Exhibit 1.01
MaxLinear, Inc.
Conflict Minerals Report
For The Year Ended December 31, 2015
Cautionary Note Concerning Forward-Looking Statements: This Conflict Minerals Report contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements include statements concerning MaxLinear’s objectives for its conflict minerals policy and compliance initiatives and actions it intends to take relating to conflict minerals. Forward-looking statements involve substantial risks and uncertainties that could cause actual results to differ materially from currently anticipated results. When considering forward-looking statements, you should consider, among other factors, the risk factors described in the reports and other filings that MaxLinear files with the United States Securities and Exchange Commission, including MaxLinear’s Annual Report on Form 10-K for the year ended December 31, 2015 (including Amendment No. 1 thereto) and its subsequent Quarterly Reports on Form 10-Q. The risk factors included in these filings are not exhaustive, and risks that are not identified therein could materially affect whether MaxLinear realizes the results anticipated or implied by any forward-looking statements contained in this Conflict Minerals Report. Except as required by law, MaxLinear disclaims any obligation to update these forward-looking statements, whether as a result of new information, future events, or otherwise.
Introduction
This Conflict Minerals Report (this “Report”) for MaxLinear, Inc. (“MaxLinear” or “we” or “our”) covers the reporting period from January 1, 2015 to December 31, 2015 and is presented in accordance with Rule 13p-1 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 13p-1”). This Report is filed as Exhibit 1.01 to our Specialized Disclosure Report on Form SD (the “Form SD”). A copy of this Report and the Form SD are publicly available on our website at http://investors.maxlinear.com/phoenix.zhtml?c=233477&p=irol-sec.
In 2010, the United States enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). Section 1502 of the Act relates to conflict minerals and requires companies subject to the Act to file a Form SD annually with the United States Securities and Exchange Commission (“SEC”) to disclose whether the tungsten, tantalum, tin, and gold (referred to collectively as “3TG”) used in their products benefitted, directly or indirectly, armed groups in the Democratic Republic of the Congo and adjoining countries (collectively, the “Covered Countries”). This Report, which is an exhibit to our Form SD, describes the design and implementation of our conflict minerals due diligence measures undertaken in 2015, including a description of how these measures were designed to determine, to our knowledge, the source mines, countries of origin, and processing facilities for 3TG contained in components used in MaxLinear’s products.
In addition, on April 30, 2015, MaxLinear completed its acquisition of Entropic Communications, Inc., a Delaware corporation and former publicly-traded company listed on The NASDAQ Stock Market (“Entropic”). Accordingly, this Report covers products that Entropic manufactured or contracted to manufacture during the portion of 2015 prior to our acquisition of Entropic that contain conflict minerals necessary to the functionality or production of such products.
Background and Covered Products
MaxLinear is a provider of radio-frequency and mixed-signal integrated circuits for cable and satellite broadband communications, the connected home, data center, metro, and long-haul networks, and wireless infrastructure. As a fabless semiconductor company, we do not manufacture our integrated circuits but contract for their manufacture through semiconductor foundries in Asia. Our supply chain is complex, and multiple tiers exist between the mines from which 3TG are extracted and its incorporation into our products. We do not purchase raw ore or unrefined 3TG directly and make no purchases in the Covered Countries. As a result and as described more fully below, we rely on our foundries and suppliers to provide information on the origin of the 3TG contained in our products.
During 2014, MaxLinear contracted to manufacture and had manufactured a total of 57 integrated circuits, or IC Products, (as measured by individual stock keeping units or SKUs) for our markets. We currently provide several types of broadband and communications semiconductor devices: radio frequency, or RF, receivers and RF Receiver System on Chip, or RF SoCs; transimpedance amplifiers, or TIA’s; laser driver integrated circuits; and clock and data recovery devices, or CDR’s. Our semiconductor solutions combine various analog and mixed-signal technologies and functionality that traditionally required the use of multiple external discrete components. Over 99% of Maxlinear’s revenues in calendar year 2015 were generated through sales of IC Products.
MaxLinear also provides evaluation or demonstration circuit boards, or Board Products, to customers or prospective customers to allow them to test or validate Maxlinear’s IC products. Board Products are marketing or business development tools that
facilitate the sale of Maxlinear’s IC Products. Because of their limited application, Board Products are manufactured and sold in very small quantities. Board Products are either assembled at Maxlinear facilities or manufactured for Maxlinear by third party suppliers. The supplier base for Board Products varies widely and includes many small suppliers, including printed circuit board manufacturers, component distributors, component manufacturers and manufacturers of custom made hardware such as RF filters, connectors, cables, etc. The sales of Board Products represented less than 1% of Maxlinear’s revenues in calendar year 2015.
Reasonable Country of Origin Inquiry
In accordance with Rule 13p-1 and Form SD, MaxLinear determined that 3TG are necessary to the functionality or production of its IC Products and Board Products and that 3TG are incorporated into its products during the manufacturing process. Accordingly, we undertook a reasonable country of origin inquiry (“RCOI”).
MaxLinear RCOI consisted principally of submitting to its suppliers the conflict minerals reporting template (the “CFSI Template”) prepared by the Conflict-Free Sourcing Initiative (“CFSI”), an initiative of the Electronic Industry Citizenship Coalition and Global e-Sustainability Initiative. MaxLinear submitted the CFSI Template to all of its contract manufacturers and all of its first tier suppliers of components. MaxLinear then reviewed all responses for completeness, reasonableness, and consistency, and followed up for corrections and clarifications as MaxLinear determined appropriate.
Based on MaxLinear’s RCOI, MaxLinear was unable to determine that the 3TG used in its products did not originate in Covered Countries.
Due Diligence Process
MaxLinear’s due diligence measures were designed to conform, in all material respects, with the framework in the Organisation for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (the “OECD Framework”). The objectives of our diligence initiative were to determine, to the best of our ability, the source and chain of custody of the 3TG necessary for the functionality and/or production of our products; whether any such 3TG originated in the Covered Countries; and where such 3TG were determined to have originated in Covered Countries, whether armed groups directly or indirectly benefitted from such 3TG.
Due diligence measures undertaken by MaxLinear included, but were not limited to, the following:
| |
1. | Establishment of Internal Management Systems |
| |
a. | Conflict Minerals Policy. In 2013, MaxLinear adopted and communicated to its foundries and suppliers a written policy relating to the use of conflict minerals in its supply chain. A copy of MaxLinear’s Conflict Minerals Policy is publicly available at http://www.maxlinear.com/corporate-social-responsibility/. |
| |
b. | Internal Management to Support Supply Chain Due Diligence. MaxLinear has established an internal compliance team with members from its operations, finance, and legal functions, and these individuals are charged with the management of our conflict minerals program, including the integration of Entropic’s conflict minerals program with that of MaxLinear. |
| |
c. | Controls and Transparency. As described above, MaxLinear undertook an RCOI with respect to conflict minerals in our supply chain by providing the CFSI Template to each of our contract manufacturers and other first tier suppliers to gather information about their use of 3TG, the smelters and refiners in their supply chain that are included in our products, and the countries of origin for 3TG used in our products. |
| |
d. | Supplier Engagement. MaxLinear continues to engage actively with its foundries and other first tier suppliers to strengthen its relationship with them. We have communicated to our foundries and other suppliers our commitment to source 3TG in a manner that does not, directly or indirectly, benefit armed groups in the Covered Countries, and we have communicated that we will consider alternative arrangements with other manufacturers or suppliers who are unable to cooperate in our due diligence efforts. |
| |
e. | Grievance Mechanism. MaxLinear’s code of conduct includes procedures for reporting violations, and we provide mechanisms for anonymous reporting of violations or concerns about the conduct of our business, including our implementation and enforcement of our Conflict Minerals Policy. |
| |
2. | Identification and Assessment of Risks in the Supply Chain |
Because of our position within our supply chain, identifying actors upstream from our first tier contract manufacturers and suppliers is difficult. As discussed above, we identified our foundries and first tier suppliers and relied on them to provide the necessary information about the source of conflict minerals contained in the products that we contract to have manufactured. Similarly, our foundries and first tier suppliers rely on information provided by their suppliers to provide information regarding the country of origin of 3TG included in our products.
| |
3. | Designing and Implementing a Strategy to Respond to Identified Risks |
We are in the process of developing a formal risk management plan through which our conflict minerals program will be implemented, managed, and monitored. During calendar years 2013, 2014, 2015 and continuing into 2016, where foundries or suppliers were unable to provide MaxLinear with complete or reliable responses to the CFSI template, we considered these matters internally. To date, we have not identified any circumstances where we concluded that it was necessary to terminate any contract or relationship or find a replacement manufacturer or supplier as a result of conflict minerals matters.
| |
4. | Carrying Out Independent Third-Party Audit of Supply Chain Due Diligence at Identified Points in the Supply Chain |
We do not have a direct relationship with any smelters or refiners in our supply chain. As a result, we do not and cannot conduct any audits directly. Instead, we support the development and implementation of independent third party audits of smelters such as the CFSI’s Conflict Free Smelter Program (“CFSP”) by encouraging our foundries and other suppliers to purchase materials from audited smelters that have been validated as conflict-free under the CFSP.
| |
5. | Reporting on Supply Chain Due Diligence |
In May 2016, we publicly filed the Form SD and this Report with the SEC. A copy of this Report and the Form SD are publicly available at http://investors.maxlinear.com/phoenix.zhtml?c=233477&p=irol-sec. This Report includes information about the RCOI methodology utilized by the Company, the design of our due diligence process in conformance with the OECD Framework, the list of known smelters and refiners utilized in our supply chain identified in our due diligence process, and a description of our products that incorporate 3TG necessary to the functionality or production of such products.
Smelters and Refiners in Supply Chain
We adopted CFSI’s industry approach to trace back the origin of 3TG by identifying smelters, refineries, or recyclers and scrap supplier sources through our supply chain survey results. MaxLinear leveraged CFSI and the CFSP to trace the mine of origin of the 3TG to its ore level. The CFSP audits smelters and refineries to ensure that all certified smelters and refineries use only the ores that are conflict free from the Covered Countries.
|
| | | |
Metal | Smelter or Refiner Name | Country | CFSP* |
Gold | Tanaka Kikinzoku Kogyo K.K. | JAPAN | C** |
Gold | Shandong Zhaojin Gold & Silver Refinery Co., Ltd. | CHINA | C** |
Gold | Heraeus Ltd. Hong Kong | CHINA | C**# |
Gold | Solar Applied Materials Technology Corp. | TAIWAN | C** |
Gold | Metalor Technologies (Hong Kong) Ltd. | CHINA | C**# |
Gold | Rand Refinery (Pty) Ltd. | SOUTH AFRICA | C** |
Gold | Metalor Technologies SA | SWITZERLAND | C**# |
Gold | PAMP SA | SWITZERLAND | C** |
Gold | Valcambi SA | SWITZERLAND | C**# |
Gold | Argor-Heraeus SA | SWITZERLAND | C** |
Gold | Western Australian Mint trading as The Perth Mint | AUSTRALIA | C** |
Gold | Aida Chemical Industries Co., Ltd. | JAPAN | C |
Gold | Asaka Riken Co., Ltd. | JAPAN | C |
Gold | Eco-System Recycling Co., Ltd. | JAPAN | C |
Gold | Elemetal Refining, LLC | UNITED STATES | C** |
Gold | Heimerle + Meule GmbH | GERMANY | C** |
Gold | Yamamoto Precious Metal Co., Ltd. | JAPAN | C |
Gold | Allgemeine Gold-und Silberscheideanstalt A.G. | GERMANY | C**# |
Gold | AngloGold Ashanti Córrego do Sítio Mineração | BRAZIL | C** |
Gold | Asahi Pretec Corporation | JAPAN | C** |
Gold | Asahi Refining Canada Limited | CANADA | C** |
Gold | Asahi Refining USA Inc. | UNITED STATES | C** |
Gold | Aurubis AG | GERMANY | C** |
Gold | CCR Refinery - Glencore Canada Corporation | CANADA | C** |
Gold | Chimet S.p.A. | ITALY | C** |
Gold | Dowa | JAPAN | C |
|
| | | |
Gold | Heraeus Precious Metals GmbH & Co. KG | GERMANY | C** |
Gold | Ishifuku Metal Industry Co., Ltd. | JAPAN | C** |
Gold | JX Nippon Mining & Metals Co., Ltd. | JAPAN | C** |
Gold | Kennecott Utah Copper LLC | UNITED STATES | C**# |
Gold | Kojima Chemicals Co., Ltd. | JAPAN | C |
Gold | LS-NIKKO Copper Inc. | KOREA, REPUBLIC OF | C** |
Gold | Materion | UNITED STATES | C |
Gold | Matsuda Sangyo Co., Ltd. | JAPAN | C** |
Gold | Metalor USA Refining Corporation | UNITED STATES | C** |
Gold | Mitsubishi Materials Corporation | JAPAN | C** |
Gold | Mitsui Mining and Smelting Co., Ltd. | JAPAN | C** |
Gold | Nihon Material Co., Ltd. | JAPAN | C** |
Gold | Ohura Precious Metal Industry Co., Ltd. | JAPAN | C |
Gold | Republic Metals Corporation | UNITED STATES | C**# |
Gold | Royal Canadian Mint | CANADA | C** |
Gold | SEMPSA Joyería Platería SA | SPAIN | C** |
Gold | Sumitomo Metal Mining Co., Ltd. | JAPAN | C** |
Gold | The Refinery of Shandong Gold Mining Co., Ltd. | CHINA | C** |
Gold | Tokuriki Honten Co., Ltd. | JAPAN | C** |
Gold | Umicore SA Business Unit Precious Metals Refining | BELGIUM | C** |
Gold | United Precious Metal Refining, Inc. | UNITED STATES | C |
Gold | Yokohama Metal Co., Ltd. | JAPAN | C |
Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation | CHINA | C** |
Tantalum | H.C. Starck GmbH Goslar | GERMANY | C |
Tantalum | H.C. Starck Inc. | UNITED STATES | C |
Tantalum | Ningxia Orient Tantalum Industry Co., Ltd. | CHINA | C |
Tantalum | Global Advanced Metals Boyertown | UNITED STATES | C |
Tantalum | Exotech Inc. | UNITED STATES | C |
Tantalum | Ulba Metallurgical Plant JSC | KAZAKHSTAN | C |
Tantalum | F&X Electro-Materials Ltd. | CHINA | C |
Tantalum | Solikamsk Magnesium Works OAO | RUSSIAN FEDERATION | C |
Tantalum | Changsha South Tantalum Niobium Co., Ltd. | CHINA | C |
Tantalum | H.C. Starck Ltd. | JAPAN | C |
Tantalum | Mitsui Mining & Smelting | JAPAN | C |
Tantalum | H.C. Starck GmbH Laufenburg | GERMANY | C |
Tantalum | H.C. Starck Co., Ltd. | THAILAND | C |
Tantalum | H.C. Starck Hermsdorf GmbH | GERMANY | C |
Tantalum | H.C. Starck Smelting GmbH & Co.KG | GERMANY | C |
Tantalum | Jiujiang Tanbre Co., Ltd. | CHINA | C |
Tantalum | Plansee SE Liezen | AUSTRIA | C |
Tantalum | Taki Chemicals | JAPAN | C |
Tin | PT Timah (Persero) Tbk Kundur | INDONESIA | C |
Tin | Yunnan Tin Group (Holding) Company Limited | CHINA | C |
Tin | CV United Smelting | INDONESIA | C |
Tin | Metallo-Chimique N.V. | BELGIUM | C |
Tin | Mitsubishi Materials Corporation | JAPAN | C |
Tin | PT Bukit Timah | INDONESIA | C |
Tin | PT Timah (Persero) Tbk Mentok | INDONESIA | C |
Tin | Mineração Taboca S.A. | BRAZIL | C |
Tin | Minsur | PERU | C |
Tin | Thaisarco | THAILAND | C |
|
| | | |
Tin | Malaysia Smelting Corporation (MSC) | MALAYSIA | C |
Tin | Fenix Metals | POLAND | C |
Tin | O.M. Manufacturing Philippines, Inc. | PHILIPPINES | C |
Tin | Operaciones Metalurgical S.A. | BOLIVIA | C |
Tin | PT Stanindo Inti Perkasa | INDONESIA | C |
Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | CHINA | C |
Tin | Cooperativa Metalurgica de Rondônia Ltda. | BRAZIL | C |
Tin | EM Vinto | BOLIVIA | C |
Tin | PT Tinindo Inter Nusa | INDONESIA | C |
Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd. | CHINA | A |
Tin | Alpha | UNITED STATES | C |
Tin | An Vinh Joint Stock Mineral Processing Company | VIET NAM | A |
Tin | China Tin Group Co., Ltd. | CHINA | C |
Tin | CV Serumpun Sebalai | INDONESIA | C |
Tin | Dowa | JAPAN | C |
Tin | Magnu's Minerais Metais e Ligas Ltda. | BRAZIL | C |
Tin | PT Aries Kencana Sejahtera | INDONESIA | C |
Tin | PT Artha Cipta Langgeng | INDONESIA | C |
Tin | PT Babel Inti Perkasa | INDONESIA | C |
Tin | PT Bangka Tin Industry | INDONESIA | C |
Tin | PT Belitung Industri Sejahtera | INDONESIA | C |
Tin | PT BilliTin Makmur Lestari | INDONESIA | C |
Tin | PT DS Jaya Abadi | INDONESIA | C |
Tin | PT Eunindo Usaha Mandiri | INDONESIA | C |
Tin | PT Inti Stania Prima | INDONESIA | C |
Tin | PT Justindo | INDONESIA | C |
Tin | PT Mitra Stania Prima | INDONESIA | C |
Tin | PT Panca Mega Persada | INDONESIA | C |
Tin | PT Prima Timah Utama | INDONESIA | C |
Tin | PT Refined Bangka Tin | INDONESIA | C |
Tin | PT Sariwiguna Binasentosa | INDONESIA | C |
Tin | PT Wahana Perkit Jaya | INDONESIA | C |
Tin | Rui Da Hung | TAIWAN | C |
Tin | Soft Metais Ltda. | BRAZIL | C |
Tin | White Solder Metalurgia e Mineração Ltda. | BRAZIL | C |
Tungsten | Xiamen Tungsten Co., Ltd. | CHINA | C |
Tungsten | Global Tungsten & Powders Corp. | UNITED STATES | C |
Tungsten | H.C. Starck GmbH | GERMANY | C |
Tungsten | Jiangxi Xinsheng Tungsten Industry Co., Ltd. | CHINA | A |
Tungsten | Ganzhou Seadragon W & Mo Co., Ltd. | CHINA | C |
Tungsten | Hunan Chunchang Nonferrous Metals Co., Ltd. | CHINA | C |
Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | CHINA | C |
Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd. | CHINA | C |
Tungsten | Xiamen Tungsten (H.C.) Co., Ltd. | CHINA | C |
Tungsten | A.L.M.T. TUNGSTEN Corp. | JAPAN | C |
Tungsten | Guangdong Xianglu Tungsten Co., Ltd. | CHINA | C |
Tungsten | Japan New Metals Co., Ltd. | JAPAN | C |
Tungsten | Kennametal Huntsville | UNITED STATES | A |
Tungsten | Tejing (Vietnam) Tungsten Co., Ltd. | VIET NAM | A |
Tungsten | Wolfram Bergbau und Hütten AG | AUSTRIA | C |
_________________________ |
| |
* | This column indicates whether the known smelter or refiner participates in the CFSP as a smelter that sources conflict minerals in a manner that does not finance or benefit armed groups in the Covered Countries. For purposes of this column, “C” denotes that the smelter participates in the CFSP and has been certified and audited by the CFSI, and “A” denotes that the smelter has agreed to participate in the CFSP but that the audit process has not yet been completed as of May 20, 2016.
|
** | Denotes a London Bullion Market Association accredited gold refiner on the Good Delivery List as of May 20, 2016.
|
# | Denotes a Responsible Jewellery Council Certified Member as of May 20, 2016.
|
Future Steps
We have communicated our expectations to our foundries and other first tier suppliers regarding our commitment to sourcing minerals for our products in a manner that does not, directly or indirectly, finance or benefit armed groups in the DRC or adjoining countries. Since the end of 2013, we have continued, and expect to continue to increase our engagement with our relevant manufacturing foundries and first tier suppliers in order to build their knowledge and capacity so they are able to provide MaxLinear with more complete and accurate information on the source and chain of custody of conflict minerals.