CONSOLIDATEDFINANCIALSTATEMENTS
FY2023
Year Ended March 31, 2023
with Independent Auditor's ReportConsolidated Balance Sheets
Tokyo Electron Limited and Subsidiaries
As of March 31, 2023 and 2022

Thousands of
U.S. dollars

Millions of yen

ASSETS

2023

2022

2023

Current assets:

Thousands of
U.S. dollars

Millions of yen

LIABILITIES AND NET ASSETS

2023

2022

2023

¥116,317¥120,908$871,096

Income taxes payable

71,177

107,193533,045

Customer advances

289,169

102,555

2,165,579

Current liabilities:¥472,471¥335,648$3,538,318

628

35,626

4,709

464,889

433,9483,481,536

(184)

(160)

(1,383)

Accrued employees’ bonuses

43,33744,871

324,550

Inventories

652,208

473,8454,884,358

Accrued warranty expenses

34,382

26,568257,486

Prepaid consumption tax

123,977

110,494

928,458

Other current liabilities

75,50966,482565,487

Other current assets

26,96819,301201,969

629,893

468,578

4,717,245

Total current assets

1,740,959

1,408,703

13,037,967

Net defined benefit liabilities

60,366

62,643452,081

Other liabilities

21,80816,186

163,325

82,17578,829615,407712,069

547,408

5,332,653

Common stock
Authorized: 300,000,000 shares
Issued: 157,210,911 and 157,210,911 shares
as of March 31, 2023 and 2022, respectively

54,961

54,961

411,601

Capital surplus

78,01178,011

584,220

1,322,203

1,104,983

9,901,919(22,033)(27,418)(165,009)

107,452

93,492804,709

(46)

(52)

(344)

Foreign currency translation adjustments

43,09130,640322,712

Accumulated remeasurements of defined benefit plans

3,954

535

29,616

11,92911,89589,3401,599,524

1,347,048

11,978,768¥2,311,594¥1,894,457$17,311,421

Cash and cash equivalents
Short-term investments
Notes and accounts receivable - trade, and contract assets
Allowance for doubtful accounts

Trade notes and accounts payable

Total current liabilities

Non-current liabilities:
Property, plant and equipment:Land

31,28331,052

234,278

Buildings and structures

248,421233,553

1,860,417

Machinery and equipment

253,955

225,454

1,901,860

Construction in progress

39,60520,095

296,605

Other property, plant and equipment

12,566

7,628

94,107

Total property, plant and equipment

585,831517,784

4,387,268

326,743294,706

2,446,965

259,088

223,078

1,940,303

Less: Accumulated depreciation
Net property, plant and equipment

Total non-current liabilities
Total liabilities

Net assets:
Shareholders’ equity

Retained earnings
Investments and other assets:
Investment securities

165,507

144,972

1,239,476

Deferred tax assets

58,59945,654

438,852

Net defined benefit assets

19,374

16,186145,098

Intangible assets

28,55922,540213,881

Other assets

40,844

34,621

305,880

Allowance for doubtful accounts(1,340)(1,298)(10,038)

311,545

262,676

2,333,151¥2,311,594¥1,894,457$17,311,421

Total investments and other assets
Total assets
See accompanying Notes to Consolidated Financial Statements.

Treasury stock, at cost
1,090,672 and 1,461,581 shares
as of March 31, 2023 and 2022, respectively
Accumulated other comprehensive income
Net unrealized gains on investment securities
Net deferred losses on hedging instruments

Share subscription rights
Total net assets
Total liabilities and net assets
See accompanying Notes to Consolidated Financial Statements.

1

TOKYO ELECTRON Consolidated Financial Statements FY2023

TOKYO ELECTRON Consolidated Financial Statements FY2023

2

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2023 and 2022

Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2023 and 2022

Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income

2023

2022

2023

¥2,209,025¥2,003,805$16,543,289

1,224,617

1,091,983

9,171,102

984,408

911,822

7,372,186

366,684

312,551

617,723599,271

2023

2022

2023

¥471,584¥437,076$3,531,671

Net unrealized gains on investment securities

13,951

27,374

104,480

2,746,081

Foreign currency translation adjustments

12,32020,06692,2644,626,105

Remeasurements of defined benefit plans

3,382

1,594

25,334

183

70

1,372

29,837

49,107

223,451

501,421486,183

3,755,123¥501,421¥486,183$3,755,123

Interest and dividend income

2,435

1,576

18,242

Share of profit of associates accounted for using the equity method

2,968

1,721

22,232

Revenue from grants

2,559

492

19,164

890

71

6,672

(1,401)(2,447)(10,498)

Loss on sales and disposal of property, plant and equipment

(781)

(406)

(5,850)Loss on impairment of property, plant and equipment, goodwill
and other assets

(438)

—

(3,284)

Additional payment of value-added tax—(4,577)—

Other, net

899

996

6,739

624,856

596,698

4,679,523

Current

173,704

162,7081,300,862

Deferred(20,431)(3,086)(153,010)

Net income

471,584

437,076

3,531,671

Net income attributable to owners of parent¥471,584¥437,076$3,531,671

Foreign exchange loss, net

Income before income taxes

Net income
Other comprehensive income:

Share of other comprehensive income of associates accounted
for using the equity method

Other income (expenses):Gain on sales of property, plant and equipment

Thousands of
U.S. dollars

Millions of yen

Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of parent
See accompanying Notes to Consolidated Financial Statements.

Income taxes:

Yen

U.S. dollars

Per share of common stock (Note):
Net income — basic¥1,007.82¥935.95$7.55

Net income — diluted

1,003.86

931.30

7.52

Net assets

3,389.68

2,857.48

25.39

Cash dividends

1,711.00

1,403.00

12.81

Note: T he Company implemented a 3-for-1 common stock split on April 1, 2023. Net income per share of common stock - basic, net income per share of common stock diluted and net assets per share of common stock are calculated on the assumption that stock split was implemented at the beginning of the year ended March 31, 2022.
See accompanying Notes to Consolidated Financial Statements.

3

TOKYO ELECTRON Consolidated Financial Statements FY2023

TOKYO ELECTRON Consolidated Financial Statements FY2023

4

Consolidated Statements of Changes in Net Assets

Consolidated Statements of Cash Flows

Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2023 and 2022

Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2023 and 2022

Millions of yen
Shareholders’ equity

Thousands of
U.S. dollars

Millions of yen

Accumulated other comprehensive income
Net unrealized Net deferredgains onlosses on
investment
hedgingsecurities
instruments

Foreign
Accumulated
currency
remeasurements
Sharetranslationof defined
subscription
adjustments benefit plansrights2022

2023

Income before income taxes¥624,856¥596,698$4,679,523

Depreciation and amortization

42,92736,727

321,484

168

206

1,262

Increase (decrease) in accrued employees' bonuses(2,301)

9,540(17,236)

7,594

9,614

56,878Cash flows from operating activities:

Commonstock

CapitalsurplusRetainedearnings

Treasurystock¥54,961¥78,011¥835,240¥(30,744)¥66,124¥(79)¥10,441¥(978)¥11,585¥1,024,562

—

—

(753)

—

—

—

—

—

—

(753)

54,96178,011

834,486(30,744)

66,124(79)

10,441(978)11,585

1,023,809

Cash dividends——(166,252)

—

—

—

—

—

—

(166,252)

Increase in accrued warranty expenses

Net income attributable toowners of parent——

437,076

—

—

—

—

—

—

437,076

Increase in notes and accounts receivable trade, and contract assets(24,750)(195,543)(185,354)

Purchase of treasury stock

—

—

—

(15)

—

—

—

—

—

(15)

Disposal of treasury stock

—

—

(327)

3,341

—

—

—

—

—

3,014

Increase in inventories(173,487)(100,309)(1,299,238)

Net changes except forshareholders’ equity

Increase (decrease) in trade notes and accounts payable(11,406)

18,892(85,420)

—

—

—

—

27,36726

20,1991,513

310

49,417

Increase in prepaid consumption tax(13,390)(27,675)(100,281)¥54,961¥78,011¥1,104,983¥(27,418)¥93,492¥(52)¥30,640¥535¥11,895¥1,347,048

Increase in customer advances

185,616

32,031

1,390,070

Cash dividends——(252,988)

—

—

—

—

—

—

(252,988)

Other, net(3,354)

7,070(25,124)

Net income attributable toowners of parent——

471,584

—

—

—

—

—

—

471,584

Subtotal

632,473

387,252

4,736,563

Purchase of treasury stock

—

—

—

(1,728)

—

—

—

—

—

(1,728)

Receipts from interest and dividends

2,907

2,232

21,777

Disposal of treasury stock——(1,375)

7,113

—

—

—

—

—

5,737

Income taxes paid

(209,111)(106,098)(1,566,023)

Net changes except forshareholders’ equity

—

—

—

—

13,9606

12,4503,419

33

29,871

Net cash provided by operating activities

426,270

283,387

3,192,316¥54,961¥78,011¥1,322,203¥(22,033)¥107,452¥(46)¥43,091¥3,954¥11,929¥1,599,524(713)(35,641)(5,344)

Proceeds from redemption of short-term investments

35,73145,618267,589

Payment for purchases of property, plant and equipment(66,897)(56,153)(500,992)

Payment for acquisition of intangible assets(9,416)(8,950)(70,523)

(459)

(504)

(3,438)(41,756)(55,632)(312,709)(1,728)(15)(12,944)(252,988)(166,252)(1,894,621)(1,817)(988)(13,608)(256,534)(167,256)(1,921,174)

8,843

9,156

66,230Net increase in cash and cash equivalents

136,823

69,655

1,024,663

Cash and cash equivalents at beginning of year

335,648

265,9932,513,654

Cash and cash equivalents at end of year

¥472,471¥335,648$3,538,318

Balance as ofMarch 31, 2021
Cumulative effects ofchanges in accounting policies
Restated balance

Balance as ofMarch 31, 2022

Balance as ofMarch 31, 2023

Total
net assets

2023

Amortization of goodwill

Cash flows from investing activities:
Payment for purchases of short-term investments

Thousands of U.S. dollars
Shareholders’ equity

Accumulated other comprehensive income
Net unrealized Net deferredgains onlosses on
investment
hedgingsecurities
instruments

Foreign
Accumulated
currency
remeasurements
Sharetranslationof defined
subscription
adjustments benefit plansrightsCapitalsurplusRetainedearnings

Treasurystock$411,601$584,220$8,275,169$(205,336)$700,158$(393)$229,468$4,010Cash dividends——(1,894,621)

—

—

—

—

—

—

(1,894,621)

Payment for purchases of treasury stock

Net income attributable toowners of parent——

3,531,671

—

—

—

—

—

—

3,531,671

Dividends paid

Purchase of treasury stock

—

—

—

(12,944)

—

—

—

—

—

(12,944)

Other, net

Disposal of treasury stock——(10,299)

53,270

—

—

—

—

—

42,971

Net cash used in financing activities

Net changes except forshareholders’ equity

—

—

—

—

104,551

49

93,24425,606

253

223,704$411,601$584,220$9,901,919$(165,009)$804,709$(344)$322,712$29,616

Balance as ofMarch 31, 2022

Balance as ofMarch 31, 2023

See accompanying Notes to Consolidated Financial Statements.

Total
net assets

Other, net

Commonstock$89,087 $10,087,986$89,340 $11,978,768

Net cash used in investing activities
Cash flows from financing activities:

Effect of exchange rate changes on cash and cash equivalents

See accompanying Notes to Consolidated Financial Statements.

5

TOKYO ELECTRON Consolidated Financial Statements FY2023

TOKYO ELECTRON Consolidated Financial Statements FY2023

6

Notes to Consolidated Financial Statements
Tokyo Electron Limited and Subsidiaries
Years ended March 31, 2023 and 2022

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements ofTokyo Electron Limited (hereinafter “the Company”) and its
subsidiaries (hereinafter collectively referred to as “Tokyo
Electron”) have been prepared in accordance with theprovisions set forth in the Financial Instruments and Exchange
Act of Japan and its related accounting regulations, and in
conformity with accounting principles generally accepted inJapan, which are different in certain respects as to applicationand disclosure requirements of International Financial
Reporting Standards.
The Company uses financial statements prepared byforeign subsidiaries in accordance with International Financial
Reporting Standards or U.S. generally accepted accounting
principles for the preparation of the consolidated financial
statements, together with adjustment for certain items which
are required to be adjusted in the consolidation process.
The accompanying consolidated financial statements
have been restructured and translated into English from thestatutory Japanese language consolidated financial statements.
Some supplementary information included in the statutory
Japanese language consolidated financial statements is
not presented in the accompanying consolidated financial
statements.
The amounts in the consolidated financial statements andassociated notes shown in millions and thousands of yen;
thousands of U.S. dollars; and thousands of shares as of and forthe years ended March 31, 2023 and 2022 are truncated at thenearest unit. Accordingly, totals do not necessarily agree withthe sum of the corresponding individual amounts.
U.S. dollar amounts included herein are solely for theconvenience of readers and are presented at the rate of ¥133.53
to $1.00, the approximate rate as of March 31, 2023. The
translation should not be construed as a representation that
the Japanese yen amounts shown could be converted into U.S.
dollars at that or any other rate.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The consolidated financial statements include the accountsof the Company and its 27 and 26 subsidiaries as of March 31,
2023 and 2022, respectively. All significant inter-company
transactions and account balances have been eliminatedthrough consolidation procedures.
There is 1 affiliate accounted for using the equity method asof March 31, 2023 and 2022.
The fiscal year-end of all entities is March 31, except for
3 consolidated foreign subsidiaries. Financial statements
provisionally closed for the period ending March 31 are used for
those subsidiaries.
(b) Foreign currency translation
All assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the year-end rates, except for
those hedged by forward exchange contracts and currency
option contracts, which are translated at the contracted rates.
7

TOKYO ELECTRON Consolidated Financial Statements FY2023

Resulting exchange gains and losses are included in earnings forthe year.
Revenue and expense items are translated at the rates thatapproximate those prevailing at the time of the transactions.
The balance sheet accounts of foreign subsidiaries aretranslated into Japanese yen at the rates of exchange in effectat the balance sheet date, except for shareholders’ equity
accounts, which are translated at the historical rates. Revenue
and expense accounts of foreign subsidiaries are translated ataverage rates of exchange in effect during the year. Resulting
translation adjustments are presented in net assets as acomponent of accumulated other comprehensive income(loss) in the consolidated balance sheets.
(c) Cash and cash equivalents
Cash and cash equivalents consist of cash, short-term deposits
and low-risk financial instruments with original maturities ofthree months or less.
(d) Short-term investments
Short-term investments consist of short-term deposits andlow-risk financial instruments with original maturities of morethan three months.
(e) Investment securities
Tokyo Electron examines the intent of holding each security
and classifies those securities as trading securities, held-to
maturity debt securities or other securities. Tokyo Electron
has no trading securities as of March 31, 2023 and 2022. Heldto-maturity debt securities are stated mainly at amortizedcost. Other securities with market prices are valued at fairvalue at the balance sheet date. The differences between thebook value and fair value of other securities, net of applicable
income taxes, are presented in net assets as a componentof accumulated other comprehensive income (loss) in the
consolidated balance sheets. Other securities without market
prices are valued at cost using the weighted-average method.
The cost of sold securities is calculated using the weighted
average method.
(f) Inventories
Inventories are stated at the lower of cost, determined byprincipally the specific identification method, or net selling
price, which is defined as selling price less estimated additional
manufacturing costs and estimated direct selling expenses.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciationof buildings and structures, machinery and equipment of theCompany and its domestic subsidiaries is computed using thedeclining-balance method, except for buildings acquired sinceApril 1, 1998 and facilities attached to buildings and structuresacquired since April 1, 2016 which are depreciated using thestraight-line method, based on the estimated useful livesof assets. Foreign subsidiaries mainly apply the straight-line
method over the estimated useful lives of assets.

Estimated useful lives of property, plant and equipment are
as follows:
Buildings and structures
2 to 60 years
Machinery and equipment
2 to 20 years(h) Intangible assets (excluding goodwill)
Intangible assets are amortized by the straight-line method
over their estimated useful lives.
(i) Goodwill
Goodwill is evaluated on an individual basis and amortized by
the straight-line method over a period not exceeding 20 years.
(j) Impairment of fixed assets
Tokyo Electron evaluates the carrying value of fixed assets held
for use in the business and idle assets.
If the carrying value of a fixed asset is impaired, a loss isrecognized based on the amount by which the carrying value
exceeds its recoverable amount, being the higher of the net
selling price or the value in use of the assets. Net selling priceis determined using the fair value less disposal costs and value
in use is based on the total amount of discounted cash flows
estimated to be generated from the continuing use of theindividual assets or the asset group and the disposal of theassets.
(k) Allowance for doubtful accounts
The Company and its domestic subsidiaries provide anallowance for doubtful accounts at an amount determinedbased on the historical experience of bad debts with respect toordinary receivables, and an estimate of uncollectible amounts
determined by reference to specific doubtful receivablesfrom customers which are experiencing financial difficulties.
Overseas subsidiaries provide an allowance for doubtful
accounts based on an estimate of uncollectible amounts
determined by reference to specific doubtful receivables from
customers which are experiencing financial difficulties.
(l) Accrued employees’ bonuses
The provision for accrued employees’ bonuses is provided
based on the estimated payments to be made in respect of the
fiscal year.
(m) Employee benefits
The Company and its domestic subsidiaries provide defined
benefit plans for their employees. Expected benefits are
attributed to accounting periods by the benefit formula basis.
Prior service costs are charged to earnings on a straight-line
basis, beginning from the fiscal year in which they are incurred,over a fixed number of years (4 years) within the averageremaining years of service of employees when the changes
occur. Actuarial differences are charged to earnings on astraight-line basis, beginning from the following fiscal year
after they are incurred, over a fixed number of years (4 years)
within the average remaining years of service of employees
when the differences occur.

The provision for accrued pension and severance costs
for directors and audit & supervisory board members of
the Company and its domestic subsidiaries is calculated inaccordance with internal regulations.
The Company and certain domestic subsidiaries decided to
discontinue the payment of severance pay for directors andaudit & supervisory board members after April 1, 2005, and at
the general shareholders’ meeting in June 2005, it was resolvedthat the severance pay for directors and audit & supervisoryboard members until March 31, 2005 would be paid at thetermination of their service and the decision regarding thepayment amount for each director and audit & supervisoryboard member was delegated to the board of directors andaudit & supervisory board members. The accruals for severance
costs for directors and audit & supervisory board members areincluded in Net defined benefit liabilities in the consolidatedbalance sheets.
(n) Accrued warranty expenses
Tokyo Electron’s products are generally subject to warranty,
and Tokyo Electron accrues estimated warranty costs.
Estimated after-sale repair expenses over warranty periods are
accrued based on the historical ratio of actual repair expenses
to corresponding sales.
(o) Derivatives and hedge accounting
The Company and certain subsidiaries (hereinafter “the Group”)
make use of derivatives in order to manage certain risks arisingfrom adverse fluctuations in foreign currency exchange rates.
The amount of derivatives is limited to the extent of actual
demands, and the Group does not trade in derivatives for
speculative purposes.
Derivatives are carried at fair value in the consolidatedbalance sheets with changes in unrealized gain or loss charged
or credited to earnings, except for those which meet thecriteria for hedge accounting. Unrealized gains or losses on
hedging instruments, net of taxes, are reported in net assets
as a component of accumulated other comprehensive income(loss) in the consolidated balance sheets. Receivables, payables
and foreign currency forecast transactions hedged by qualified
forward foreign exchange contracts and currency option
contracts are translated at the corresponding contract rates.
(p) Income taxes
Tokyo Electron records deferred tax assets and liabilities on
temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and theamounts used for income tax purposes and net operating loss
carryforwards. Deferred tax assets and liabilities are measured
using the enacted tax rates and laws which are expected to bein effect when net operating loss carryforwards and temporary
differences are expected to be realized.

TOKYO ELECTRON Consolidated Financial Statements FY2023

8

(q) Revenue recognition
Nature of main performance obligations in the principal
business
Tokyo Electron principally develops, manufactures, and sells
semiconductor production equipment and flat panel display(FPD) production equipment, and provides field solution
services such as spare parts, services and modifications for
installed equipment, and sales of used equipment. Regarding
sales of equipment, transfer of goods, provision of set-up
services, sales of spare parts, and provision of modifications
and maintenance services are identified as major performanceobligations.
Timing of satisfaction of performance obligations(Timing of revenue recognition)
Regarding sales of semiconductor and FPD production
equipment, revenue for the transfer of goods and provisionof set-up services is principally recognized when goods aredelivered to customers and provision of set-up services
is completed. Regarding sales of spare parts, revenue isrecognized when spare parts are delivered to customers.
Regarding modifications, revenue is principally recognizedwhen modifications are completed. Regarding maintenanceservices, revenue is principally recognized over the term of thecontracts with customers.
(r) Research and development expenses
Research and development expenses are charged to earnings
as incurred and amounted to ¥191,196 million ($1,431,862
thousand) and ¥158,256 million for the years ended March 31,
2023 and 2022, respectively.
(s) Reclassifications
Certain reclassifications have been made to the prior year’s
consolidated financial statements to conform with thepresentation used for the year ended March 31, 2023.
3. Significant Accounting Estimates
1. Valuation of inventories(1) Carrying amounts in the consolidated financial statements¥652,208 million ($4,884,358 thousand) and ¥473,845 million
as of March 31, 2023 and 2022, respectively.
(2) Information on the nature of significant accounting
estimates
Inventories are principally stated at cost on the consolidatedbalance sheets. When the net selling price for inventory
decreases below its cost at the end of the fiscal year, theCompany writes down inventories in an amount equal to thedifference between the cost of the inventory and the net
selling price.
Inventories aged over a certain holding period are classified
based on the expected use and salability and are thensystematically written down according to their classification.
The carrying amount of inventories to be disposed of iswritten down to the estimated disposal value.
9

TOKYO ELECTRON Consolidated Financial Statements FY2023

The valuation of inventories is based on forecasts offuture demand and prospects for the market environment.
The semiconductor industry, where Tokyo Electron operates,
is influenced by the short-term unbalance between supply
and demand, and the market could undergo fluctuations.
Unforeseen rapid contraction of the semiconductor market
could lead to additional write downs of inventories in the
consolidated financial statements for the next fiscal year.
2. Accrued warranty expenses(1) Carrying amounts in the consolidated financial statements¥34,382 million ($257,486 thousand) and ¥26,568 million as ofMarch 31, 2023 and 2022, respectively.
(2) Information on the nature of significant accounting
estimates
The Company accrues estimated warranty costs. Estimatedafter-sale repair expenses over warranty periods are accrued
based on the historical ratio of actual repair expenses tocorresponding sales.
Tokyo Electron’s products are based on the integrationof numerous leading-edge technologies. The occurrence of
unforeseen defects could lead to additional after-sale repair
expenses in the consolidated financial statements for the next
fiscal year.
4. Changes in Accounting Policies and Adoption of New
Accounting Standards
Year ended March 31, 2022
Application of Accounting Standard for Revenue Recognition
From the beginning of the fiscal year ended March 31,
2022, the Company and its consolidated domestic subsidiaries
apply “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) and recognizes revenue
based on the amounts expected to be received in exchange forthe promised goods or services as the control of such goods orservices are transferred to customers.
Regarding sales of semiconductor and FPD production
equipment, goods and set-up services to be transferred werepreviously identified as a single performance obligation andrevenue was recorded at the time of the confirmation of set-up
in principle. Going forward, performance obligations related
to goods and set-up services to be transferred for equipment
are separately identified and revenue is recognized when eachperformance obligation is satisfied, which is when equipment
is delivered to customers and services related to setting up
equipment are completed.
In addition, in cases where a series of transactions for salesof equipment are transacted with the same customer, there
can be special prices such as corresponding to total purchasequantities. For such series of transactions with special prices,
revenue was previously recognized based on the price foreach order. However, on the grounds that the sales prices oftransactions fluctuates based on future purchase quantities,
the accounting method is changed to treat those special prices
as variable consideration, and include it in the transaction

price only to the extent that it is probable that a significant
reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variableconsideration is subsequently resolved.
The application of such changes in accounting policies
follows the transitional treatment prescribed in the proviso
of paragraph 84 of the Accounting Standard for Revenue
Recognition. The cumulative effect of the retrospective
application, assuming the new accounting policy had been
applied to periods prior to the beginning of the fiscal year
ended March 31, 2022, was added to or deducted from the
beginning balance of retained earnings of the fiscal year ended
March 31, 2022.
In addition, “Trade notes and accounts receivable” presented
under “Current assets” in the consolidated balance sheets forthe consolidated fiscal year ended March 31, 2021 was included
in “Notes and accounts receivable - trade, and contract assets”
from the fiscal year ended March 31, 2022. In accordance withthe transitional treatment prescribed in the paragraph 89-2of the Accounting Standard for Revenue Recognition, figures
for the consolidated fiscal year ended March 31, 2021 havenot been restated in accordance with the new approach topresentation.
As a result, in comparison with the method prior to
the application of the Accounting Standard for Revenue
Recognition, the consolidated balance sheet as of March 31,
2022 changed, mainly including an increase of ¥176,527 million
in notes and accounts receivable - trade, and contract assets,a decrease of ¥118,589 million in inventories, and a decreaseof ¥47,472 million in customer advances. In the consolidated
statement of income for the year ended March 31, 2022, net
sales increased by ¥195,058 million, cost of sales increased by¥88,084 million, and each of operating income and income
before income taxes increased by ¥106,974 million, accordingly.
The consolidated statement of cash flows for the year
ended March 31, 2022 changed, mainly including an increaseof ¥106,974 million in income before income taxes, an increaseof ¥69,043 million in increase in inventories, a decrease of¥139,564 million in increase in notes and accounts receivable trade, and contract assets, and a decrease of ¥35,234 million inincrease (decrease) in customer advances.
Due to the reflection of the cumulative effect on net assets
as of April 1, 2021, the beginning balance of retained earnings in
the consolidated statement of changes in net assets decreasedby ¥753 million.
In addition, the effect on per share information of the fiscal
year ended March 31, 2022 is described in Note 21.
Furthermore, in accordance with the transitional treatmentprescribed in paragraph 89-3 of the Accounting Standard for
Revenue Recognition, Note 19. does not include information for
the fiscal year ended March 31, 2021.
Application of Accounting Standard for Fair Value Measurement
From the beginning of the fiscal year ended March 31,
2022, Tokyo Electron applies “Accounting Standard for Fair
Value Measurement” (ASBJ Statement No. 30, July 4, 2019).

In accordance with the transitional treatment prescribedin paragraph 19 of the Accounting Standard for Fair Value
Measurement and paragraph 44-2 of “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, July 4, 2019),
new accounting policies prescribed by the Accounting Standard
for Fair Value Measurement are adopted prospectively. Thereis no effect from this change on the consolidated financial
statements.
The breakdown of fair value of financial instruments bylevel is stated in Note 17. In accordance with the transitional
treatment prescribed in paragraph 7-4 of “Implementation
Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No. 19, July 4, 2019), the Note does
not include information for the fiscal year ended March 31, 2021.
5. Additional Information
Transactions for Delivery of the Company’s Own Stock to
Employees and others through Trusts
Tokyo Electron introduced stock delivery schemes(hereinafter “the Schemes”) as a common global incentive plan.
The purpose of the Schemes is to encourage the directors of
the Company and its subsidiaries (excluding outside directors),
corporate officers, executive officers and senior and mid-level
employees to contribute to improving medium-term businessperformance, as well as to share a shareholder perspective
by holding Company shares and raising awareness towards
enhancing corporate value.
For the Company's outside directors, the Company
has introduced non-performance-linked stock-based
compensation as a system that is more consistent with their
expected role of advising management from the perspective of
increasing corporate value over the medium- to long-term, in
addition to management supervision. In accordance with that
objective, the Company’s outside directors are now within thescope of the Schemes.
Tokyo Electron adopted the “Practical Solution on
Transactions for Delivery of the Company’s Own Stock to
Employees, and others through Trusts” (PITF No. 30, March 26,2015) for the accounting treatment of the Schemes.
1. Executive compensation BIP (Board Incentive Plan) Trust(1) Overview of the transactions
The Executive compensation BIP Trust which the Company
established acquires the Company’s shares, and delivers andprovides shares of the Company and monetary compensation
corresponding to the cash conversion value of the Company’s
shares to the directors and the corporate officers of theCompany and its subsidiaries in accordance with the sharedelivery rules.
(2) The Company’s shares held by the trust
Tokyo Electron recorded the Company’s shares held by thetrust in “Treasury stock, at cost” under “Net assets” at the bookvalue in the trust (excluding ancillary expenses). The bookvalue and the number of such treasury shares were ¥1,576
million ($11,805 thousand) and 64,964 shares, respectively, asTOKYO ELECTRON Consolidated Financial Statements FY2023

10

of March 31, 2023, and were ¥1,744 million and 80,538 shares,
respectively, as of March 31, 2022.
The Company implemented a 3-for-1 common stock split on
April 1, 2023. The number of treasury shares presented above isbased on the number before the stock split.
2. Share-delivering ESOP (Employee Stock Ownership Plan) Trust(1) Overview of the transactions
The Share-delivering ESOP Trust which the Company
established acquires the Company’s shares, and delivers andprovides shares of the Company and monetary compensation
corresponding to the cash conversion value of the Company’s
shares to the general managers, senior employees and midclass employees of the Company and its subsidiaries basedon their position and attainment of performance targets inaccordance with the share delivery rules.
(2) The Company’s shares held by the trust
Tokyo Electron recorded the Company’s shares held by thetrust in “Treasury stock, at cost” under “Net assets” at the bookvalue in the trust (excluding ancillary expenses). The book value
and the number of such treasury shares were ¥10,555 million($79,049 thousand) and 435,915 shares, respectively, as ofMarch 31, 2023, and were ¥11,409 million and 529,991 shares,
respectively, as of March 31, 2022.
The Company implemented a 3-for-1 common stock split on
April 1, 2023. The number of treasury shares presented above isbased on the number before the stock split.

(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are
currently in the process of determining the effects of these newstandards on the consolidated financial statements.
7. Securities
Other securities as of March 31, 2023 and 2022 are as follows:(1) Overview“Partial Amendments to Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28), etc. (hereinafter,“Statement No.28, etc.”) were published on February, 2018 andthus the responsibility for implementation guidance on tax
effect accounting was transferred from the JICPA to the ASBJ.
In the process of deliberation of the newly issued standards
and guidance above, the following two issues, which were to bereviewed after the publication of Statement No.28, etc., weredeliberated and new requirements published.
• Classification of tax expenses (taxation on othercomprehensive income)• Tax effect on the sale of shares of subsidiaries and affiliates
when the group taxation regime is applied(2) Effective date
Effective from the beginning of the fiscal year ending March 31,
2025.
11

TOKYO ELECTRON Consolidated Financial Statements FY2023(2) Movement of plan assets

8. Inventories
Inventories as of March 31, 2023 and 2022 are as follows:

Balance at April 1, 2022
and 2021

2023:

Cost

Carrying value

Non-current
Securities with carrying value exceedingacquisition cost
¥7,191Equity securities¥162,237

Securities with carrying value not exceedingacquisition cost
Equity securities
Total

3,165

3,118

¥10,357¥165,355

Millions of yen

2022:

Cost

Securities with carrying value exceedingacquisition cost
¥7,904¥142,831

Securities with carrying value not exceedingacquisition cost
Equity securities
Total

2023

2022

2023

2,023

1,991

¥9,927¥144,822

Thousands of U.S. dollars
Cost

Carrying value$53,855

Equity securities$1,214,987

Securities with carrying value not exceedingacquisition cost
Equity securities
Total

23,70823,355$77,563$1,238,342

Held-to-maturity securities classified as current assets are¥0 million ($7 thousand) and ¥97,000 million as of March 31,
2023 and 2022, respectively.
Reconciliation of held-to-maturity securities as of March 31,
2023 and 2022 to the amounts of short-term investments inthe consolidated balance sheets are as follows:
Thousands of
U.S. dollars

Millions of yen

2023
Held-to-maturity (current)
Deposits and low-risk financial
instruments with original
maturities of three months or less

2022
¥0

—

¥97,000(62,000)

2023
$7

—

2022

2023
$601,307¥80,292¥74,095

Expected return on plan assets

1,834

1,577

13,741

Actuarial gain (loss)(1,044)605(7,822)

Employer contributions

2,332

5,211

17,471(1,877)(1,719)(14,057)

Finished products¥236,795¥183,512$1,773,351

Work in process, raw materials
and supplies

415,412290,332

3,111,007Foreign currency exchange
rate changes

246

522

1,845

Balance at March 31, 2023
and 2022¥81,785¥80,292$612,484

Total¥652,208¥473,845$4,884,358

The amounts of change in inventory provision included
in cost of sales in the consolidated statements of income forthe years ended March 31, 2023 and 2022 were an increaseof ¥10,788 million ($80,791 thousand) and ¥308 million,
respectively.
9. Pledged Assets
Tokyo Electron did not hold any assets pledged as collateral asof March 31, 2023 and 2022.
10. Short-term Borrowings
There are no short-term borrowings classified as current
liabilities as of March 31, 2023 and 2022.
As of March 31, 2023 and 2022, Tokyo Electron had unusedlines of credit amounting to ¥329,491 million ($2,467,545
thousand) and ¥276,988 million, respectively.
11. Employee Benefits
The Company and its domestic subsidiaries provide a cash
balance plan and a non-contributory retirement and severance
benefit plan as defined benefit plans, and provide a defined
contribution plan as defined contribution plans for theiremployees. Further, certain consolidated overseas subsidiaries
provide defined benefit plans and defined contribution plans
for their employees.
Defined benefit plans(1) Movement of defined benefit obligations
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

¥126,639¥124,212$948,398

Service cost

6,724

6,463

50,362

Interest cost

1,017

842

7,622

Actuarial gain (loss)(6,403)(484)(47,958)

Benefits paid

(5,491)(5,075)(41,124)

Balance at April 1, 2022
and 2021

Deposits with original maturities
of more than three months

627

626

4,702

Foreign currency exchange
rate changes

Short-term investments¥628¥35,626$4,709Other

Net loss on devaluation of investment securities was none
and immaterial for the years ended March 31, 2023 and 2022,
respectively.

2023

Benefits paid

Non-current
Securities with carrying value exceedingacquisition costThousands of
U.S. dollars

Millions of yen(3) Reconciliation from defined benefit obligations and plan
assets to net defined benefit liabilities (assets)

Balance at March 31, 2023
and 2022

228

530

1,712

60

149

453

¥122,776¥126,639$919,467

Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Funded defined benefit
obligations¥63,718¥65,330$477,187

Plan assets(81,785)(80,292)(612,484)

Funded status(18,066)(14,961)(135,296)

Unfunded defined benefit
obligations

59,05761,309442,279

Net defined benefit liabilities at
March 31, 2023 and 2022

¥40,991¥46,347$306,983

Net defined benefit liabilities

60,36662,533452,081

Net defined benefit assets(19,374)(16,186)(145,098)

Net defined benefit liabilities at
March 31, 2023 and 2022

¥40,991¥46,347$306,983

Carrying value

Non-current

Equity securities

Thousands of
U.S. dollars

Millions of yen

Millions of yen

2023:

6. Accounting Standards Issued but Not yet Adopted“Accounting Standard for Current Income Taxes”(ASBJ Statement No. 27, October 28, 2022)“Accounting Standard for Presentation of Comprehensive
Income”(ASBJ Statement No. 25, October 28, 2022)“Implementation Guidance on Tax Effect Accounting”(ASBJ Guidance No. 28, October 28, 2022)

For the years ended March 31, 2023 and 2022, the Company
sold available-for-sale securities and the amounts wereimmaterial.

Note: The provision for accrued pension and severance costs for directors and audit& supervisory board members of ¥110 million as of March 31, 2022 is notincluded.

(4) Defined benefit costs
Thousands of
U.S. dollars

Millions of yen

Service cost

2023

2022

2023

¥6,724¥6,463$50,362Interest cost

1,017

842

7,622

Expected return on plan assets(1,834)(1,577)(13,741)

Net actuarial gain amortization

(482)

952

(3,611)

Prior service cost amortization

—

338

—

Other

212

329

1,591

¥5,638¥7,350$42,225

Total defined benefit costs forthe years ended March 31, 2023
and 2022(5) Remeasurements of defined benefit plans
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Prior service cost (before tax)

¥—

¥338

$—

Actuarial gain (before tax)

4,826

1,917

36,142

Total¥4,826¥2,256$36,142TOKYO ELECTRON Consolidated Financial Statements FY2023

12

(6) Accumulated remeasurements of defined benefit plans
Millions of yen

2023
Net actuarial gain (loss) that is
yet to be recognized (before
tax)¥5,8582023

2022¥1,032

2023

2022

2023

Elimination of unrealized profit ininventories¥29,274¥21,936$219,233

Net defined benefit liabilities

18,483

19,250138,419

Software

17,07911,494

127,908

Devaluation of inventories

11,781

7,908

88,229Accrued warranty expenses

9,287

7,181

69,553

Accrued employees’ bonuses

7,795

9,605

58,381

Deferred tax assets$43,874(7) Plan assets
1. Plan assets comprise:
2023

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

2022Life insurance company general account

30%

31%

Alternative investments (Note)

26

25

Research and development
expenses

6,963—

52,14832,21430,455

241,250
995,126

Bonds

14

14

Other

Equity securities

14

14

Total gross deferred tax assets

132,879

107,832

5

Less valuation allowance(6,102)(5,467)(45,701)

Total deferred tax assets

126,776

102,364

949,424

Net unrealized gains on
investment securities(47,422)(41,253)(355,143)

Undistributed earnings ofsubsidiaries(12,848)(11,506)(96,219)

Other(8,587)(5,397)(64,309)2

Cash and cash equivalents
Other

14

11

Total

100%

100%

Note: A lternative investments mainly consist of hedge funds, multi-assets, realestate, infrastructure and insurance-linked securities.

2. Long-term expected rate of return
Current and target asset allocations, and historical andexpected returns on the various categories of plan assets havebeen considered in determining the long-term expected rate of
return.
(8) Actuarial assumptions
The principal actuarial assumptions as of and for the years
ended March 31, 2023 and 2022 are as follows:
2023
Discount rateLong-term expected rate of return

1.02%
2.00%

2022
0.54%
2.00%

The expected rates of salary increase for the years ended
March 31, 2023 and 2022 are also considered as one of theactuarial assumptions, and are set based on the salary increaseindex by age group as of January 1, 2019.
Defined contribution plans
The contributions of the Company and its subsidiaries tothe defined contribution plans are ¥3,928 million ($29,417
thousand) and ¥3,123 million for the years ended March 31,
2023 and 2022, respectively.
12. Income Taxes
Significant components of the deferred tax assets and liabilities
as of March 31, 2023 and 2022 are as follows:

Deferred tax liabilities

Total deferred tax liabilities(68,857)(58,157)(515,672)

Net deferred tax assets¥57,918¥44,207$433,751

The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during theperiod in which temporary differences become deductible andnet operating loss carryforwards are available to be utilized.
For assessment of the realizability of deferred tax assets,management considers the scheduled reversal of deferred
tax liabilities, future estimated taxable income, tax planning
strategies and level of net operating loss carryforwards, if any,in accordance with accounting principles generally accepted inJapan.
Based on the level of historical taxable income andfuture estimated taxable income over the periods which
the temporary differences are deductible and net operating
loss carryforwards are available to be utilized, management
believes Tokyo Electron will realize the benefits of deferred tax
assets, net of valuation allowance, as of March 31, 2023 and2022.
Year ended March 31, 2023
The Company and its wholly-owned domestic subsidiaries
apply a group tax sharing system for corporate tax purposes.
The Company and its wholly-owned domestic subsidiaries
account for, and make disclosures in relation to, corporate tax,
local tax and related tax effects in accordance with “Practical
Solution on the Accounting and Disclosure Under the Group Tax
Sharing System” (PITF No.42, August 12, 2021).
Year ended March 31, 2022
The Company and its wholly-owned domestic subsidiaries
apply a consolidated tax filing system for corporate tax
purposes.

13

TOKYO ELECTRON Consolidated Financial Statements FY2023

The Company and its domestic subsidiaries calculated theamounts of deferred tax assets and deferred tax liabilities
based on the Income Tax Act prior to amendment regarding
the transition to group tax sharing system established in “Actfor Partial Amendment of the Income Tax Act, etc. ” (Act No.8
of 2020) and the items for which the single tax payment
system was amended in line with the transition to group tax
sharing system, in accordance with the treatment specified
by paragraph 3 of “Practical Solution on the Treatment of Tax
Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (PITF No.39,
March 31, 2020) instead of the provision of paragraph 44 of”Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28, February 16, 2018).
The Company and its domestic subsidiaries will transition
from a consolidated tax filing system to a group tax sharing
system for corporate tax purpose from the next fiscal year.
From the beginning of the next fiscal year, the Company
and its domestic subsidiaries will apply “Practical Solution on
the Accounting and Disclosure Under the Group Tax Sharing
System” (PITF No.42, August 12, 2021) which provides thepractical solution on the accounting and the disclosure ofcorporate tax, local tax, and tax effect accounting.
Significant components of the difference between thestatutory and effective tax rates for the years ended March 31,
2023 and 2022 are as follows:
Statutory tax rate in Japan

2023

2022

30.62%

30.62%

Adjustments:
Tax credits(5.55)(4.14)

Difference in statutory tax rates of subsidiaries(1.15)(0.87)

Others, net

0.61

1.14

Effective tax rate

24.53%

26.75%

13. Net Assets
Net assets comprises four subsections, which are shareholders’equity, accumulated other comprehensive income, sharesubscription rights and non-controlling interests.
Under Japanese laws and regulations, the entire amount
paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the board of
directors, designate an amount not exceeding one half of theprice of the new shares as additional paid-in capital which isincluded in capital surplus.
In cases where dividend distribution of surplus is made, thelesser of an amount equal to 10% of the dividend or the excess,if any, of 25% of common stock over the total of additional
paid-in capital and legal reserve must be set aside as additional
paid-in capital or legal reserve. Legal reserve is included inretained earnings in the accompanying consolidated balance
sheets.
Both appropriations of legal reserve and additional paid-in
capital used to eliminate or reduce a deficit generally require aresolution of the shareholders’ meeting.
Additional paid-in capital and legal reserve may not be

distributed as dividends. All additional paid-in capital andlegal reserve may be transferred to other capital surplus andretained earnings, respectively, which are potentially available
for dividends.
The Company is subject to restriction of dividends basedon the Japanese Corporate Act, which restricts the amount ofdividends to retained earnings on a consolidated basis.
The Company’s articles allow for the distribution of earnings
to shareholders on dates other than the mid-term and yearend, by a resolution of the board of directors in accordancewith Japanese laws and regulations.
At the board of directors’ meeting held on May 11, 2023, thedistribution of cash dividends amounting to ¥133,754 million($1,001,680 thousand) was resolved. Such appropriations havenot been accrued in the consolidated financial statements asof March 31, 2023 since they are recognized in the period inwhich they are resolved at the board of directors’ meeting.
The dividends of ¥133,754 million include ¥427 million ($3,203
thousand) related to treasury stock held by the BIP/ESOP
Trusts.
14. Other Comprehensive Income
Other comprehensive income for the years ended March 31,
2023 and 2022 is as follows:
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Net unrealized gains arisingduring the year

¥20,356¥39,592$152,450

Reclassification adjustments

(239)

(132)

(1,796)

20,11639,459150,653

Tax expense(6,165)(12,085)(46,173)

Sub-total, net of tax

13,951

27,374

104,480

Adjustments during the year

12,341

20,10592,426

Reclassification adjustments

—

—

—

12,341

20,10592,426

Net unrealized gains on
investment securities

Sub-total, before tax

Foreign currency translation
adjustments

Sub-total, before tax
Tax expense
Sub-total, net of tax

(21)

(38)

(162)

12,32020,06692,26439,753Remeasurements of defined
benefit plans
Adjustments during the year

5,308

964

Reclassification adjustments

(482)

1,291

(3,611)

Sub-total, before tax

4,826

2,256

36,142

Tax expense(1,443)(661)(10,807)

Sub-total, net of tax

3,382

1,594

25,334

183

70

1,372

¥29,837¥49,107$223,451

Share of other comprehensive
income of associates accounted
for using the equity method
Adjustments during the year
Total other comprehensive
incomeTOKYO ELECTRON Consolidated Financial Statements FY2023

1415. Share Subscription Rights
Stock option plan
The Company’s shareholders have approved annual stock
option plans for directors and selected employees since theyear ended March 31, 1999. The options under the plans vest
immediately or over three-year period with restriction on
exercise up to three years after the date of grant, and have an
exercise period of seventeen years from the date on which theoptions become exercisable.
Options to purchase 77,000 shares and 70,000 shares of
the Company were authorized and granted at exercise prices of¥1 ($0.01) and ¥1 for the years ended March 31, 2023 and 2022,
respectively.
A summary of stock options outstanding and exercisable asof March 31, 2023 and 2022 is as follows:
2023

Number ofshares704,500

Outstanding at the beginning of year

2022

Weighted-average exercise price

Number ofshares

Weighted-average exercise price

U.S. dollars
¥1

$0.01

828,100

¥1

Yen

Yen

payable, mainly mature within one year. Trade payables are
exposed to liquidity risks which are managed through activities
such as implementing cash management plans.
See Note 18 for detailed discussion on derivative financial
instruments.
Fair value of financial instruments
Carrying amount and estimated fair value of financial
instruments as of March 31, 2023 and 2022 are set out below.
Millions of yen

Carrying
amount2023:
AssetsGranted77,0001

0.01

70,000

1

Short-term investments

Exercised261,900

1

0.01

193,600

1

Investment securities
Derivatives (see Note 18)¥0¥1

162,389

162,387

—

—

—

—

—

519,600

1

0.01

704,500

1

Hedge accounting not applied

48

48

Exercisable at the end of year

241,800

1

0.01

143,300

1

Hedge accounting applied——

Millions of yen

Note: The Company implemented a 3-for-1 common stock split on April 1, 2023. The numbers before the stock split are presented above.

Amounts expensed related to stock options
The amounts expensed related to stock options for the years
ended March 31, 2023 and 2022, are as follows:
Thousands of
U.S. dollars

Millions of yen

2023
Selling, general andadministrative expenses¥3,0482023

2022¥3,226$22,831

The Company implemented a 3-for-1 common stock split on
April 1, 2023. The price of fair value presented above is based on
the price before the stock split.
16. Leases
Future minimum lease payments on non-cancelable operatingleases are as follows:
Millions of yen

Valuation method of fair value per unit of stock options
Fair value as of the grant date for stock options granted for theyear ended March 31, 2023 and 2022 were ¥39,594 ($296.52)
and ¥46,086 per unit, which were evaluated as follows:( 1 ) Valuation method used: Black-Scholes model(2) Major underlying assumptions and estimates:
18th Stock
Acquisition Rights

17th Stock
Acquisition Rights

Volatility (Note 1)

36.25%

34.86%

Expected residual period (Note 2)

5.17 years

5.26 years

Expected dividends (Note 3)¥1,092 ($8.18)
per share¥684.50per share

Risk-free interest rate (Note 4)

0.10%(0.10)%

Notes: 1. Calculated based on the stock price performance for the period
corresponding to the expected residual period (from April 2017 to June
2022 and March 2016 to June 2021 for 18th and 17th Stock Acquisition
Rights).
2. Calculated based on past actual results and forecast of the exercise ofstock options.
3. Based on the dividends paid for the years ended March 31, 2022 and 2021,
and the years ended March 31, 2021 and 2020, for 18th and 17th Stock
Acquisition Rights.
4. Based on Japanese government bond yield corresponding to the expected
residual period.

(3) M ethod of estimating the number of vested stock options
It is not necessary to estimate the number of vested stock
options as the rights to exercise stock options are vested
immediately when granted.

TOKYO ELECTRON Consolidated Financial Statements FY2023

2023

Carrying
amountEstimated
fair value1

Cash and cash equivalents¥10,000¥10,002

Short-term investments

35,00034,990Investment securities

142,993

142,990

1,358

1,358

—

—

2022:
AssetsDerivatives (see Note 18)
Hedge accounting not applied
Hedge accounting appliedThousands of
U.S. dollars

2022

2023

Thousands of U.S. dollars

Carrying
amount2023:

Due within one year

¥4,286¥4,428$32,099

Due over one year

12,166

12,816

91,117

Short-term investments

Total¥16,453¥17,244$123,216

Investment securities

Note: Leases of consolidated overseas subsidiaries as a lessee are not includedin the amounts above, since they are recorded on the balance sheets inprinciple.

17. Fair Value of Financial Instruments
Policy for financial instruments
Tokyo Electron limits its fund management to short-term bankdeposits and low-risk financial instruments.
Trade receivables, which consist of notes and accounts
receivable, are exposed to credit risk in the event of
non-performance by the counterparties. Execution andmanagement of credit risk, maturity and receivable balance
are conducted pursuant to the internal management rules for
credit control. Credit risk of major customers is assessed on aregular basis.
Short-term investments consist of short-term deposits andlow-risk financial instruments and Tokyo Electron trade withhighly-rated financial institutions to mitigate credit risks.
Investment securities mainly consist of equity interests inlisted companies exposed to equity market risks. Conditions,
including market prices, for these investment securities aremonitored on a regular basis.
Trade payables, which consist of notes and accounts

2022:

Estimated
fair value1

Assets$7$7

1,216,125

1,216,115

Hedge accounting not applied

360

360

Hedge accounting applied——

Derivatives (see Note 18)

Notes:1. A
 part of Cash and cash equivalents and Short-term investments, Notes
and accounts receivable - trade, and contract assets and Trade notes andaccount payable are omitted because they are cash or settled in a shortperiod of time and the fair values approximate the book values.
2. The following financial instruments classified as stocks without market
prices and similar financial instruments are not included in the above.
Thousands of
U.S. dollars

Millions of yen

2023

2023

2022

Within 1 year

After 1 through5 years¥—

Cash and cash equivalents¥335,648

Short-term investments

35,626—

Trade notes and accounts receivable

415,333——

149

Investment securities

Thousands of U.S. dollars

2023:

Within 1 year

After 1 through5 years

Cash and cash equivalents$3,538,318

$—

4,709

—

3,295,212

—

—

1,133

Short-term investments
Trade notes and accounts receivable

Outstanding at the end of year

Expired (forfeited)15

Estimated
fair value1

Millions of yen

Investment securities

Hierarchy by level for fair value of financial instruments
The fair values of financial instruments are classified into
the following three levels according to the observability andsignificance of the inputs used in fair value measurements:
Level 1: Fair values measured based on quoted prices of theassets or liabilities being measured which are available
in active markets as observable valuation inputs
Level 2: Fair values measured based on inputs other than inputs
included within Level 1 as observable valuation inputs
Level 3: Fair values measured based on unobservable valuation
inputsWhen several inputs that have a significant impact
on fair value measurements are used, the fair values are
categorized into the lowest level in the hierarchy for fair value
measurements among the levels to which each of the inputs
belongs.
(1) F inancial instruments recorded at fair value in the
consolidated balance sheets
Millions of yen

Fair value
2023:

Level 1

Level 2

Level 3

Total

Investment securities
Other securities
Equity securities¥162,237¥—¥—¥162,237

Derivatives
Currency-Related
Transactions
Total

—

48

—

48

¥162,237¥48¥—¥162,286

Reported amount in balance sheet
Unlisted stocks¥3,1183. Maturities of financial assets and securities are as follows:

Cash and cash equivalents
Short-term investments
Trade notes and accounts receivable
Investment securities

Fair value
2022:

Millions of yen

2023:

Millions of yen$23,351¥1,978

Level 1

Level 2

Level 3

Total

Investment securities

Within 1 year

After 1 through5 years¥472,471

¥—

628

—

440,009——

151

Other securities
Equity securities¥142,844¥—¥—¥142,844

Derivatives
Currency-Related
Transactions
Total

—

1,358

—

1,358

¥142,844¥1,358¥—¥144,203

TOKYO ELECTRON Consolidated Financial Statements FY2023

16

Thousands of U.S. dollars

Fair value
2023:

Level 1

Level 2

Level 3

Total

Investment securities
Other securities
Equity securities$1,214,991$—$— $1,214,991

Derivatives
Currency-Related
Transactions
Total

—

360

—

360

$1,214,991$360$— $1,215,352(2) Financial instruments other than those recorded at fairvalue in the consolidated balance sheets
Millions of yen

Fair value
2023:

Level 1

Level 2

Level 3

Total

Short-term investments
and Investment securities
Held-to-maturity
securities
Other
Total

¥—

¥151

¥—

¥151

¥—

¥151

¥—

¥151

Millions of yen

Level 1

Level 2

Level 3

Total

Cash and cash equivalents,
Short-term investments,
and Investment securities¥—¥44,991¥—¥44,991

Other

—

146

—

146

¥—

¥45,138¥—¥45,138

Thousands of U.S. dollars

Fair value
Level 1

Level 2

Level 3

Total

Total

Buy U.S. dollars¥7,085¥40¥40

Buy Chinese yuan

6,448

(3)

(3)

Buy Korean won

1,547

13

13

702

(2)

(2)

¥15,784¥48¥48

Millions of yen$—$—$1,131$1,131$—$—

TOKYO ELECTRON Consolidated Financial Statements FY2023

Millions of yen

Reportable Segment

2023:¥1,397¥144¥239,937

344,32718—

344,346

Europe184,261——

184,261South Korea

349,568

9,131—

358,700

Taiwan420,269

12,384—

432,653

China

496,755

30,682—

527,438

Others121,62860—

121,688

Total¥2,155,206¥53,674¥144¥2,209,025

1,692,796

42,009—1,734,806

462,409

11,664

144

474,218¥2,155,206¥53,674¥144¥2,209,025

Products and services:
New equipment (Note 2)
Field solution services and Others (Note 2)

Millions of yen

Reportable Segment

2022:¥1,334¥131¥230,368

268,065——

268,065

Europe107,954——

107,954South Korea

377,767

3,407—

381,175

Taiwan359,225

2,343—

361,569

China

513,529

52,689—566,219

88,39854—

88,453¥1,943,843¥59,830¥131¥2,003,805

1,499,079

48,610—1,547,689

444,764

11,220131

456,116¥1,943,843¥59,830¥131¥2,003,805

1,071

1,071

Buy Chinese yuan

6,276

297

297

Others

819

0

0

Total

$1,131$1,131
2023:

Contract
amountFair value

Gains(losses)

Buy U.S. dollars$53,064

$300

$300

Buy Chinese yuan

48,294(25)(25)

Buy Korean won

11,586

103

103

Buy Singapore dollars
Total

Products and services:
New equipment (Note 2)

Thousands of U.S. dollars

5,263

(17)

(17)

$118,208

$360

$360

Total

¥228,902

23,250(0)

Other(Note 1)

North America

Buy U.S. dollars¥1,358FPD
production
equipment

Japan

¥(10)

(0)

Semiconductor
production
equipment

Geographic regions:¥(10)¥1,358

Total¥238,394¥3,660271

Other(Note 1)

North America

Sell U.S. dollars¥34,278

FPD
production
equipment

Japan

Fair value

2022:

Gains
(losses)

Semiconductor
production
equipment

Geographic regions:Contract
amountTotal

Note: E
 xplanation of valuation techniques and valuation inputs used in fair value
measurements
Cash and cash equivalents, short-term investments, and investment
securities
Listed securities and bonds are evaluated using the market prices. Listed
securities are traded on active markets, so the fair values are classified
as Level 1. On the other hand, bonds held by Tokyo Electron are tradedinfrequently on the market and their values are not recognized as themarket price on an active market, so the fair values are classified as
Level 2.
Derivatives
The fair values of currency-related transactions are calculated using
the discounted present value method with observable inputs such as
interest rates and foreign exchange rates and are classified as Level 2.

17

Gains
(losses)

Buy Singapore dollars

Held-to-maturity
securities
Other

Fair value

Buy EURO

Short-term investments
and Investment securities

19. Revenue Recognition
Disaggregation of revenue arising from contracts with customers
Disaggregation of revenue by geographic regions, and types of products and services for the years ended March 31, 2023 and 2022
are as follows:

Total

Contract
amountTotal

Corporate bonds

2023:

Millions of yen

Buy Singapore dollars

Held-to-maturity
securities

Total

1. Derivative financial instruments not designated as hedging
instruments

2023:

Fair value2022:

18. Derivative Financial Instruments
Tokyo Electron and certain subsidiaries are subject to risk
from adverse fluctuations in foreign currency exchange
rates in its operating and financing activities. The Group
enters into forward foreign exchange contracts in order tohedge such risks, but do not enter into such transactions andcurrency option contracts for speculative purposes. The Group
implements a ratio analysis of the total cumulative cash flow
fluctuations or market fluctuations for the hedged item or
the hedging instrument to assess effectiveness of hedging
for all derivative transactions, except for transactions where
the critical terms of the hedging instrument and hedged item
match and the Group could conclude that changes in fair value
or cash flows are expected to completely offset. Execution
and management of all derivative transactions are conductedpursuant to the internal management rule.
The estimated fair values of the derivative financial
instruments as of March 31, 2023 and 2022 are as follows:

Field solution services and Others (Note 2)Total

2. Derivative financial instruments designated as hedging
instruments
The contract amounts of forward foreign exchange contracts,
entered into to hedge future transactions and receivables andpayables denominated in foreign currencies that have beentranslated by the corresponding contracted rates are none asof March 31, 2023 and 2022.

TOKYO ELECTRON Consolidated Financial Statements FY2023

18

Thousands of U.S. dollars

Reportable Segment

2023:

Semiconductor
production
equipment

FPD
production
equipment

Other(Note 1)

Total

Geographic regions:Japan$1,785,329$10,464$1,084$1,796,877

North America

2,578,656

135—

2,578,791

Europe1,379,926——

1,379,926

South Korea

2,617,905

68,387—2,686,292

Taiwan3,147,376

92,745—3,240,121

China

3,720,178

229,781—3,949,959

Others910,868450—

911,319$16,140,239$401,964$1,084$16,543,289

New equipment (Note 2)

12,677,274

314,610—

12,991,885

Field solution services and Others (Note 2)

3,462,965

87,354

1,084

3,551,403$16,140,239$401,964$1,084$16,543,289

Total

Products and services:

Total

Notes: 1 . “Other” includes all other operating segments which are not included in the reportable segments, including the group-wide logistic services, facility maintenance andinsurance.
2. “New equipment” includes sales of new equipment and set-up services to be transferred for equipment. “Field solution services and Others” includes spare parts,
services and modifications for installed equipment, and sales for used equipment.
3. Net sales amounting to ¥2,209,025 million and ¥2,003,805 million recorded in the consolidated statements of income for the years ended March 31, 2023 and 2022,
respectively, are mainly “Revenue arising from contracts with customers”. Revenue arising from other sources is included in the “Disaggregation of revenue arisingfrom contracts with customers” because its amount is immaterial. Most of the revenue arising from contracts with customers is arising from goods or services
transferred to customers at a point in time. Maintenance services included in field solution services are revenue arising from services provided to customers over timeand are recognized revenue over time. However, it is not separately disclosed in the “Disaggregation of revenue arising from contracts with customers” because it isimmaterial.

Basic information for the understanding of revenue arisingfrom contracts with customers
Information on performance obligations (the nature of
performance obligations (the nature of the goods or services
that Tokyo Electron has promised to transfer to the customer))In the business of semiconductor production equipment
and FPD production equipment, Tokyo Electron delivers
equipment and provides equipment installation at customer’ssites and adjustment to adequately demonstrate equipment
performance to satisfy customers’ specifications.
It also provides field solution services such as spare parts,
services and modifications for installed equipment, and sales
for used equipment.
Regarding sales of semiconductor and FPD production
equipment, performance obligations related to transfer ofgoods and provision of set-up services are separately identified.
Regarding sales of spare parts, performance obligations related
to each spare parts delivery are separately identified. Regarding
modifications, modification parts delivery and modification
operation by using these modification parts are identified
as a single performance obligation. In addition, provision ofmaintenance services is identified as a performance obligation.
Timing of satisfaction of performance obligations (Timing ofrevenue recognition)
Revenue related to equipment delivery is principally
recognized when the equipment is transferred to the customer
because the legal title to the equipment is transferred to the
19TOKYO ELECTRON Consolidated Financial Statements FY2023

customer, the customer obtains control of the equipment, andthe performance obligation is considered satisfied.
Revenue related to provision of set-up services is principally
recognized when the equipment is installed at the customer’ssite and adjustment to adequately demonstrate equipment
performance to satisfy customers’ specification is completed,and the performance obligation is considered satisfied.
Revenue related to spare parts is recognized when spareparts are transferred to the customer because the legal title
to spare parts is transferred to the customer, the customer
obtains control of spare parts, and the performance obligationis considered satisfied.
Revenue related to modifications is principally recognizedwhen the modification is completed, and the performanceobligation is considered satisfied.
Revenue related to maintenance services is recognizedover the term of the contracts with customers because theperformance obligation is satisfied over time.
Payment terms
The transaction consideration is received according to thecontract terms with customers. Since the period between
satisfaction of performance obligations and payments oftransaction consideration generally does not exceed one
year, transaction consideration does not include a significant
financing component. According to the contracts withcustomers, in some cases advance payments are received
before all performance obligations are satisfied.

Determination of transaction priceTransaction prices are determined at the time of thecommencement of the transaction with customers.
In cases where a series of transactions for sales ofequipment are transacted with the same customer, there canbe special prices such as corresponding to purchase quantities.
For such series of transactions with special prices, on the
grounds that the sales price of transactions fluctuates basedon future purchase quantities, the special prices are treatedas variable consideration and included in the transaction
price only to the extent that it is probable that a significant
reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variableconsideration is subsequently resolved. Transaction prices are
estimated including variable consideration by using customers’planned purchase quantities or planned sales quantities towhich special prices apply, which are indicated when suchseries of transactions with special prices are proposed.
Estimation of variable consideration is periodically revised
based on the status of transactions with customers.
Allocation of transaction price to performance obligations
Allocation of transaction prices to performance obligations
reflects the amount of consideration expected to be received
in exchange for transferring goods or services to customers.
Transaction prices are allocated to each performance obligation
identified in the contracts based on the relative stand-alone
selling prices of goods or services. If the stand-alone selling
price of goods or services is not directly observable, the standalone selling price is estimated based on the cost approach byadding an appropriate margin to expected costs calculated
based on historical actual costs.
Relationship between satisfaction of performanceobligations based on contracts with customers and cash
flows arising from the contracts, and information on theamount and timing of revenue expected to be recognizedfrom the next fiscal year from contracts with customers
existing as of this fiscal year end(1) Balances of contract assets and contract liabilities
Thousands of
U.S. dollars

Millions of yen

Receivables from contracts
with customers

March 31, 2023

April 1, 2022

March 31, 2023
$3,295,212¥440,009¥415,333

Contract assets

24,87918,614

186,323

Contract liabilities

289,169

102,555

2,165,579

Millions of yen

Receivables from contracts with customers

March 31, 2022

April 1, 2021

¥415,333¥221,967

Contract assets

18,614

6,695

Contract liabilities

102,555

69,484The contract assets principally relate to Tokyo Electron’s rights
to consideration for performance obligations transferred

but not billed at the fiscal year end. The contract assets
are transferred to receivables arising from contracts withcustomers when the rights for the considerations become
unconditional.
The contract liabilities principally relate to advances
received from customers before all performance obligations
are satisfied. The contract liabilities are reclassified to revenue
when revenue is recognized.
The revenue recognized during the fiscal years ended March
31, 2023 and 2022 that was included in the contract liabilities
balance as of April 1, 2022 and 2021 was ¥87,424 million($654,720 thousand) and ¥64,876 million, respectively.
Increases and decreases of contract assets are principally
due to revenue recognition and reclassification to accounts
receivable.
Increases and decreases of contract liabilities are principally
due to advances received and revenue recognition.
The revenue recognized during the years ended March
31, 2023 and 2022 for which performance obligations weresatisfied or partially satisfied in the previous period was
immaterial.
(2) Transaction prices allocated to remaining performanceobligations
The practical expedient is applied for this Note for transaction
prices allocated to remaining performance obligations. The
contracts for which original expected terms of the contract is
one year or less are not included in this Note.
The amount of performance obligations not satisfied
or partially not satisfied is ¥364,073 million ($2,726,529
thousand) and ¥171,553 million as of March 31, 2023 and March
31, 2022, respectively, and approximately 70% and 80% ofsuch performance obligations are expected to be recognized
as revenue within one year after March 31, 2023 and March 31,
2022, respectively.
The total amount of transaction prices allocated to theremaining performance obligations does not include theestimated amounts of variable consideration described in“Determination of transaction price” above.
20. Segment Information
General information about reportable segments
A reportable segment is a component or an aggregatedcomponent of Tokyo Electron. For each of the components,
discrete financial information is available and the operating
result is regularly reviewed by management to make decisions
about resources to be allocated to the segment and assess its
performance.
The operation of Tokyo Electron consists of segments byproducts and services based on business units (BUs), and Tokyo
Electron identifies as a reportable segment, “semiconductor
production equipment (SPE)” and “flat panel display (FPD)
production equipment”.
Products of the SPE segment consist of coater/developers,
etch systems, deposition systems, cleaning systems used inwafer processing, wafer probers used in the wafer testing

TOKYO ELECTRON Consolidated Financial Statements FY2023

20

process and other semiconductor production equipment, suchas wafer bonders/debonders. The SPE segment principallydevelops, manufactures, and sells such products, and provides
services related to them.
Products of the FPD production equipment segment
mainly consist of etch/ash systems used in the manufactureof flat panel displays. The FPD production equipment segmentprincipally develops, manufactures, and sells such products,
and provides services related to them.

have been allocated to reportable segments on a systematic
basis.
Year ended March 31, 2022
As described in “4. Changes in Accounting Policies and Adoptionof New Accounting Standards”, Tokyo Electron changed theaccounting treatment for revenue recognition by adopting
the Accounting Standard for Revenue Recognition fromthe beginning of the fiscal year ended March 31, 2022, andaccordingly changed the methods for measuring profits orlosses of business segments in the same manner.
As a result, in comparison with the previous method, net
sales of the semiconductor production equipment segment
and the FPD production equipment segment for the year ended
March 31, 2022 increased by ¥188,757 million and ¥6,301 million,
respectively. In addition, segment profit of the semiconductor
production equipment segment and the FPD production
equipment segment for the year ended March 31, 2022
increased by ¥105,410 million and ¥1,563 million, respectively.

Basis of measurement of reportable segment net sales,
segment profit (loss), segment assets and other items
The accounting policies applied in each reportable segment
are generally consistent with those applied for the preparationof the consolidated financial statements. Intersegment sales
or transfers are determined by negotiation between theTokyo Electron group companies considering current market
prices. Assets in common use have not been allocated to eachreportable segment, while costs associated with those assets

Information about reportable segment net sales, segment profit (loss), segment assets and other items
Reportable segment information as of and for the years ended March 31, 2023 and 2022 is as follows:
Millions of yen

Thousands of U.S. dollars

Reportable Segment
Semiconductor
production
equipment

FPD
production
equipment$16,140,239$401,964$1,084——

255,143

Total

16,140,239

401,964

Segment profit

5,215,144

Segment assets

8,809,262
165,2541,262
250,062

2023:

Other
(Note 1)

Adjustments(Note 2)

Consolidated(Note 3)

$16,543,289$—$16,543,289

255,143(255,143)—

256,227

16,798,432(255,143)

16,543,289

7,947

9,188

5,232,280(552,757)

4,679,523

175,378

31,896

9,016,537

8,294,883

17,311,421

10,944859

177,058

144,426

321,484

—

—

1,262

—

1,262

10,425

180

260,667

387,720

648,387

Total

Net sales
Sales to external customers
Intersegment sales or transfers

Depreciation and amortization
Amortization of goodwill
Capital expenditures, including intangible assets

Notes: 1.“Other” includes all other operating segments which are not included in the reportable segments, including group-wide logistic services, facility maintenance andinsurance.
2. (1) “ Adjustments” for segment profit totaling ¥(73,809) million ($(552,757) thousand) and ¥(75,312) million for the years ended March 31, 2023 and 2022, respectively,
mainly consists of research and development costs of ¥(31,446) million ($(235,501) thousand) and ¥(23,075) million for the years ended March 31, 2023 and 2022,
respectively, pertaining to the Company's fundamental research and element research, additional payment of value-added tax of ¥(4,577) million for the year
ended March 31, 2022 and other general and administrative costs that do not belong to the reportable segments.
(2) “Adjustments” for segment assets totaling ¥1,107,615 million ($8,294,883 thousand) and ¥915,828 million as of March 31, 2023 and 2022, respectively, mainly
consist of cash and cash equivalents, investment securities and prepaid consumption tax not allocated to any of the reportable segments.
(3) “Adjustments” for capital expenditures totaling ¥51,772 million ($387,720 thousand) and ¥39,936 million for the years ended March 31, 2023 and 2022, respectively,
mainly consist of capital expenditures for buildings and structures and construction in progress not allocated to any of the reportable segments.
3. Segment profit is reconciled to income before income taxes in the consolidated statements of income.

Reportable Segment

2023:

Semiconductor
production
equipment

FPD
production
equipment

Other(Note 1)

Adjustments(Note 2)

Total

Consolidated

Millions of yen

Net sales
Sales to external customers
Intersegment sales or transfers
Total¥2,155,206¥53,674¥144¥2,209,025

¥—

—

—

2,155,206

53,674¥2,209,025

34,06934,069(34,069)—

34,2142,243,094(34,069)

2,209,025

Segment profit

696,378

1,061

1,226

698,666(73,809)624,856

Segment assets

1,176,300

23,4184,259

1,203,9781,107,615

2,311,594

Depreciation and amortization
Amortization of goodwill
Capital expenditures, including intangible assets

Other information(1) Domestic and overseas net sales by destination for the years ended March 31, 2023 and 2022 are as follows:

22,066

1,461

114

23,642

19,28542,927

168

—

—

168

—

168

33,3901,392

2434,806

51,772

86,579

2023:

Japan

North America

EuropeSouth Korea

Taiwan

China

Other

Total

Net sales¥239,937¥344,346¥184,261¥358,700¥432,653¥527,438¥121,688¥2,209,025

Notes: 1. Sales are classified in countries or regions based on location of customers.
2. Net sales of North America include sales in the U.S.A. of ¥344,310 million.
Millions of yen

2022:

Japan

North America

EuropeSouth Korea

Taiwan

China

Other

Net sales¥230,368¥268,065¥107,954¥381,175¥361,569¥566,219¥88,453

Notes: 1. Sales are classified in countries or regions based on location of customers.
2. Net sales of North America include sales in the U.S.A. of ¥267,999 million.
Thousands of U.S. dollars

Millions of yen

Reportable Segment

2022:

Semiconductor
production
equipment

FPD
production
equipment¥1,943,843¥59,830

Other(Note 1)

Adjustments(Note 2)

Consolidated¥2,003,805¥—¥2,003,805

Total

Net sales
Sales to external customers
Intersegment sales or transfers

¥131

—

—

28,00028,000(28,000)—

1,943,843

59,83028,132

2,031,806(28,000)

2,003,805

Segment profit

667,437

3,874

698

672,010(75,312)596,698

Segment assets

949,71425,0193,895

978,629

915,828

1,894,457

Total

2023:

Japan

North America

EuropeSouth Korea

TaiwanChina

Net sales$1,796,877$2,578,791$1,379,926$2,686,292$3,240,121$3,949,959

Amortization of goodwill
Capital expenditures, including intangible assets

19,1491,258

148

20,556

16,17036,727

206

—

—

206

—

206

25,331

1,592

20

26,94539,936

66,881

TOKYO ELECTRON Consolidated Financial Statements FY2023

Total(2) Net property, plant and equipment by location as of March 31, 2023 and 2022 are as follows:
Millions of yen

2023:
Property, plant and equipment

Japan

Other

Total

¥190,993¥68,095¥259,088

Millions of yen

Property, plant and equipment

Japan

Other

Total

¥173,493¥49,584¥223,078

Thousands of U.S. dollars

2023:
Property, plant and equipment

21

Other

$911,319 $16,543,289

Note: Net sales of North America include sales in the U.S.A. of $2,578,527 thousand.

2022:
Depreciation and amortization

Total¥2,003,805

Japan

Other

Total

$1,430,338$509,964$1,940,303

TOKYO ELECTRON Consolidated Financial Statements FY2023

22

(3) Major customer information
Net sales to external customers that represent 10 percent or more of net sales are as follows:
Millions of yen

Thousands of
U.S. dollars

Name of customer

Related reportable segment

2023

2023

Intel Corporation

Semiconductor production equipment¥357,636$2,678,326

Taiwan Semiconductor Manufacturing Company Ltd.

Semiconductor production equipment

320,427

2,399,670

Samsung Electronics Co., Ltd.

Semiconductor production equipment and FPD production equipment

275,916

2,066,322

Note: The amounts include sales to the customer and its subsidiaries.
Millions of yen

Name of customer

Related reportable segment

Samsung Electronics Co., Ltd.

Semiconductor production equipment and FPD production equipment¥312,279

2022

Intel Corporation

Semiconductor production equipment

303,982

Taiwan Semiconductor Manufacturing Company Ltd.

Semiconductor production equipment

231,393

Note: The amounts include sales to the customer and its subsidiaries.

Information about reportable segment goodwill
Reportable segment information about amortization of
goodwill for the years ended March 31, 2023 and 2022, andunamortized balances as of March 31, 2023 and 2022 are as
follows:
Millions of yen

Semiconductor
production
equipment

FPD
production
equipment

Amortization of goodwill

¥168

¥—

¥168

Goodwill

365

—

365

2023:

Total

2023

Net income attributable toowners of parent¥471,584¥437,076$3,531,671

Less components not pertaining
to holders of common stock

—

—

—

Net income pertaining to holdersof common stock¥471,584¥437,076$3,531,671

Weighted-average numberof shares of common stock
outstanding (thousands)

467,926

466,988

Net income per share of common
stock - Diluted

Semiconductor
production
equipment

FPD
production
equipment

Adjustment of net income
attributable to owners of parent

Amortization of goodwill

¥206

¥—

¥206

Goodwill

531

—

531

Total

Thousands of U.S. dollars

Semiconductor
production
equipment

FPD
production
equipment

Amortization of goodwill$1,262$—$1,262

Goodwill

2,738

—

2,738

2023:

Total

21. Per-Share Information
Net income per share and net assets per share are computed
based on the weighted-average number of shares of common
stock outstanding during each year. Net income-diluted pershare is computed based on the weighted-average number ofshares of common stock outstanding during each year afterincorporating the dilutive potential effect of shares of common
stock to be issued upon the exercise of stock options.
Dividends per share has been presented on an accruals
basis and include, in each fiscal year ended March 31, dividends
approved or to be approved after March 31 but applicable tothe year then ended.
The basis for the calculation of net income per share for the
fiscal years ended March 31, 2023 and 2022 is as follows:

23 TOKYO ELECTRON Consolidated Financial Statements FY2023

2023

2022

Net income per share of common
stock - Basic

Millions of yen

2022:

Thousands of
U.S. dollars

Millions of yen——

Increase in number of common
stock (Thousands of share)

1,843

2,331

Increase in number of sharesubscription rights(Thousands of share)

1,843

2,331

—

Note: The Company implemented a 3-for-1 common stock split on April 1, 2023.
Each of the numbers above are calculated on the assumption that stock split
was implemented at the beginning of the previous fiscal year.
The shares of the Company held by "Executive compensation BIP Trust"and "Share-delivering ESOP Trust", which are recorded in “Treasury stock, atcost” under shareholders’ equity, are included in the treasury stock which isdeducted in calculating the per-share information.
The number of treasury shares deducted in the calculation of net assets per
share was 1,502 thousand shares and 1,831 thousand shares as of March 31,
2023 and 2022, respectively, and the average number of treasury sharesdeducted in the calculation of net income per share and fully diluted net
income per share was 1,614 thousand shares and 1,838 thousand shares forthe fiscal years ended March 31, 2023 and 2022, respectively.
As described in “4. Change in Accounting Policies and Adoption of New
Accounting Standards”, Tokyo Electron applies the Accounting Standard for
Revenue Recognition from the fiscal year ended March 31, 2022, and theapplication of such changes in accounting policies follows the transitional
treatment prescribed in the proviso of paragraph 84 of the standard. As
a result, net assets per share increased by ¥471.69, net income per share
increased by ¥476.79, and fully diluted net income per share increased by¥474.42, respectively, for the fiscal year ended March 31, 2022. For theseeffects, the numbers before the stock split are presented.

22. Subsequent Events
1. Stock split and corresponding partial amendment to the Articles of Incorporation
The Company implemented a stock split and made a corresponding partial amendment to the Articles of Incorporation on April 1,
2023, in accordance with the resolution of its Board of Directors on February 9, 2023.
(1) Purpose of stock split
By implementing the stock split to lower the minimum investment, Tokyo Electron intends to make shares more affordable forinvestors, with a view to expanding the investor base.
Tokyo Electron recognizes that transitioning to a share price per unit within the ideal range recommended by the Tokyo Stock
Exchange (between 50,000 yen and 500,000 yen) would be beneficial in terms of encouraging market participation by individual
investors. Going forward, Tokyo Electron will continue to comprehensively consider future stock market trends, the price andliquidity of the Company shares, and changes to the shareholder structure.
(2) Overview of stock split(i) Split method
The Company split the shares of common stock owned by shareholders recorded in the final register of shareholders as of March 31,
2023, in the proportion of 1 share into 3 shares.
(ii) Number of shares increased through stock split
Total number of issued shares before stock split:
Number of shares increased through stock split:
Total number of issued shares after stock split:
Total number of authorized shares after stock split:(iii) Schedule of stock split
Date of public notice of record date:
Record date:
Effective date:

157,210,911 shares
314,421,822 shares
471,632,733 shares
900,000,000 shares

March 16, 2023
March 31, 2023
April 1, 2023(iv) Effect on per share information
The effect on per share information is described in the consolidated statements of income.
(3) Partial amendment to the Articles of Incorporation(i) Reason for amendment
In accordance with the provisions of Article 184, Paragraph 2 of the Companies Act, the Company changed the total number ofauthorized shares stipulated in Article 6 of the Articles of Incorporation as of April 1, 2023, in response to the implementation of thestock split.
(ii) Details of amendment
The details of the amendment are as follows:(Amended parts are underlined)

Current Articles of Incorporation

Amended Articles of Incorporation

Article 6 Total Number of Authorized Shares

Article 6 Total Number of Authorized Shares

The total number of shares the Company is authorized to issue
shall be three hundred million (300,000,000) shares.

The total number of shares the Company is authorized to issue
shall be nine hundred million (900,000,000) shares.

(iii) Schedule of amendment
Effective date of amendment of the Articles of Incorporation:

April 1, 2023

(4) Other
Dividends
As the effective date of the stock split was April 1, 2023, year-end dividends for the fiscal year ended March 2023, to allshareholders with a record date of March 31, 2023, will be implemented based on the number of shares issued prior to the stock split.

TOKYO ELECTRON Consolidated Financial Statements FY2023

24

2. Share repurchase
At the Board of Directors meeting held on May 11, 2023, the Company resolved to acquire its own shares under the provisions of its
Articles of Incorporation pursuant to paragraph 1, Article 459 of the Companies Act, set out below.
(1) Reason for acquisition of own shares
Tokyo Electron intends to acquire its own shares in accordance with its capital policy while taking into account its current cash
position and investment capital for medium- to long-term revenue growth.
(2) Details of acquisition(i) Type of shares to be acquired:(ii) Total number of shares to be acquired:		(iii) Total cost of acquisition:(iv) Period of acquisition:(v) Method of acquisition:

25 TOKYO ELECTRON Consolidated Financial Statements FY2023

Shares of common stock
Up to 10 million shares(Equivalent to 2.1% of outstanding shares excluding treasury stock)
Up to ¥120 billion ($898 million)
From June 1, 2023 to December 31, 2023
Acquisition through market transactions on the Tokyo Stock ExchangeTOKYO ELECTRON Consolidated Financial Statements FY2023

26

Independent Auditor’s Report
Reasonableness of the valuation of inventories in the semiconductor production equipment business
The key audit matter

How the matter was addressed in our audit

To the Board of Directors of Tokyo Electron Limited:

OpinionWe have audited the accompanying consolidated financial statements of Tokyo Electron Limited (“the Company”) and its
consolidated subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at
March 31, 2023 and 2022, the consolidated statements of income, comprehensive income, changes in net assets and cash
flows for the years then ended, and the related notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at March 31, 2023 and 2022, and its consolidated financial performance and its consolidated
cash flows for the years then ended in accordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.

In the consolidated balance sheet for the current fiscal year, theCompany recognized Inventories of ¥652,208 million, which
represented approximately 28% of total assets in the consolidated
financial statements. Most of the inventories belonged to thesemiconductor production equipment business.
As described in Note 3 “Significant Accounting Estimates, 1.
Valuation of inventories” to the consolidated financial statements,
inventories are measured in principle at the lower of either theacquisition cost or the net selling price at the end of the fiscal
year. However, inventories aged over a certain holding period
are classified based on the use and salability and are thensystematically written down according to their classification. In
addition, the carrying amount of inventories to be disposed of iswritten down to the estimated disposal value.
The valuation of inventories aged over a certain holding period
and the identification of finished goods and work in process
inventories to be disposed of are based on management’s
forecasts of future demand and prospects of market environment.
Among the markets in which the Group participate, thesemiconductor market is susceptible to fluctuations due to ashort-term imbalance between supply and demand, which could
result in an unforeseen rapid market contraction. Therefore, theforecasts of future demand and prospects of market environment
involve uncertainty and management’s judgment thereon may
have a significant effect on the valuation of inventories.
We, therefore, determined that our assessment of thereasonableness of the Company’s valuation of inventories inthe semiconductor production equipment business was one of
the most significant in our audit of the consolidated financial
statements for the current fiscal year, and accordingly, a key audit
matter.

The primary procedures we performed to assess whether
the Company’s valuation of inventories in the semiconductor
production equipment business was reasonable included thefollowing:(1) Internal control testing
We tested the design and operating effectiveness of certain of
the Company’s internal controls relevant to the valuation of
inventories.
In this assessment, we focused our testing on controls designed todetermine the rates of write-down for each holding period on the
carrying amount of inventories aged over a certain holding period
and to identify finished goods and work in process inventories tobe disposed of in a comprehensive manner.
(2) Assessment of whether the valuation of inventories aged
over a certain holding period was reasonable
The rates of write-down by holding period adopted bymanagement in applying the method that writes down the
carrying amount of inventories on a systematic basis according totheir holding periods were determined based on management’s
forecasts of future demand and prospects of market environment.
In order to assess the appropriateness of assumptions underlying
the rates of write-down determined by management, we:• evaluated the rates of write-down by holding period determinedby management by referencing published demand forecasts forsemiconductor production equipment and the customers’ capital
investment plans; and• compared the amount of the write-down of inventories aged
over a certain holding period, calculated using the rates of writedown by holding period determined by management, with ourown estimate of the write-down of those inventories.
(3) A ssessment of whether finished goods and work inprocess inventories to be disposed of were identified in acomprehensive mannerAmong finished goods and work in process inventories aged over acertain holding period, we assessed the accuracy of management’s
sales forecasts by comparing the past forecast for a selection offinished goods and work in process inventories held for a long
period with actual sales results and examining the causes ofvariances between the two. In order to assess the appropriatenessof assumptions related to sales forecasts adopted by management
in identifying finished goods and work in process inventories to bedisposed of, we primarily:• evaluated the basis for management judgment on its sales
forecasts for finished goods and work in process inventories held
for a long period by inquiring of management and inspecting
relevant documents.

27

TOKYO ELECTRON Consolidated Financial Statements FY2023

TOKYO ELECTRON Consolidated Financial Statements FY2023

28

Other Information
The other information comprises the information included in the disclosure documents that contain or accompany the audited
consolidated financial statements, but does not include the consolidated financial statements and our auditor’s report thereon.
We do not perform any work on the other information as we determine such information does not exist.

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performance of their duties
with regard to the design, implementation and maintenance of the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards
generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, while the objective of the audit is not to express an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with accounting
standards generally accepted in Japan, the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
29 TOKYO ELECTRON Consolidated Financial Statements FY2023• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGroup to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.
We communicate with corporate auditors and the board of corporate auditors regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2023
are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 1 to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.
/S/ Michitaka Shishido
Designated Engagement Partner
Certified Public Accountant/S/ Akira Nishino
Designated Engagement Partner
Certified Public Accountant/S/ Shin Suzuki
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
June 20, 2023

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by the Company and KPMG AZSA LLC.

TOKYO ELECTRON Consolidated Financial Statements FY2023

30

Akasaka Biz Tower, 3-1 Akasaka 5-chome
Minato-ku, Tokyo 107-6325, Japan
Tel: +81-3-5561-7000
www.tel.com

TEL is a registered trademark or a trademark of Tokyo Electron Limited in Japan and/or other countries.

PR1 61-0025