Intel Corp. (Intel) is the world’s largest semiconductor company and a household name for many consumers of IT products. Since the 1970s, the company has been sourcing from suppliers in Malaysia, which is remains one of their strategic supplier bases. Currently, 44% of their suppliers are from the Asia Pacific.

Intel has invested heavily in ensuring that fair recruitment occurs throughout its supply chain.
KnowTheChain, a benchmarking initiative for business and human rights, ranks the company 4th out of 49 companies in the ICT industry. Intel’s Statement on Combating Modern Slavery details the expectations they have for themselves and their suppliers. Most notably, it adopts progressive practices such as:

In 2020, they announced their 2030 RISE strategy which outlines targets they have on corporate responsibility. Their targets include:

1. To scale their supplier responsibility programs to ensure respect for human rights across 100% of their tier 1 contracted suppliers and higher-risk tier 2 suppliers.
2. To expand their efforts beyond conflict minerals to cover all minerals used in semiconductor manufacturing and apply the learnings to lead their industry to create new sourcing standards.

Q+A with Intel

To better understand Intel’s approach to fair recruitment in Malaysia, we spoke to the Darren Gibby (Supplier Code of Conduct Manager for Human Rights) and Adam Schafer (Director of Supply Chain Responsibility) to share their experience.

Adam Schafer (Director of Supply Chain Responsibility)

Darren Gibby (Supplier Code of Conduct Manager for Human Rights)

Can you share with us your experience working with Malaysian suppliers in fair recruitment?

Darren: We have thousands of suppliers, many of them small, and many of them large local companies or international companies with operations in Malaysia. Some of the fair recruitment issues we face in Malaysia are similar to other countries that recruit migrant workers from parts of South Asia. For example, the information workers receive about the job from recruitment agencies (such as working conditions, work benefits and salary) might be not accurate. In terms of where we’ve seen improvements, we started with progress on health and safety early on, working gradually towards labour rights. The work is still ongoing.

Adam: The inconsistency of the contracting and recruiting processes, and the recruiting language, is seen in Malaysia more than in other geographies. The prominence of the foreign worker population represents a certain risk level, which is also a challenge with other countries.

Darren: Malaysia is one of the key sourcing locations for us, so we’re not just trying to do short-term projects. We’re concerned about our impact on the overall industry and on the people of Malaysia. We know we’re not there just to make money; we’re part of the community.

What are some of the recent key milestones in fair recruitment you are able to share with us?

Darren: One of our key milestones is the initiation of efforts to stop the practice of recruitment fees being charged to workers through agencies. If workers have already paid these fees, we then work with our suppliers to ensure they repay the workers.

Adam: We have returned US$23 million to workers over the last 6 years. That was up from US$4 million 4 years ago. It’s a strange milestone because we didn’t anticipate this, but through this, we have impacted tens of thousands of people and made their situation better. We also made it clear to suppliers that they need to hit the mark for corporate responsibility to be able to continue to be suppliers for us and the rest of the industry.

From your experience, what practices from your end have been particularly helpful in tackling this issue?

Adam: The degree of maturity of a supplier base can grow over time and having international customers is a key factor in education. One of the ways we’ve been able to shift the entire industry is to work closely with consortia like the Responsible Business Alliance (RBA), our customers and key suppliers, to have a unified code of conduct to ensure that the rules are the same across the industry.

Darren: If everyone plays by the same rules, then there’s no way for anyone to successfully bypass the market and be irresponsible because everyone agrees that the playing field is level and this is how you compete. For example, everyone agrees you cannot have bonded labour or excessive hours in your operations and supply chain. If you want to play, these are the rules.

Adam: Working with our consortia, we’re able to go to our suppliers as an industry and not as a company. We’re not competing for the lowest possible price, we’re competing for the best suppliers which involve factors like price, but also safety and responsibility.

How do you ensure your suppliers, including those beyond Tier 1, play by the rules?

Darren: When we have discussions with our suppliers, we look at the types of contracts and recruitment agencies they use. We also look at their processes and periodically check with them through audits, assessments and follow-ups. We also ask them to do the same with their suppliers. Apart from our audit programme, we also have training and supplier development functions. As the industry adopts these standards collectively, it becomes easier to maintain.

Adam: We also rely on the news – such as the recent news in Malaysia on the labour issues faced by Top Glove – and information from our customers or consortia to build our understanding of where the highest risks lie.

Lastly, what are the business drivers for Intel to take fair recruitment seriously?

Adam: It’s pretty clear that if you do things in the most cut-throat and ruthless way, it’s only going to get you short-term profits. But for long-term growth, you need access to the most customers, the clearest transparency, and the most reliable suppliers. It’s not just a matter of doing the right thing, but about having business continuity across your customer base that requires responsibility from your suppliers. We will fire suppliers that we cannot work with responsibly. That is it. We cannot work with a supplier that cannot be transparent or cannot show that they treat people with respect.

Darren: We recognise the long-term benefits of having a responsible supplier base in the country and one that is willing to learn. We believe that it’s better business to operate in a way that has long-term benefits to the communities and citizens of the country. We believe that companies that want to perform better in the stock market will achieve that if they do things that are better for the workers. I don’t think there’s a tradeoff.

Footnotes :

1. Intel, Intel 2020-21 Corporate Responsibility Report. 2021
2. The Responsible Business Alliance (RBA) is a non-profit coalition of leading companies dedicated to improving social, environmental and ethical conditions in their global supply chains.