Exhibit 1.02
Silicom Ltd.
Conflict Minerals Report
For The Year Ended December 31, 2013
This report for the year ended December 31, 2013 is presented to comply with Section 13(p) of the Securities Exchange Act of 1934 and Rule 13p-1 (the Rule) and Form SD thereunder. 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). 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 and tungsten 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. In accordance with the instructions, and related guidance, to Form SD, this Conflict Minerals Report has not been audited by an independent private sector auditor.
If a registrant can establish that the conflict minerals originated from sources other than the Democratic Republic of the Congo or an adjoining country (the “Covered Countries”), or from recycled and scrap sources, they must submit a Form SD which describes the Reasonable Country of Origin Inquiry completed. If a registrant has reason to believe that any of the conflict minerals in their supply chain may have originated in the Covered Countries, or if they are unable to determine the country of origin of those conflict minerals, then the issuer must exercise due diligence on the conflict minerals’ source and chain of custody and submit a Conflict Minerals Report to the SEC that includes a description of those due diligence measures.
Design and Description of Conflict Minerals Diligence Program
The design of our conflict minerals due diligence program is in conformity with the Organization for Economic Co-operation and Development Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Second Edition, and related Supplements on Tin, Tantalum and Tungsten and on Gold (collectively, “OECD Guidance”), specifically as it relates to our position in the minerals supply chain as a “downstream” purchaser. We designed our due diligence program, management and measures to conform in all material respects with the framework OECD Guidance.
| | (i) | Establishment of Strong Company Management Systems |
| | a. | Our management system includes the development of a Conflict Mineral Qualification Team overseen by the Chief Financial Officer of the Company and run under the supervision of the Company’s QA & EMS Director, and includes a team of subject matter experts from relevant functions including Operations and Purchasing. Senior management is briefed about the results of our due diligence efforts on a regular basis. |
| | b. | Implement a supply chain system of controls and transparency through the use of due diligence tools created by the Conflict-Free Sourcing Initiative (“CFSI”). |
| | c. | Incorporate requirements related to conflict minerals in our standard template for supplier contracts and specifications. |
| | d. | Maintain a documentation and record maintenance mechanism to ensure the retaining of relevant documentation in an electronic database. |
| | e. | Implementation of a Corrective Action System in order to achieve continuous improvement of our conflict mineral qualification process and reduction of uncertainty in the process. |
| | (ii) | Identification and Assessment of Risk in the Supply Chain |
| | a. | We have adopted the processes and protocols of the Conflict Free Smelter Program. All Conflict Minerals “necessary to the functionality of the products” have been identified and the suppliers of those Conflict Minerals have been identified and smelter data has been collected from them. Responses provided by suppliers have undergone a review for accuracy. |
| | b. | We conducted a survey of our active suppliers using the template developed jointly by the companies of Electronic Industry Citizenship Coalition® (EICC®) and The Global e-Sustainability Initiative (GeSI), known as the CFSI Reporting Template (the 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. Written instructions and recorded training illustrating the use of the tool is available on CFSI’s website (http://www.conflictfreesourcing.org/). The Template is being widely adopted by many companies in their due diligence processes related to conflict minerals. |
| | (iii) | Design and Implementation of a Strategy to Respond to Identified Risks |
| | a. | Due diligence reviews of suppliers, smelters and refiners that may be sourcing or processing conflict minerals from the Covered Countries which may not be from recycled or scrap sources. However, as a result of the complexity of our products and the constant evolution of our supply chain, it is difficult to identify sub-tier suppliers downstream from our direct suppliers. |
| | b. | Monitor and track suppliers, smelters and/or refiners identified as not meeting the requirements (or that defined themselves as “Unknown”) set forth in our Conflict Minerals Sourcing Policy or contractual requirements to determine their progress in meeting those requirements. Any new suppliers will be required to complete EICC-GeSI declarations as part of becoming an approved supplier to Silicom. |
| | c. | Provide progress reports to our senior management and board relating to our risk mitigation efforts. |
| | d. | Undertake any additional fact and risk assessments as necessary. |
| | (iv) | Support for the Development and Implementation of Independent Third Party Audits of Smelters’ and Refiners’ sourcing: |
We encourage our suppliers to purchase from EICC’s Conflict-Free Smelter (CFS) Compliant Smelters.
| | (v) | Report on Supply Chain Due Diligence |
This report is available on our website at http://www.silicom-usa.com/Article.aspx?Item=939&ln=en.
Products
During this reporting period, we identified the products below that we manufactured or contracted to manufacture as containing necessary conflict minerals:
| | (i) | High-end server network interface cards with and without bypass (Server Adapters); |
| | (ii) | Intelligent and programmable cards, with features such as encryption, acceleration, data compression, redirection, time stamping and/or other offload features (Smart Adapters); |
| | (iii) | Stand-alone Bypass Switches (mostly Intelligent bypass switches); and |
| | (iv) | The patented SETAC (Server To Appliance Converter) product family, a unique solution that enables standard servers to be configured as network appliances with high-density front networking ports and easy port modularity. |
Results of our Due Diligence Measures
Inherent Limitations on Due Diligence Measures
As a downstream purchaser of conflict minerals, our due diligence measures can provide only reasonable, not absolute, assurance regarding the source and chain of custody of the necessary conflict minerals. Our due diligence processes are based on the necessity of seeking data from our direct suppliers and those suppliers seeking similar information within their supply chains to identify the original sources of the necessary conflict minerals. We also reviewed information from websites of suppliers and manufacturers where conflict minerals reports were available. We also rely, to a large extent, on information collected and provided by independent third party audit programs. Such sources of information, as well as our smelters and refiner facility visits, may yield inaccurate or incomplete information and may be subject to fraud.
Supplier Chain Survey Responses
As a result of our due diligence efforts, we have concluded in good faith that during 2013 and with respect to the necessary conflict minerals that originated or may have originated from the Covered Countries, our products which contain conflict minerals are “DRC Conflict Undeterminable” (as defined in the Rule). We reached this conclusion because we have been unable to determine the origin of all of the conflict minerals used in our products.
Table 1 below lists the facilities which, to the extent known, processed the necessary conflict minerals used in our products.
| Metal | Smelter or Refiner Facility Name† | Country |
| Gold | Aida Chemical Industries Co. Ltd. | Japan |
| Gold | Allgemeine Gold- und Silberscheideanstalt A.G.* | Germany |
| Gold | Almalyk Mining and Metallurgical Complex (AMMC) | Uzbekistan |
| Gold | Almalyk Minning and Metallurgical Complex (AMMC) | Uzbekistan |
| Gold | AngloGold Ashanti Mineração Ltda* | Brazil |
| Gold | Argor-Heraeus SA* | Switzerland |
| Gold | Asahi Pretec Corp* | Japan |
| Gold | Asaka Riken Co.,Ltd. | Japan |
| Gold | Atasay Kuyumculuk Sanayi Ve Ticaret A.S. | Turkey |
| Gold | Aurubis AG | Germany |
| Gold | Bangko Sentral ng Pilipinas (Central Bank of the Philippines) | Philippines |
| Gold | Boliden Mineral AB | Sweden |
| Gold | Caridad | Mexico |
| Gold | Cendres & Metaux SA | Switzerland |
| Gold | Central Bank of the DPR of Korea | Korea, Republic of |
| Gold | Chimet SpA * | Italy |
| Gold | Chugai Mining Co.,Ltd | Japan |
| Gold | Codelco | Chile |
| Gold | Daejin Indus Co. Ltd | Korea, Republic of |
| Gold | DaeryongENC | Korea, Republic of |
| Gold | Do Sung Corporation | Korea, Republic of |
| Gold | Dowa Metals & Mining Co. Ltd, Dowa Metals & Mining. Kosaka Seiren* | Japan |
| Gold | FSE Novosibirsk Refinery | Russian Federation |
| Gold | Heimerle + Meule GmbH* | Germany |
| Gold | HERAEUS HONG KONG Heraeus Ltd. Heraeus Technology* | Hong Kong |
| Gold | Heraeus Precious Metals GmbH & Co. KG* | Germany |
| Gold | Hwasung CJ Co. Ltd | Korea, Republic of |
| Gold | Inner Mongolia Qiankun Gold and Silver Refinery Share Company Limited | China |
| Gold | Ishifuku Metal Industry Co., Ltd.* | Japan |
| Gold | Istanbul Gold Refinery* | Turkey |
| Gold | Japan Mint | Japan |
| Gold | Jiangxi Copper Company Limited | China |
| Gold | Johnson Matthey Canada | Canada |
| Gold | Johnson Matthey Inc* | United States |
| Gold | Johnson Matthey Limited* | Canada |
| Gold | JSC Ekaterinburg Non-Ferrous Metal Processing Plant | Russian Federation |
| Gold | JSC Uralectromed | Russian Federation |
| Gold | JX Nippon Mining & Metals Co., Ltd* | Japan |
| Gold | Kazzinc Ltd | Kazakhstan |
| Gold | Kennecott Utah Copper LLC* | United States |
| Gold | Kojima Chemicals Co. Ltd.* | Japan |
| Gold | Korea Metal Co. Ltd | Korea, Republic of |
| Gold | L'azurde Company for Jewelry | Saudi Arabia |
| Gold | LS-Nikko Copper Inc* | Korea, Republic of |
| Gold | Materion Advanced Metals* | United States |
| Gold | Matsuda Sangyo Co. Ltd* | Japan |
| Gold | Metalor Technologies (Hong Kong) Ltd* | Hong Kong |
| Gold | Metalor Technologies SA* | Switzerland |
| Gold | Metalor USA Refining Corporation* | United States |
| Gold | Met-Mex Peñoles, S.A. | Mexico |
| Gold | Mitsubishi Materials Corporation* | Japan |
| Gold | Mitsui Mining and Smelting Co., Ltd.* | Japan |
| Gold | Moscow Special Alloys Processing Plant | Russian Federation |
| Gold | Nadir Metal Rafineri San. Ve Tic. A.Ş. | Turkey |
| Gold | Navoi Mining and Metallurgical Combinat | Uzbekistan |
| Gold | Nihon Material Co. LTD* | Japan |
| Gold | Ohio Precious Metals LLC.* | United States |
| Gold | OJSC “The Gulidov Krasnoyarsk Non-Ferrous Metals Plant” (OJSC Krastvetmet) | Russian Federation |
| Gold | OJSC Kolyma Refinery | Russian Federation |
| Gold | PAMP SA* | Switzerland |
| Gold | Pan Pacific Copper Co. LTD | Japan |
| Gold | Perth Mint (Western Australia Mint)* | Australia |
| Gold | Prioksky Plant of Non-Ferrous Metals | Russian Federation |
| Gold | PT Aneka Tambang (Persero) Tbk | Indonesia |
| Gold | PX Précinox SA | Switzerland |
| Gold | Rand Refinery (Pty) Ltd* | South Africa |
| Gold | Royal Canadian Mint* | Canada |
| Gold | Sabin Metal Corp. | United States |
| Gold | SAMWON METALS Corp. | Korea, Republic of |
| Gold | Schone Edelmetaal | Netherlands |
| Gold | SEMPSA Joyeria Plateria SA* | Spain |
| Gold | Shandong Zhaojin Gold & Silver Refinery Co. Ltd | China |
| Gold | SOE Shyolkovsky Factory of Secondary Precious Metals | Russian Federation |
| Gold | Solar Applied Materials Technology Corp.* | Taiwan |
| Gold | Sumitomo Metal Mining Co. Ltd* | Japan |
| Gold | Suzhou Xingrui Noble | China |
| Gold | Tanaka Kikinzoku Kogyo K.K.* | Japan |
| Gold | The Great Wall Gold and Silver Refinery of China | China |
| Gold | The Refinery of Shandong Gold Mining Co., Ltd | China |
| Gold | Tokuriki Honten Co. Ltd* | Japan |
| Gold | Torecom | Korea, Republic of |
| Gold | Umicore SA Business Unit Precious Metals Refining* | Belgium |
| Gold | United Precious Metal Refining, Inc.* | United states |
| Gold | Valcambi SA* | Switzerland |
| Gold | Xstrata Canada Corporation | Canada |
| Gold | Yokohama Metal Co Ltd | Japan |
| Gold | Zhongyuan Gold Smelter of Zhongjin Gold Corporation | China |
| Gold | Zijin Mining Group Co. Ltd | China |
| Tin | Metallo Chimique | Belgium |
| Tin | EM Vinto | Bolivia |
| Tin | EM Vinto | Bolivia |
| Tin | OMSA* | Bolivia |
| Tin | Mineração Taboca S.A. | Brazil |
| Tin | White Solder Metalurgia | Brazil |
| Tin | Cooper Santa | Brazil |
| Tin | Smelter Not Listed | Brazil |
| Tin | Gejiu Zili Metallurgy Co. | China |
| Tin | Geiju Non-Ferrous Metal Processing Co. Ltd.* | China |
| Tin | Gold Bell Group | China |
| Tin | Jiangxi Nanshan | China |
| Tin | Liuzhou China Tin | China |
| Tin | Yunnan Chengfeng Non-Ferrous Metals Co Ltd | China |
| Tin | Yunnan Tin Company Limited | China |
| Tin | CNMC (Guangxi) PGMA Co. Ltd. | China |
| Tin | Minmetals Ganzhou Tin Co. Ltd. | China |
| Tin | Huichang Jinshunda Tin Co. Ltd | China |
| Tin | Kai Unita Trade Limited Liability Company | China |
| Tin | Linwu Xianggui Smelter Co | China |
| Tin | CV DS Jaya Abadi (PT Stanindo Inti Perkasa) | Indonesia |
| Tin | CV Duta Putra Bangka | Indonesia |
| Tin | CV JusTindo | Indonesia |
| Tin | CV Makmur Jaya | Indonesia |
| Tin | CV Nurjanah | Indonesia |
| Tin | CV Prima Timah Utama | Indonesia |
| Tin | CV Serumpun Sebalai | Indonesia |
| Tin | CV United Smelting | Indonesia |
| Tin | PT Alam Lestari Kencana | Indonesia |
| Tin | PT Artha Cipta Langgeng | Indonesia |
| Tin | PT Babel Inti Perkasa | Indonesia |
| Tin | PT Babel Surya Alam Lestari | Indonesia |
| Tin | PT Bangka Kudai Tin | Indonesia |
| Tin | PT Bangka Putra Karya | Indonesia |
| Tin | PT Bangka Timah Utama Sejahtera | Indonesia |
| Tin | PT Belitung Industri Sejahtera | Indonesia |
| Tin | PT BilliTin Makmur Lestari | Indonesia |
| Tin | PT Bukit Timah* | Indonesia |
| Tin | PT Eunindo Usaha Mandiri | Indonesia |
| Tin | PT Fang Di MulTindo | Indonesia |
| Tin | PT HP Metals Indonesia | Indonesia |
| Tin | PT Koba Tin | Indonesia |
| Tin | PT Mitra Stania Prima | Indonesia |
| Tin | PT Refined Banka Tin | Indonesia |
| Tin | PT Sariwiguna Binasentosa | Indonesia |
| Tin | PT Stanindo Inti Perkasa | Indonesia |
| Tin | PT Sumber Jaya Indah | Indonesia |
| Tin | PT Timah* | Indonesia |
| Tin | PT Timah Nusantara | Indonesia |
| Tin | PT Tinindo Inter Nusa | Indonesia |
| Tin | PT Yinchendo Mining Industry | Indonesia |
| Tin | PT Tambang Timah* | Indonesia |
| Tin | PT Bangka Tin Industry | Indonesia |
| Tin | PT DS Jaya Abadi | Indonesia |
| Tin | PT Panca Mega | Indonesia |
| Tin | PT Seirama Tin investment | Indonesia |
| Tin | Cooper Santa | Brazil |
| Tin | Mitsubishi Materials Corporation | Japan |
| Tin | Malaysia Smelting Corporation Berhad* | Malaysia |
| Tin | Minsur | Peru |
| Tin | Fenix Metals | Poland |
| Tin | Novosibirsk Integrated Tin Works | Russian Federation |
| Tin | Thailand Smelting and Refining Co. Ltd. | Thailand |
| Tin | Cookson | United States |
| Tin | CNMC (Guangxi) PGMA Co. Ltd. | China |
| Tin | Alpha* | United States |
| Tin | Cooper Santa* | Brazil |
| Tin | CV United Smelting* | Indonesia |
| Tin | Fenix Metals* | Poland |
| Tin | Huichang Jinshunda Tin Co. Ltd* | China |
| Tin | Linwu Xianggui Smelter Co* | China |
| Tin | Malaysia Smelting Corporation (MSC)* | Malaysia |
| Tin | Metallo Chimique* | Belgium |
| Tin | Mineração Taboca S.A.* | Brazil |
| Tin | Minmetals Ganzhou Tin Co. Ltd.* | China |
| Tin | Minsur* | Peru |
| Tin | Mitsubishi Materials Corporation* | Japan |
| Tin | PT Bangka Putra Karya* | Indonesia |
| Tin | PT Belitung Industri Sejahtera* | Indonesia |
| Tin | PT Bukit Timah* | Indonesia |
| Tin | PT Mitra Stania Prima* | Indonesia |
| Tin | PT REFINED BANGKA TIN* | Indonesia |
| Tin | PT Tambang Timah* | Indonesia |
| Tin | PT Timah* | Indonesia |
| Tin | PT Tinindo Inter Nusa* | Indonesia |
| Tin | Rui Da Hung* | Taiwan |
| Tin | Soft Metais, Ltda.* | Brazil |
| Tin | Thaisarco* | Thailand |
| Tin | White Solder Metalurgia e Mineração Ltda.* | Brazil |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co.,Ltd.* | China |
| Tin | Yunnan Tin Company, Ltd.* | China |
| Tin | Gejiu Zili Metallurgy Co. | China |
| Tantalum | Plansee* | Austria |
| Tantalum | LMS Brasil S.A.* | Brazil |
| Tantalum | Duoluoshan Sapphire Rare Metal Co. Ltd* | China |
| Tantalum | F&X* | China |
| Tantalum | JiuJiang Tambre Co. Ltd.* | China |
| Tantalum | Ningxia Orient Tantalum Industry Co., Ltd.* | China |
| Tantalum | Zhuzhou Cement Carbide* | China |
| Tantalum | RFH* | China |
| Tantalum | Conghua Tantalum and Niobium Smeltry* | China |
| Tantalum | JiuJiang JinXin Nonferrous Metals Co. Ltd.* | China |
| Tantalum | King-Tan Tantalum Industry Ltd | China |
| Tantalum | H.C. Starck GmbH* | Germany |
| Tantalum | Mettalurgical Products India Pvt. Ltd. (MPIL)* | India |
| Tantalum | Mitsui Mining & Smelting* | Japan |
| Tantalum | Takei Chemicals* | Japan |
| Tantalum | Ulba Metallurgical Plant, jsc* | Kazakhstan |
| Tantalum | Solikamsk Metal Works* | Russian Federation |
| Tantalum | Exotech Inc.* | United States |
| Tantalum | Gannon & Scott | United States |
| Tantalum | Global Advanced Metals* | United States |
| Tantalum | Kemet Blue Powder (Niotan)* | United States |
| Tantalum | Hi-Temp* | United States |
| Tantalum | Telex* | United States |
| Tantalum | Tantalite Resources (Pty) Ltd.* | South Africa |
| Tungsten | Wolfram Bergbau und Hütten AG | Austria |
| Tungsten | Chaozhou Xianglu Tungsten Industry Co Ltd | China |
| Tungsten | China Minmetals Nonferrous Metals Co Ltd | China |
| Tungsten | Chongyi Zhangyuan Tungsten Co Ltd | China |
| Tungsten | Ganzhou Huaxing Tungsten Products Co. LTD. | China |
| Tungsten | Jiangxi Rare Earth & Rare Metals Tungsten Group Corp | China |
| Tungsten | Jiangxi Tungsten Industry Group Co., Ltd | China |
| Tungsten | Xiamen Tungsten Co Ltd | China |
| Tungsten | Zhuzhou Cemented Carbide Works Imp. & Exp. Co. | China |
| Tungsten | Ganzhou Grand Sea W & Mo Group Co Ltd* | China |
| Tungsten | Hunan Chenzhou Mining Group Co | China |
| Tungsten | ALMT* | China |
| Tungsten | Dayu Weiliang Tungsten Co., Ltd. | China |
| Tungsten | Fujian Jinxin Tungsten Co., Ltd.* | China |
| Tungsten | Hunan Chun-Chang Nonferrous Smelting & Concentrating Co., Ltd. | China |
| Tungsten | Jiangxi Minmetals Gao'an Non-ferrous Metals Co., Ltd. | China |
| Tungsten | H.C. Starck GmbH* | United States |
| Tungsten | Japan New Metals Co Ltd | Japan |
| Tungsten | Allied Material (A.L.M.T) Corp | Japan |
| Tungsten | Japan New Metals Co Ltd | Japan |
| Tungsten | Wolfram Company CJSC | Russian Federation |
| Tungsten | Wolfram JSC, Russia | Russia |
| Tungsten | Alldyne Powder Technologies (ATI Firth Sterling) | United States |
| Tungsten | Global Tungsten & Powders Corp* | United States |
| Tungsten | Kennametal Inc.* | United States |
| Tungsten | Tejing (Vietnam) Tungsten Co Ltd | Vietnam |
| | † | Smelter and refiner facility names as reported by the CFSI as of May 1, 2014. |
| | * | Denotes smelters and refiners which have received a “conflict free” designation from an independent third party audit program as of May 1, 2014. |
Future Due Diligence Measures
During the reporting period for the calendar year ending December 31, 2014, we are continuing to engage in the diligence process described above. We will also continue to attempt to validate supplier responses using information collected via independent conflict free smelter validation programs such as the Electronic Industry Citizenship Coalition / Global e-Sustainability Initiative (EICC/GeSI) Conflict Free Smelter Program.
