Document qd2Z3nEK48Mzpp3jdD79BqQ7q

NAT vo varaumventio As resus Hang-swizrand one: woe Socio-economic report: Proposed REACH restriction of PFAS and its implications for the semiconductor value chain This socio-economic report ams to assess the potantial negative Impact on VAT Vakuumventile AG and its subdiaries, operatingwithin thesemiconductor value chain, resulting from the proposed REACH (Registration, Eval uation, Authorization, and Restriction of Chemicals restriction of per- and polyfluoroalkyl substances (PFAS). While recognizing the importance of environmental protection and public health, it is essential to evaluate the potential socio-economic consequences of such regulatory measures. `Overviewof VAT Vakuumventie AG and the semiconductor value chain VAT Vakuumventile AG is th leading global manufacture of high-quality vacuum valves and components. Our innovative product portfli includes a wide rang of valves, gate valves, angle valves, and other vacuum components, designed to meet the demanding requirements of industries such as semiconductor manufacturing, research laboratories, and advanced manufacturing processes. 75% of the valves sold by VAT Vakuumventil AG 0 to the semiconductor industry and 25% to other high-tech industries VAT Vakuumventile AG operates witha wel-established structure to support its global operations and is represented workdwid with production facilities in Switzerland, Romania, and Malaysia as wel as other sas and sarvice locations. In 2022, the company employed 2.991 people and generated net sales of CHE 11455 millon, with an annual turnover of more than CHF 60-100 millon in the European Economic Area EEAD alone. VAT Vakuumventile AG is mainly affected by REACH regulation as a downstream user of sealing devices. To ensure the vacuum function for the high-performance area, crtain physical properties are needed for the sealing devices. Agoodsealmateirciruacilalfor ourvacuum valves and compodunsetosnevtersal reasons. Firstly, sealingsare a critical part n ensuring that thedesiredvacuum level is maintained inthesystem, enablingeficient and precise Vacuum treatment, and preventing leaks. Secondly. a high-quality seal prevents the ingress of foreign particles or contaminants that could compromise the performance and lfespan of the vacuum application. This is particuley important in industries where our products are used in atmospheres with corrosive and agressive gases such as the semiconductor industry. Hora the heat and chemical resistaofntche PFAS material is of the utmost importance. Additionally, an effective seal helps reduce leaks, leading to improved eneray efficiency and cost savings. Overal a good sea is essentil for preserving optimal vacuum results and ensuring the reliability ond aualityof products inthe vacuum industry. Only materials from the PFAS group exhibit these properties therefor our seaings contain substances directly inked tothe PFAS substance group. Currently, we process about 3-4 millon sealings fo the manufacturing of our vacuum solutions and service activities, whereby approximately 20% of all our products sold end up in the European market or at least, in the context of possible intermediate processing steps, pass through the EEA and would thus be very strongly affected by the REACH regulation. Understanding PFAS and the proposed REACH restriction PAS are a diverse group of chemical substances used in various industria applications, including our business, ue to their uniqueproperties, as mentioned above. And while concerns regarding the persistence, boaccumulation, and potential adverse health facts of PFAS hava led to proposed restrictions under REACH and harmiul propertioesfsome PFAS substances are beyond question there are aso harmless substances in the PFAS group Argumentation on the PFAS substances which wa use. [em t-------- Froera? -- \r/ Date: VAT Vakuumventile AG - CH-9469 Haag - Switzerland Potential negative impact on VAT Vakuumventile AG 10.08.23 Product performance: PFAS-based materials play a critical role in ensuring high-performance, reliable, and long-lasting vacuum valves. If PFAS were to be banned from being used in sealings, the previously mentioned side-effects will most certainly occur: faster ingress of foreign particles or contaminants reducing the lifespan of vacuum application, causing a rise in costs and due to the overall importance of vacuum for the semiconductor industry a possible disruption in the semiconductor supply. Product availability; The restriction of PFAS may limit the availability of suitable alternatives, potentially compromising the performance and functionality of not only semiconductor components, but also other areas where due to the corrosive and aggressive atmosphere vacuum valves are used. Cost implications: The development and adoption of alternative materials or technologies that meet the proposed restrictions may require significant research and development investments. These costs could be substantial for VAT and may affect its competitiveness in the market, potentially leading to increased semiconductor costs for end-users. Supply chain disruption: A sudden restriction on PFAS without adequate alternatives readily available could disrupt the semiconductor value chain. It may lead to supply shortages, production delays, and increased lead times, impacting VAT's ability to meet customer demands and fulfill contractual obligations. International competitiveness: If the proposed REACH restriction of PFAS is more stringent compared to regulations in other regions, VAT and the semiconductor industry in Europe may face a competitive disadvantage. This could result in market share loss to companies operating in regions with less stringent regulations. While we are currently expecting a growing of our business of up to 25% in the next 2 years in the EEA, the restriction of PFAS and all the associated implications related to the semiconductor industry might shift away from an increase in Europe to pre-dominantly focus on Asia. Mitigation strategies and opportunities VAT Vakuumventile AG acknowledges the importance of addressing environmental concerns and strives to adopt sustainable practices. To mitigate the potential negative impact of the proposed REACH restriction of PFAS, the following strategies could be explored: Collaboration and research: We are engaging in collaborative efforts with industry stakeholders, our suppliers and research institutions to develop and promote the use of safer alternatives to PFAS material in sealings wherever possible. However, based on current knowledge the alternatives are limited (see our report on possible alternatives). Regulatory dialogue: We are actively participating in regulatory consultations, providing company insights, data and expertise to ensure a balanced approach that considers both environmental protection and the socio-economic implications for the semiconductor industry. Supply chain resilience: We are strengthening relationships with suppliers, assessing alternative supply sources, and diversifying the supply chain to mitigate potential disruptions caused by the restriction. In case of a full ban with limited material alternatives a further shift to the Asian market needs to be considered, leading us to strengthen our Asian supply chains. The proposed REACH restriction of PFAS presents socio-economic challenges for VAT Vakuumventile AG and the semiconductor industry as a whole. Balancing environmental concerns with the socio-economic impact is crucial. VAT Vakuumventile AG remains committed to sustainability, innovation, and responsible practices, striving to minimize the potential negative consequences while actively contributing to the development of a sustainable semiconductor industry. Report 1_Economic Summary Page 2 of 2 version v1.1