Exhibit 1.01
Conflict Minerals Report
This is the Conflict Minerals Report for InvenSense, Inc. (“InvenSense” , “we” or “our”), filed with the United States Securities and Exchange Commission (SEC) pursuant to Rule 13p-1 under the Securities Exchange Act of 1934 (the “Rule”) for the reporting period ended December 31, 2015. The Rule was adopted by the 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). The Rule imposes certain reporting obligations on SEC registrants whose manufactured products contain conflict minerals that 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.
If a registrant can establish that the conflict minerals in its products originated from sources other than the Democratic Republic of the Congo (DRC) or an adjoining country, or from recycled and scrap sources, the registrant must submit a specialized disclosure report under Form SD that describes the steps that the registrant took to determine the origin of the conflict minerals in its products.
If a registrant has reason to believe that any of the conflict minerals in its supply chain may have originated in the DRC or an adjoining country, or if the registrant is unable to determine the country of origin of those conflict minerals, then the registrant must exercise due diligence on the conflict minerals’ source and chain of custody, and the registrant must annually submit a Conflict Minerals Report to the SEC that includes a description of those due diligence measures.
The report presented herein has not been audited by an independent private sector auditor, as the Rule provides that if a registrant’s products are not described as “DRC conflict free”, then such audit is not required.
1.Company Overview
We are a leader in sensor solutions, particularly sensors that combine microelectromechanical systems (MEMS) transducers, such as accelerometers, gyroscopes, barometers, compasses, and microphones, with proprietary algorithms, processors and firmware that synthesize and calibrate sensor output data. Our solutions typically detect and track a host device’s (e.g. smartphone) motion, direction, elevation, and what it is hearing. Where an end user is holding or attached to such a host device, our solutions can detect and track many types of data about the end user. We leverage our intellectual property in MEMS design and manufacturing to reduce sensor size, cost and power. Our proprietary algorithms improve the speed and accuracy of sensor output data, and our application programming interfaces (APIs) and design tools simplify the task of incorporating sensor output into end user applications.
2.Products Overview
While our solutions have broad applicability, we currently target the mobile, automotive, gaming, industrial, drone, wearables, smart home and other internet of things (IoT) markets. We utilize a fabless model, leveraging generally available complementary metal oxide semiconductor (CMOS) and MEMS foundries to whom we have granted licenses to use our proprietary additions and improvements for our benefit, as well as semiconductor packaging and services vendors. We perform the critical test and calibration functions in our wholly owned subsidiary located in Hsinchu, Taiwan. We design our products and solutions in California, Massachusetts, China, Taiwan, Korea, Japan, France, Canada, Slovakia, and Italy. We sell our products to consumer electronics device manufacturers, original design manufacturers and contract manufacturers through our direct worldwide sales organization and through our channel of distributors.
We determined that during the 2015 calendar year, we manufactured and sub-contracted the manufacture of products containing conflict minerals and that the use of these minerals is necessary to the functionality or production of these products.
3.Supply Chain Overview
Our supply chain is complex. There are multiple tiers between our company and the mines. Accordingly, we rely on our direct suppliers to provide information on the origin of the conflict minerals contained in components that are included in our products. The methods we used to try to determine the origin of conflict minerals in our products included:
| • | sending letters to our direct suppliers, explaining the rule and referring the suppliers to online instructions; |
| • | soliciting survey responses from relevant suppliers of components of our products, using the standard Conflict Minerals Reporting Template designed by the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI); |
| • | reviewing responses that we received from our suppliers and following up on inconsistent, incomplete, and inaccurate responses; and |
| • | sending reminders to suppliers who did not respond to our initial requests for information. |
4.Reasonable Country of Origin Inquiry (RCOI) and RCOI conclusion
We conducted an analysis of our products and found the 3TG minerals can be found in our products and are necessary to the functionality or production of those products. Therefore, we are subject to the reporting obligations of Rule 13p-1.
We conducted a survey of our active suppliers using a template developed by the EICC and the GeSI, known as the Conflict Minerals Reporting Template. The template was developed to facilitate disclosure and communication of information regarding smelters that provide material to a company’s supply chain. It includes questions regarding a company’s conflict-free policy, engagement with its direct suppliers, and a listing of the smelters the company and its suppliers use. In addition, the template contains questions about the origin of conflict minerals included in their products, as well as supplier due diligence. We believe this template is being widely adopted by similarly situated companies in their due diligence processes related to conflict minerals.
At the outset of our 2015 RCOI, we elected to survey our known direct component and outsourced manufacturing supply chain. During the process of our review, we identified eight suppliers who fell within the scope of our RCOI. We sent the Conflict Minerals Reporting Template to those eight of our direct suppliers and received responses from six of the eight. Five of these responses indicated that the conflict minerals that they supplied to us did not originate in the DRC or an adjoining country during the reporting period, while one indicated that they were unable to declare that its conflict minerals did not originate in the DRC during the reporting period. The two suppliers from whom we did not receive responses are suppliers of evaluation boards only and do not supply components and services used in our other products.
Due to the breadth and complexity of our products and supply chain, it will take time and ongoing effort for our suppliers to verify the origin of all of the minerals, and they may not succeed in determining the origin of all or any such minerals at all times during the reporting period. A total of 96 smelters were identified in our supply chain. The smelters identified in our supply chain are provided in Annex I. All of the smelters listed in Annex I were validated as “compliant” on the EICC-GeSI Conflict Free Sourcing Initiative’s (“CFSI”) Conflict Free Smelter List at the end of the reporting period. The CFSI program includes the requirement for an independent audit, which evaluates risks of supporting conflict; a smelter is placed on the Conflict Free Smelter list only upon achieving acceptable results of this audit.
Despite having conducted a good faith reasonable country of origin inquiry and due diligence process, we do not currently have sufficient information from all our suppliers or other sources to determine the country of origin of the conflict minerals used in our products or identify the facilities used to process those conflict minerals during the reporting period. Therefore, we cannot exclude the possibility that some of these conflict minerals may have originated in the Democratic Republic of the Congo or an adjoining country and are not from recycled or scrap sources during the reporting period.
Using our continuing supply chain due diligence processes, we hope to further develop transparency into our supply chain.
5.Due Diligence Program
5.1.Conflict Minerals Policy
Our policy with respect to the sourcing of conflict minerals can be found athttp://ir.invensense.com, under the heading “Corporate Governance – Corporate Social Responsibility Policy”. The content of any website referred to in this report is included for general information only and is not incorporated by reference in this report.
5.2.Due Diligence Process
5.2.1.Design of Our Due Diligence and Description of the Due Diligence Process
Our due diligence processes and efforts have been developed in conjunction with the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the related supplements for gold and for tin, tantalum and tungsten. We designed our due diligence process to conform in all material respects with these OECD guidelines.
Our conflict minerals due diligence process includes: the development of a Conflict Minerals Policy, establishment of governance structures with cross functional team members and senior executives, and communication with suppliers. We took measures to ensure that the findings of our supply chain risk assessment are reported to members of our senior management, including our CEO, CFO, VP of Operations and VP of Sales.
5.2.2.Record Maintenance
We have established our due diligence compliance process and a documentation and record maintenance procedure to ensure the retention of relevant documentation in a structured manner.
5.3.Steps to Be Taken to Mitigate Risk and Maturing Due Diligence Program
As we move towards developing our due diligence program, we intend to enhance our supplier communication and to improve our due diligence data accuracy in order to mitigate the risk that the necessary conflict minerals contained in our products could benefit armed groups in the DRC or adjoining countries.
6.Identify and Assess Risk in the Supply Chain
Because of the breadth and complexity of our products, and the constant evolution of our supply chain, it is difficult to identify actors downstream from our direct suppliers.
We have contacted the direct suppliers for our products. Of the eight suppliers that are within the scope of the RCOI, we received responses from six of the suppliers to our request for information. All but one of these responses indicated that the conflict minerals that they supplied to us did not originate in the DRC or an adjoining country during the reporting period, while one indicated that they were unable to declare that its conflict minerals did not originate in the DRC during the reporting period.
7.Audit of Supply Chain Due Diligence
We do not have a direct relationship with 3TG smelters and refiners, nor do we perform direct audits of the other entities in our supply chain. However, we do rely upon industry efforts to influence smelters and refineries to participate in the EICC/GeSI Conflict- Free Smelter Program.
8.Continuous Improvement Efforts to Mitigate Risk
We intend to undertake the following next steps to improve the due diligence process and to gather additional information which will assist us to determine whether the conflict minerals we utilize benefit armed groups contributing to human rights violations:
| • | continue to conduct and report annually on supply chain due diligence for the applicable conflict minerals; |
| • | examine the possibility of establishing new terms and conditions in supplier contracts that stipulate responses to conflict mineral related inquires; and |
| • | attempt to validate supplier responses using information collected via independent conflict free smelter validation programs such as the EICC/GeSI Conflict Free Smelter Program. |
ANNEX I
Smelter List for 2015 Reporting Period
The smelters in the table below were reported in our supply chain for the 2015 reporting period.
Metal | Smelter Name | Smelter Country | Smelter Identification | |||
Gold | Aida Chemical Industries Co., Ltd. | JAPAN | CID000019 | |||
Gold | Allgemeine Gold-und Silberscheideanstalt A.G. | GERMANY | CID000035 | |||
Gold | AngloGold Ashanti Córrego do Sítio Mineração | BRAZIL | CID000058 | |||
Gold | Argor-Heraeus SA | SWITZERLAND | CID000077 | |||
Gold | Asahi Pretec Corporation | JAPAN | CID000082 | |||
Gold | Asaka Riken Co., Ltd. | JAPAN | CID000090 | |||
Gold | Aurubis AG | GERMANY | CID000113 | |||
Gold | CCR Refinery - Glencore Canada Corporation | CANADA | CID000185 | |||
Gold | Chimet S.p.A. | ITALY | CID000233 | |||
Gold | Dowa | JAPAN | CID000401 | |||
Gold | Eco-System Recycling Co., Ltd. | JAPAN | CID000425 | |||
Gold | Heimerle + Meule GmbH | GERMANY | CID000694 | |||
Gold | Heraeus Ltd. Hong Kong | CHINA | CID000707 | |||
Gold | Heraeus Precious Metals GmbH & Co. KG | GERMANY | CID000711 | |||
Gold | Ishifuku Metal Industry Co., Ltd. | JAPAN | CID000807 | |||
Gold | Asahi Refining USA Inc. | UNITED STATES | CID000920 | |||
Gold | Asahi Refining Canada Limited | CANADA | CID000924 | |||
Gold | JX Nippon Mining & Metals Co., Ltd. | JAPAN | CID000937 | |||
Gold | Kennecott Utah Copper LLC | UNITED STATES | CID000969 | |||
Gold | Kojima Chemicals Co., Ltd. | JAPAN | CID000981 | |||
Gold | LS-NIKKO Copper Inc. | KOREA, REPUBLIC OF | CID001078 | |||
Gold | Materion | UNITED STATES | CID001113 | |||
Gold | Matsuda Sangyo Co., Ltd. | JAPAN | CID001119 | |||
Gold | Metalor Technologies (Hong Kong) Ltd. | CHINA | CID001149 | |||
Gold | Metalor Technologies SA | SWITZERLAND | CID001153 | |||
Gold | Metalor USA Refining Corporation | UNITED STATES | CID001157 | |||
Gold | Mitsubishi Materials Corporation | JAPAN | CID001188 | |||
Gold | Mitsui Mining and Smelting Co., Ltd. | JAPAN | CID001193 | |||
Gold | Nihon Material Co., Ltd. | JAPAN | CID001259 | |||
Gold | Elemetal Refining, LLC | UNITED STATES | CID001322 | |||
Gold | Ohura Precious Metal Industry Co., Ltd. | JAPAN | CID001325 | |||
Gold | PAMP SA | SWITZERLAND | CID001352 | |||
Gold | Rand Refinery (Pty) Ltd. | SOUTH AFRICA | CID001512 | |||
Gold | Royal Canadian Mint | CANADA | CID001534 | |||
Gold | SEMPSA Joyería Platería SA | SPAIN | CID001585 | |||
Gold | Shandong Zhaojin Gold & Silver Refinery Co., Ltd. | CHINA | CID001622 | |||
Gold | Solar Applied Materials Technology Corp. | TAIWAN | CID001761 | |||
Gold | Sumitomo Metal Mining Co., Ltd. | JAPAN | CID001798 | |||
Gold | Tanaka Kikinzoku Kogyo K.K. | JAPAN | CID001875 | |||
Gold | The Refinery of Shandong Gold Mining Co., Ltd. | CHINA | CID001916 | |||
Gold | Tokuriki Honten Co., Ltd. | JAPAN | CID001938 |
Metal | Smelter Name | Smelter Country | Smelter Identification | |||
Gold | Umicore SA Business Unit Precious Metals Refining | BELGIUM | CID001980 | |||
Gold | United Precious Metal Refining, Inc. | UNITED STATES | CID001993 | |||
Gold | Valcambi SA | SWITZERLAND | CID002003 | |||
Gold | Western Australian Mint trading as The Perth Mint | AUSTRALIA | CID002030 | |||
Gold | Yamamoto Precious Metal Co., Ltd. | JAPAN | CID002100 | |||
Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation | CHINA | CID002224 | |||
Gold | Republic Metals Corporation | UNITED STATES | CID002510 | |||
Tin | Alpha | UNITED STATES | CID000292 | |||
Tin | Cooperativa Metalurgica de Rondônia Ltda. | BRAZIL | CID000295 | |||
Tin | PT Justindo | INDONESIA | CID000307 | |||
Tin | PT Aries Kencana Sejahtera | INDONESIA | CID000309 | |||
Tin | CV Serumpun Sebalai | INDONESIA | CID000313 | |||
Tin | CV United Smelting | INDONESIA | CID000315 | |||
Tin | Dowa | JAPAN | CID000402 | |||
Tin | EM Vinto | BOLIVIA | CID000438 | |||
Tin | Fenix Metals | POLAND | CID000468 | |||
Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | CHINA | CID000538 | |||
Tin | Malaysia Smelting Corporation (MSC) | MALAYSIA | CID001105 | |||
Tin | Mineração Taboca S.A. | BRAZIL | CID001173 | |||
Tin | Minsur | PERU | CID001182 | |||
Tin | Mitsubishi Materials Corporation | JAPAN | CID001191 | |||
Tin | Operaciones Metalurgical S.A. | BOLIVIA | CID001337 | |||
Tin | PT Artha Cipta Langgeng | INDONESIA | CID001399 | |||
Tin | PT Babel Inti Perkasa | INDONESIA | CID001402 | |||
Tin | PT Bangka Tin Industry | INDONESIA | CID001419 | |||
Tin | PT Belitung Industri Sejahtera | INDONESIA | CID001421 | |||
Tin | PT BilliTin Makmur Lestari | INDONESIA | CID001424 | |||
Tin | PT Bukit Timah | INDONESIA | CID001428 | |||
Tin | PT DS Jaya Abadi | INDONESIA | CID001434 | |||
Tin | PT Eunindo Usaha Mandiri | INDONESIA | CID001438 | |||
Tin | PT Mitra Stania Prima | INDONESIA | CID001453 | |||
Tin | PT Panca Mega Persada | INDONESIA | CID001457 | |||
Tin | PT Prima Timah Utama | INDONESIA | CID001458 | |||
Tin | PT Refined Bangka Tin | INDONESIA | CID001460 | |||
Tin | PT Sariwiguna Binasentosa | INDONESIA | CID001463 | |||
Tin | PT Stanindo Inti Perkasa | INDONESIA | CID001468 | |||
Tin | PT Timah (Persero) Tbk Kundur | INDONESIA | CID001477 | |||
Tin | PT Timah (Persero) Tbk Mentok | INDONESIA | CID001482 | |||
Tin | PT Tinindo Inter Nusa | INDONESIA | CID001490 | |||
Tin | Rui Da Hung | TAIWAN | CID001539 | |||
Tin | Soft Metais Ltda. | BRAZIL | CID001758 | |||
Tin | Thaisarco | THAILAND | CID001898 | |||
Tin | White Solder Metalurgia e Mineração Ltda. | BRAZIL | CID002036 | |||
Tin | Magnu’s Minerais Metais e Ligas Ltda. | BRAZIL | CID002468 | |||
Tin | PT Wahana Perkit Jaya | INDONESIA | CID002479 | |||
Tin | O.M. Manufacturing Philippines, Inc. | PHILIPPINES | CID002517 | |||
Tin | PT Inti Stania Prima | INDONESIA | CID002530 | |||
Tin | Metallo-Chimique N.V. | BELGIUM | CID002773 | |||
Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | CHINA | CID000258 | |||
Tungsten | Hunan Chunchang Nonferrous Metals Co., Ltd. | CHINA | CID000769 | |||
Tungsten | Japan New Metals Co., Ltd. | JAPAN | CID000825 |
Metal | Smelter Name | Smelter Country | Smelter Identification | |||
Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd. | CHINA | CID000875 | |||
Tungsten | Wolfram Bergbau und Hütten AG | AUSTRIA | CID002044 | |||
Tungsten | Xiamen Tungsten Co., Ltd. | CHINA | CID002082 | |||
Tungsten | Xiamen Tungsten (H.C.) Co., Ltd. | CHINA | CID002320 |
