Supply Chain

Silicon (Chip) Operations

NVIDIA works closely with our manufacturing partners to encourage them to improve their social and environmental performance. Our supply chain operations comprise two major divisions: the Silicon Chip Operations (covered in this section), which design NVIDIA’s GPUs, and the Board Operations, which design the printed circuit boards that house electronic components in a computer. Both divisions are fabless (that is, they use subcontractors to do the manufacturing). And both work closely with approved vendors to follow international guidelines around responsible practices and material safety.

For Silicon Chip Operations, NVIDIA’s social responsibility policy and the EICC Code of Conduct provide a framework for addressing factory working conditions in our supply chain. We believe that, through our participation in collaborative industry initiatives such as the EICC, we can have a greater positive impact on our supply chain.

To accomplish these goals, we integrate EICC training into our quarterly business reviews with our suppliers.

Carbon Disclosure Project: We improved our Carbon Disclosure Project rating from 34 in 2009 to 56 in 2010.

EICC Smelter Auditing Program: This program has been developed to help EICC members prepare for compliance with the Dodd-Frank Act (Section 1502) with regard to Conflict Minerals. Prior to the roll-out of the auditing program, NVIDIA took action. We requested that all our direct suppliers report the name and location of mines and smelters (for all their tantalum, tin, tungsten and gold sources) to confirm that none are sourced from conflict regions of the Democratic Republic of Congo. Through the EICC, NVIDIA has collected initial information from 80% of smelter suppliers and we plan to complete the remaining 20% in 2011. The smelters will then be on the EICC list of smelters to be audited live. The majority of smelters for these metals have voluntarily joined this program.

EICC Validated Audit Program: In 2010 we requested suppliers to be audited by an independent third party on the treatment of their workers in their factories, plants or facilities. By Q1 2011, 90% of our suppliers had been audited. Issues are determined to be either major or minor, and NVIDIA works with each supplier to correct major issues as soon as possible. NVIDIA meets with each supplier to discuss the findings of their audit and will initiate an action plan to prevent or correct any mistreatment of workers if necessary.

Hazardous materials reduction – NVIDIA Silicon Chip Operations is in full compliance with European Union RoHS and REACH regulations. We have committed through the JEDEC initiative to create new products that are free of halogenated flame retardants. We will continue to be vigilant and responsive to changes in the regulatory landscape that require reducing or eliminating hazardous materials in our products.

Identify and test restricted materials - We have tested our finished products at ISO 17025-certified laboratories for RoHS substances and halogens to demonstrate our compliance. We have also requested our suppliers to provide certified lab test results for homogeneous raw materials yearly to demonstrate full environmental compliance.

Active membership of the EICC- NVIDIA has been an active participant in the Electronics Industry Citizenship Coalition since 2006. We have adopted the EICC Code of Conduct in our own company and requested our suppliers to follow the Code as well. NVIDIA is also helping to develop the EICC Water Use survey for establishing a baseline for water use by our suppliers. We are requesting suppliers to continue their participation in the Carbon Reporting System.

ISO 14001 Certification - All Chip Operations suppliers are ISO 14001 certified, which ensures the following programs are in place at our suppliers:

• Have an environmental management system
• Have a waste management system
• Recycle raw materials
• Reduce and recycle packaging materials

Engage suppliers to track and report their carbon footprint - We have requested all Silicon Chip Operations suppliers to participate in the Carbon Disclosure Project or the EICC’s Carbon Reporting System to quantify the amount of carbon released from their facilities over the past year. The Scope 1 and Scope 2 data that they provide will enable us to report on the carbon footprint of our suppliers and to help generate ideas as to how they can reduce or eliminate their carbon emissions. We have not committed to a date at which we’ll report our suppliers’ emissions as our Scope 3 emissions.

Board Operations

NVIDIA’s Board Operations group designs the printed circuit boards (PCBs) that house electronic components in computers and other devices. Like our Silicon Chip Operations, our Board Operations group is fabless (that is, we use subcontractors to do the manufacturing). Both groups work closely with approved vendors to follow international guidelines related to responsible practices and material safety.

Starting in 2010, NVIDIA’s Board Operations suppliers stopped the use of halogenated parts in all new products. This effectively eliminated Polyvinyl Chloride (PVC) and Brominated Flame Retardants (BFRs), which were used previously in printed circuit boards and other components. As part of our overall operations, we document all requirements related to hazardous substances made by law, despite the fact that 99.9% have no application in our products.

NVIDIA is ISO14001 certified and we require all of our suppliers to be certified, as well.

NVIDIA’s Manufacturer Environmental Compliance specification MECS0001 includes:

• Applicable Laws & Directives:
• EU RoHS Directive 2002/95/EC (including the 1 July 2011 revision)
• CSCL, JIG, REACH and Other Regulated Substances
• Restricted Substances In Packaging
• Restricted Substances In Batteries
• Adopted Industry Environmental Standards:
• PVC Free Products
• Halogen Free Products
• Substances of Concern
• Industry Standards & Safety Agencies
• Product Specific Requirements

Due to the large number of suppliers, management of compliance is critical to ensuring that we are responsive to shareholder concerns. We implement Manufacturer Component Approval Questionnaires for all Board Operations suppliers, and have specific agreements for environmental compliance and specialized suppliers such as automotive and contract suppliers.

While we do not track water, waste and energy metrics of our suppliers, our PCB fabricators and contract manufacturers do communicate the efforts they undertake to reduce energy, reclaim and reuse water, and recycle materials in their manufacturing process.

A Material Content Declaration program has been developed for the purpose of dispositioning all parts in NVIDIA's parts database. The program includes:

• Compliance with manufacturer environmental compliance
• Legacy / History of compliance with manufacturer environmental compliance
• Disclosure of application-specific use of RoHS substances under RoHS annex exemptions and effective expirations
• Use or non-use of conflict minerals from the Democratic Republic of Congo