, we have continued to proceed with additional due diligence procedures for the purpose of determining the status of our products as it pertains to the source and chain of custody of conflict minerals.
Due Diligence Measures
Power Integrations’ conflict minerals policy and the associated due-diligence program are based on the OECD five-step framework known as OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
The following steps outline the due diligence measures taken to determine the country of origin:
| 1. | Policy and Management System |
Conflict Minerals Policy - The policy establishes Power Integrations’ expectations of its suppliers to source the required minerals from the list of conformant smelters and refiners that may be found at http://www.responsiblemineralsinitiative.org/smelter-links/smelter-database/. The policy resides on our website under “Operations and Sustainability” and can be accessed directly from https://www.power.com/products/product-documents/conflict-minerals-policy-statement/. The policy is periodically reviewed and updated, as necessary.
Management System - The Conflict Minerals policy is formally documented in Power Integrations’ Regulatory Compliance Policy. Direct suppliers (contract manufacturers) are required to provide information on the smelters or refiners in their supply chain using the RMI Conflict Minerals Reporting Template.
| 2. | Risk Assessment |
Power Integrations adopted the Conflict Minerals Reporting Template developed by the RMI. Power Integrations’ quality assurance department:
| • | Reviews and ascertains the products that contain 3TG minerals; |
| • | Identifies the direct suppliers that provide products containing conflict minerals; |
| • | Evaluates the responses via the Conflict Minerals Reporting Template from the suppliers for all products except the IGBT Drivers; |
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| • | Compares the smelters and refiners identified by the direct suppliers against the smelter list provided by the Conflict Free Sourcing Initiative’s independent third party smelter audit program; |
| • | Summarizes all responses into a Conflict Minerals Reporting Template; and |
Based on the results of this process, Power Integrations has been able to determine the smelters from which certain of its conflict minerals originate, which are listed at the end of this report under “Smelters Reported by the Direct Suppliers.” There are 157 Gold, 37 Tantalum, 62 Tin and 42 Tungsten smelters identified.
| 3. | Mitigate Risk |
Power Integrations understands that the global supply chain of conflict minerals is complex and that disclosure of mineral sources is often considered confidential. To reduce potential supply chain risk, Power Integrations communicated the requirements of the Dodd-Frank Act to its direct suppliers, and required its direct suppliers to train their smelters and to recommend that their smelters and refiners participate in an independent assessment through the Responsible Minerals Assurance Process (“RMAP”).
| 4. | Audit of Smelters/Refiners |
As a company member of RMI, Power Integrations leveraged the due diligence conducted on smelters and refiners by the RMAP. Efforts to determine mine or location of origin through RMI are described on the RMI website at www.responsiblemineralsinitiative.org.
| 5. | Report on Supply Chain Due Diligence |
The Form SD Specialized Disclosure and the Conflict Minerals Report constitute Power Integrations’ annual report on its Conflict Minerals Due Diligence. The Form SD to which this report is attached as Exhibit 1.01 for the calendar year ended December 31, 2020 is filed with the SEC.
Additional Steps
Power Integrations maintains an ongoing effort to mitigate the risk that armed groups could benefit from our use of conflict minerals. Power Integrations continues to encourage its direct suppliers to train their smelters and to recommend that their smelters and refiners participate in an independent assessment through RMAP.
Limitations on Due Diligence
This Conflict Minerals Report is based on the due-diligence activities performed to date in good faith by Power Integrations and is based on the infrastructure and information available at the time of the filing of this report. There are factors that could affect the accuracy of the information. These factors include, but are not limited to, incomplete supplier data or available smelter data, errors or omissions by suppliers or smelters, evolving definition and confirmation of smelters, incomplete information from industry or other third-party sources, continuing guidance regarding the SEC final rules, and other issues.
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SMELTERS REPORTED BY THE DIRECT SUPPLIERS
Gold | 8853 S.p,A | Italy | CID002763 |
Gold | Abington Reldan Metals, LLC | United States | CID002708 |
Gold | Advanced Chemical Company | United States | CID000015 |
Gold | African Gold Refinery | Uganda | CID003185 |
Gold | Aida Chemical Industries Co., Ltd. | Japan | CID000019 |
Gold | Al Etihad Gold LLC | UAE | CID002560 |
Gold | Allgemeine Gold-und Silberscheideanstalt A.G. | Germany | CID000035 |
Gold | Almalyk Mining and Metallurgical Complex (AMMC) | Uzbekistan | CID000041 |
Gold | AngloGold Ashanti Córrego do Sítio Mineração | Brazil | CID000058 |
Gold | Argo-Heraeus S.A. | Switzerland | CID000077 |
Gold | Asahi Pretec Corp. | Japan | CID000082 |
Gold | Asahi Refining Canada Ltd. | Canada | CID000924 |
Gold | Asahi Refining USA Inc. | Canada | CID000920 |
Gold | Asaka Riken Co., Ltd. | Japan | CID000090 |
Gold | Atasay Kuyumculuk Sanayi Ve Ticaret A.S. | Turkey | CID000103 |
Gold | AU Traders and Refiners | South Africa | CID002850 |
Gold | Aurubis AG | Germany | CID000113 |
Gold | Bangalore Refinery | India | CID002863 |
Gold | Bangko Sentral ng Pilipinas (Central Bank of the Philippines) | Philippines | CID000128 |
Gold | Boliden AB | Sweden | CID000157 |
Gold | C. Hafner GmbH + Co. KG | Germany | CID000176 |
Gold | Caridad | Mexico | CID000180 |
Gold | CCR Refinery - Glencore Canada Corporation, Canada | Canada | CID000185 |
Gold | CGR Metalloys Pvt Ltd. | India | CID00382 |
Gold | Cendres + Metaux S.A. | Switzerland | CID000189 |
Gold | Chimet S.p.A. | Italy | CID000233 |
Gold | Chugai Mining | Japan | CID000264 |
Gold | C.I Metales Procesados Industriales SAS | Colombia | CID003421 |
Gold | Daye Non-Ferrous Metals Mining Ltd. | China | CID000343 |
Gold | Degussa Sonne / Mond Goldhandel GmbH. | Germany | CID002867 |
Gold | Dijllah Gold Refinery FZC | UAE | CID003348 |
Gold | DODUCO GmbH | Germany | CID000362 |
Gold | Dowa | Japan | CID000401 |
Gold | DSC (Do Sung Corporation) | Republic of Korea | CID000359 |
Gold | Eco-System Recycling Co., Ltd. East Plant | Japan | CID000425 |
Gold | Eco-System Recycling Co., Ltd. North Plant | Japan | CID003424 |
Gold | Eco-System Recycling Co., Ltd. West Plant | Japan | CID003425 |
Gold | Emirates Gold DMCC | UAE | CID002561 |
Gold | Fidelity Printers and Refiners Ltd. | Zimbabwe | CID002515 |
Gold | Fujairah Gold FZC | UAE | CID002584 |
Gold | GCC Gujrat Gold Centre Pvt. Ltd. | India | CID002852 |
Gold | Geib Refining Corporation | United States | CID002459 |
Gold | Gold Coast Refinery | Ghana | CID003186 |
Gold | Gold Refinery of Zijin Mining Group Co., Ltd. | China | CID002243 |
Gold | Great Wall Precious Metals Co., Ltd. of CBPM | China | CID001909 |
Gold | Guangdong Jinding Gold Limited | China | CID002312 |
Gold | Guoda Safina High-Tech Environmental Refinery Co., Ltd. | China | CID000651 |
Gold | Hangzhou Fuchunjiang Smelting Co., Ltd. | China | CID000671 |
Gold | Heimerle + Meule GmbH | Germany | CID000694 |
Gold | Heraeus Metals Hong Kong Ltd. | China | CID000707 |
Gold | Heraeus Precious Metals GmbH & Co. KG | Germany | CID000711 |
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SMELTERS REPORTED BY THE DIRECT SUPPLIERS
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SMELTERS REPORTED BY THE DIRECT SUPPLIERS
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SMELTERS REPORTED BY THE DIRECT SUPPLIERS
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SMELTERS REPORTED BY THE DIRECT SUPPLIERS
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SMELTERS REPORTED BY THE DIRECT SUPPLIERS
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