TOKYO ELECTRON ANNUAL REPORT 2013

PAGE6CONTENTSCONTENTS

Financial Highlights

Business Overview

Top Message

Special Feature

To Our Stakeholders

Interview with the CEO

Review of Operations
and Business Outlook

Corporate GovernanceCorporate CitizenshipIntellectual Property

Financial Section

Corporate Data

Interview with the CEO

As we always say, technological innovation is the source of Tokyo Electron’s reve-

R&D Expenses

nues. In fiscal 2013, R&D expenses were maintained at the high level of ¥73.2 bil-(Millions of yen)lion as we worked to further boost technological development in a number of areasthat are highly promising for future growth. In addition, research into such new

100,000

semiconductor devices as MRAM (magnetoresistive random access memory) has
been accelerating in recent years. In the manufacture of such new semiconductor
devices, technological development based on not only the extension of existing
technologies, but also cutting-edge scientific theory is more important than ever.

81,50680,00070,56873,24960,000As such, the Company strengthened ties with academia, including Tohoku
University. To create new markets, a new initiative is being launched by universities

40,000and semiconductor production equipment (SPE) manufacturers to develop newdevices and new production equipment. In addition, Tokyo Electron invested ¥55

20,000billion in four corporate acquisitions to capture outstanding products and technologies. Through this multi-faceted approach we are seeking to accelerate the pace

0of technological innovation to fuel the future growth of Tokyo Electron.

Pursuing technological innovation
through multifaceted efforts

Accelerating technology
development Technological innovation creates

Ac

ratin
cele

algicolochng teioatvoinnnIntegrating outside technology
Academic approach
In-house development

value for stakeholders

QHow would you characterize fiscal 2013 in terms ofTokyo Electron’s business strategy?

AThe business environment surrounding Tokyo Electron in fiscal
2013, the year ended March 31, 2013, was severe due to the influence of the weak macro economy and restrained capital investment by our customers. On the other hand, over the medium andlong term, semiconductors continue to undergo major technological changes. Aiming to seize business opportunities accompanying shifts to new technologies, Tokyo Electron was more active
than ever in laying preparations for the future. We worked tostrengthen internal development, foster joint development withJapanese and overseas research institutions such as universities
and consortia, and obtain new technologies via corporate acquisitions.

Q

Since assuming the title of CEO in addition to your role as
Chairman, what are your thoughts on the development of
the SPE market going forward? What will drive that development?

A

The technology sought for semiconductors is becoming increasingly advanced and diverse. To meet this need, technologicalinnovation in SPE is indispensable, and we on the production
equipment side must create the breakthroughs. As long as semiconductors continue to evolve, I have every confidence that theSPE market will continue to expand, as production equipment
manufacturers continue to provide high-value-added products
and solutions.

111213

TOKYO ELECTRON ANNUAL REPORT 2013

PAGE

7

CONTENTSCONTENTS

Financial Highlights

Business Overview

Top Message

Special Feature

To Our Stakeholders

Interview with the CEO

Review of Operations
and Business Outlook

Corporate GovernanceCorporate CitizenshipIntellectual Property

Financial Section

Interview with the CEO

Demand for semiconductors is forecast to continue expanding due to the fullfledged spread of such mobile devices as smartphones and tablets and the rapid
development of cloud computing, which enables enormous data traffic. In tandemwith volume expansion, technological demand is constantly growing for new semiconductor devices offering higher speed and capacity, coupled with reduced
power consumption. In addition to conventional CMOS scaling in line with Moore’sLaw, new technological innovations are helping meet today’s increasing demands(Figure 1). From such next-generation memory as MRAM to 3DI* and otheradvanced packaging technologies, there is no end in sight to technological innovation surrounding semiconductors.

Q

What were the objectives of the three corporate
acquisitions Tokyo Electron executedin the SPE business last year?

AThese three acquisitions were all aimed at securing
future-oriented technologies. I am confident they will
create synergies with existing products and technologies,
accelerate our technological development, and help tosolidify our combined growth.

*3-dimensional interconnect

We acquired NEXX Systems, FSI International and Magnetic Solutions to strengthAs the development of new production equipment for new devices acceler-en our core SPE business. The benefits are numerous, from the obtainment of newates, the roles of SPE manufacturers on the cutting edge of semiconductor tech-single wafer cleaning technology in the cleaning systems business, which we arenology grows only more important.

seeking to develop, to the expansion of our product lineup in the field of advanced

More than ever, SPE manufacturers must provide breakthroughs and solu-wafer level packaging, which allows smartphones and tablets to run faster and use

tions to technological problems. By meeting this demand, I am sure that the SPE

less energy, to the acquisition of magnetic annealing technology necessary formarket will continue to grow in the medium and long term.

manufacturing MRAM which is poised to succeed flash memory and DRAM as thenext generation of memory. All of these corporate acquisitions were made with thegoal of capturing future technologies that are indispensable for the manufacture ofFigure 1:
Diverse technological development that supports semiconductor device innovationand leads the SPE market

new semiconductor devices.
We are making full preparations for the coming market expansion by bringingin outstanding technologies from outside the Company.

Advanced packaging
Silicon photonics

Emerging memory

More than Moore

Three acquisitions to strengthen the SPE business

New material
New structure

450 mm

TSV/WLP
ReRAM
Flip chipMRAM

3D NANDFSI International, Inc.
(now TEL FSI, Inc.)

Carbon material
Ge/III-V channel

Patterning
Tri-gate transistor
DSA

EB direct writing

EUV
Multiple patterning

More Moore

Cleaning technology

Advanced packaging
technology

MRAM manufacturing
technology

NEXX Systems, Inc.
(now TEL NEXX, Inc.)

Magnetic Solutions Ltd.
(now TEL MagneticSolutions Ltd.)

Corporate DataTOKYO ELECTRON ANNUAL REPORT 2013

PAGE8CONTENTSCONTENTS

Financial Highlights

Business Overview

Top Message

Special Feature

To Our Stakeholders

Interview with the CEO

Review of Operations
and Business Outlook

Corporate GovernanceCorporate CitizenshipIntellectual Property

Financial Section

Corporate Data

Interview with the CEO

Q

Please tell us about the background surrounding Tokyo
Electron’s entry into the photovoltaic panel production
equipment business with the purchase of Oerlikon Solar

our gratitude for the support of our shareholders. In fiscal 2014, the year ending
March 31, 2014, considering the Company’s stable financial base as well as therecent state of the world economy, we expect to pay annual dividends of around¥50, on level with fiscal 2013.
Going forward, we aim to continue our efforts to maximize corporate value

Aand increase direct returns to shareholder through sustained profit growth, while

We entered the market of photovoltaic panel production equipment with the goal of creating a new business pillar that will
enhance Tokyo Electron’s revenues over the medium
and long term. It will be quite a challenge, but it’s an area in which
we can use the SPE technology Tokyo Electron has built up over
the years.

also flexibly considering share buybacks and other means of further enhancing
shareholder returns.

For photovoltaic power generation to expand, its cost will have to decrease below

Global Development Bases

that of fossil fuel and other existing power sources. We entered the photovoltaic

Accelerating technological innovation throughout our global development framework
to maximize shareholder value through growthpanel production equipment market hoping to rapidly realize cost reductions inKorea

power generation by working from a development base of Oerlikon Solar’s thin-film
silicon photovoltaic panel technology, among the most advanced in the world, andcombining it with Tokyo Electron’s proprietary semiconductor and flat panel display
production equipment technologies. To begin with, we are concentrating ourTEL Technology Center,
Korea

imec (Belgium)

efforts on quickly establishing this innovative technology.

U.S.

Albany Nano Tech (U.S.)
SEMATECH (U.S.)

CEA-Leti (France)

Korea

JAPANTaiwan

Q

TaiwanHave the changes in top management brought any shifts
in TEL’s approach to returning profits to shareholders?
TEL TechnologyCenter, Taiwan

TEL Technology Center,AmericaA

At present there is no change to our performance-linked dividend
payout ratio target of 35%, but we will need to be flexible, taking
into consideration the Company’s operating environment andfinancial base.

In fiscal 2013, as we entered Tokyo Electron’s 50th year, we issued annual dividends of ¥51, including a commemorative anniversary dividend of ¥20, to express

Japan

Technology Center
Tsukuba

Leading-edge Process
Development Center

Technology CenterSendai

TEL development base
Joint research institution