Quality

In 2019, our corporate quality organization was reinforced and extended to include new functions, either not previously present or previously positioned elsewhere within the Company. The intention is to cover and efficiently drive the full spectrum of quality topics. These functions include:

• program management and strategic office
• innovation and development
• reliability
• operations and compliance
• materials and supplier quality management
• culture and communication

A new working model with a cross-organizational Quality Steering Committee was also set up to drive our three-year quality strategy. I 103-2 I

Focusing on our customers

FOCUS

Offering the best level of quality to our customers

As part of our efforts to rethink our way of working in 2019, we streamlined our quality and reliability approach to customers by providing a framework for:

• regular strategic meetings (internal and external)
• reinforced tracking of customer KPIs and scorecards

This approach helps us to build a closer relationship with our customers, creating an environment for optimized exchange. As a result, we can better respond to their needs and expectations and, through regular monitoring of performance and expectations, adjust and sustain our quality performance.

Our approach

Our quality approach is based on our Quality Management System (QMS), as documented in our Quality Manual. The manual details how we implement the processes to guarantee that our products meet or exceed the highest standards and customer requirements. I 103-2 I

ST adheres to internationally recognized quality management standards. We received our first companywide ISO TS 16949 certification in 2003 and this has been renewed every three years since then. Since 2018, ST has been certified IATF 16949:2016 and ISO 9001:2015, demonstrating our robust quality governance, effective QMS and quality compliance across the company. I 103-3 I

From quality booster to quality roadmap

To step up our quality performance, incident prevention and enable us to better respond to customer expectations, we initiated a specific internal booster program at the end of 2017 to challenge and improve our quality practices.

Having completed most of the initiatives in our booster program, during the second half of 2019 we transitioned to a more standard way of working. We built a three-year roadmap, maintaining the same holistic approach, with cross-functional working groups, strong governance with top management commitment, and a robust program management infrastructure with monitoring and KPIs.

Our three-year roadmap is based on a global program organized in three areas (operational, cross-functional and infrastructure) and 12 work packages.

The goal is to generate long-term structural improvements and prevent incidents occurring by focusing on three strategic domains of quality and reliability:

• streamlining customer focus
• innovation in development, detection and prevention
• modernization and digitalization

Quality strategic program

Quality as a business enabler

Quality is an important business enabler of ST’s strategic objectives.

We maintain our efforts towards making quality visible throughout the Company to employees at all levels, through our quality communities, campaigns, and annual Quality Week events.

Our commitment to fostering a culture of quality was confirmed by our 2019 employee engagement survey. 82% of employees said they clearly understand how quality expectations fit into their job requirements (nine points above the global industry norm⁽¹⁾), while 79% said day-to-day decisions in their team clearly show that quality is a priority throughout our business.

We have identified and aligned key performance indicators (KPIs) that make our goals clearer for all, while at the same time guaranteeing the robustness of our processes and programs. I 103-3 I

Quality performance

Our customer quality returns increased slightly compared to 2018, due to an isolated issue with a specific technology that has now been resolved.

Our overall quality performance improved significantly in 2019. With a 70% reduction of severe quality incidents compared to our 2016 baseline, we are on target to achieve our 2025 goal.

⁽¹⁾ CultureiQ manufacturing industrial equipment/instruments norm.

Nicolas Yackowlew

Executive Vice President, Product Quality & Reliability

We are constantly striving to satisfy our customers by responding to their expectations for the best quality performance of our products. For us, quality is more than basic compliance with industry standards. It’s also the focus that enables us to achieve breakthroughs and innovation in our ways of working, methods, processes and tools, ensuring we are always able to offer the best level of quality to our customers.”