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Supply Chain Typology
Electronics

Electronics

Section #

Supply Chain Characteristics that Impact Traceability

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Traceability Takeaways

  • Forced labor and child labor exist in the assembly and manufacturing stages of the electronics’ supply chain, as well as in the upstream raw material supply chains. The electronics supply chain is highly complex and often non-linear; it involves many kinds of inputs, which makes traceability more difficult. Traceability systems in the electronics sector should be capable of providing transparency into the acquisition of raw materials as well as all into relevant production units for both components and final assembly and manufacturing.
  • In many countries, the electronics manufacturing industry relies heavily on migrant laborers, who are often hired by third-party labor recruiters. These workers are vulnerable to indicators of forced labor, such as induced indebtedness and withheld identity documents. Understanding the practices of these recruiters is a critical aspect of combating forced labor risk. Downstream companies should consider traceability systems that allow for identification and engagement with specific facilities in their supply chains. Once they identify individual worksites that rely on labor recruiters, companies can start to understand the actual risks faced by workers on the ground. They can utilize systems that trace labor recruitment chains and assess the practices of recruiters at each site. For example, Verité’s CUMULUS Forced Labor Screen maps labor supply chains using patented technology to gather data on workforces, recruiters, and unethical recruitment and employment practices. Companies can use this information to prioritize on-the-ground assessments of recruitment, hiring, and labor conditions and to then implement any necessary prevention or remediation measures.
  • To address risk at the level of indirectly-procured raw material inputs, certification programs that offer chain of custody assurance in compliance with labor standards can help suppliers procure lower-risk goods.
  • Most electronics manufacturers are large-scale and formally organized, though smaller firms do exist. Larger facilities are likely to have the capacity to participate in a wide range of traceability initiatives; however, there is also a danger that they could become overwhelmed with multiple demands from downstream customers.  Smaller facilities, including some small component producers, are less likely to have the high administrative capacity level needed to effectively implement traceability systems.
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Nature of Labor Rights Risk/Vulnerable Workers

Forced Labor or Trafficking in Persons cited by U.S. Government

Child Labor cited by U.S. Government

Risk of Forced Labor or Trafficking in Persons cited by other source 

Documented presence of migrant workers

Documented presence or significant likelihood of third-party labor recruiters

Risk of Child Labor cited by other source

Documented presence of other vulnerable workers 

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Features of Production and Supply Chain 

Multiple points of aggregation, co-mingling, and/or transformation across supply chain

Complex/opaque supply chains and/or lack of vertical integration

High degree of flexibility in procurement practices of downstream entities

Large numbers of dispersed, unorganized or informal small producers or other worksites 

  • Electronic products are made up of many component parts and each part can have its own separate supply chain. This makes electronics supply chains complex and difficult to trace.7 Forced Labor in the Production of Electronic Goods in Malaysia: A Comprehensive Study of Scope and Characteristics. Verité, 2014, www.verite.org/wp-content/uploads/2016/11/VeriteForcedLaborMalaysianElectronics2014.pdf. 
  • Companies often outsource electronics manufacturing to a broad web of suppliers. Their procurement practices tend to be highly flexible to account for the fast-changing industry and frequent development of new technologies.8 Industry Profile: Electronics and Electrical. Responsible Sourcing Tool,  www.responsiblesourcingtool.org/visualizerisk.
  • In Malaysia, a key producing country of electronics, most facilities are large and formally organized. These facilities are typically located in Free Industrial Zones (FIZs), which offer incentives to companies, such as low taxes and duty-free imports.9 Forced Labor in the Production of Electronic Goods in Malaysia: A Comprehensive Study of Scope and Characteristics. Verité, 2014, www.verite.org/wp-content/uploads/2016/11/VeriteForcedLaborMalaysianElectronics2014.pdf. 
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Distribution of Labor Risk in Various Production Areas

Scale or nature of risk is present across multiple tiers or nodes of supply chain (including in associated downstream or upstream goods)

Scale or nature of risk varies significantly based on geographic area of production

Scale or nature of risk is strongly associated with certain types of suppliers/entities

  • Risk is present in both electronics manufacturing and the upstream procurement and mining of raw material inputs, including aluminum, coltan, tungsten, tin, copper, gold, rare earth metals (REMs), and titanium.10 Industry Profile: Electronics and Electrical. Responsible Sourcing Tool,  www.responsiblesourcingtool.org/visualizerisk.
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Linked Upstream and Downstream Risks

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Risk in Nodes in Electronics Production

Primary inputs, such as metals, plastics, and chemicals, come from the raw materials supply chain and enter the electronics supply chain at the manufacturing facility level. Workers assemble electrical components in manufacturing plants, which are then transported to wholesalers and retailers. The greatest risk of labor abuses exists at the level of low-skill assembly and manufacturing within production facilities. These risks include long working hours, injuries from repetitive motions, prolonged use of small-motor skills, exposure to dangerous chemicals and extreme temperatures, and the use of dangerous machinery.11 Industry Profile: Electronics and Electrical. Responsible Sourcing Tool,  www.responsiblesourcingtool.org/visualizerisk. 

Basic electronic components may also be used in the manufacturing of other electronic goods, such as cell phones and computers. The electronics supply chain is highly reciprocal, meaning that companies act as both customers and suppliers. Manufacturers may purchase already manufactured electrical components to produce more complex electronic goods.12 Industry Profile: Electronics and Electrical. Responsible Sourcing Tool,  www.responsiblesourcingtool.org/visualizerisk.

Assembly and Manufacturing of Electronics

Transport

Wholesale and Retail

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Associated Upstream Goods with Labor Risk

Metals and Mining

Electronics goods use a variety of upstream inputs associated with labor risk, including other manufactured electrical components and raw materials such aluminum, coltan, tungsten and tin, copper, gold, rare earth metals (REMs), and titanium.

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Associated Downstream Goods and Consumer Sectors

Energy and Electrical

Some electronics are used in the manufacturing of more complex electrical components or electronics goods.

Electronics

Electronics are sold to wholesalers and retailers as components by themselves and employed in the manufacturing of everyday electronic devices, such as computers and cell phones.

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Top Global Countries

  1. China13List of exporters for the selected product in 2021. Product: 85 List of exporters for the selected product in 2021 Product: 85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles. ITC Trade Map, www.trademap.org/Country_SelProduct.aspx?nvpm=1%7c%7c%7c%7c%7c85%7c%7c%7c2%7c1%7c1%7c2%7c1%7c1%7c2%7c1%7c1%7c1.
  2. Taiwan
  3. South Korea
  4. United States of America
  5. Germany
  6. Singapore
  7. Vietnam
  8. Japan
  9. Malaysia
  10. Mexico
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Examples & Resources: Traceability Efforts Associated with Electronics

Re | Source Pilot Project – Enabling Sustainable Cobalt IndustryRecycled Cobalt Blockchain Traceability Pilot Project
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Footnotes

Funding is provided by the United States Department of Labor under cooperative agreement number IL‐35805. 100 percent of the total costs of the project or program is financed with federal funds, for a total of USD 4,000,000. This material does not necessarily reflect the views or policies of the United States Department of Labor, nor does mention of trade names, commercial products, or organizations imply endorsement by the United States Government

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