TOKYO ELECTRONSUSTAINABILITYREPORT 2019

Cover photo: Rose of Sharon (Korea)
The cover photo shows flowers of the countries and regions in which we do business.

Akasaka Biz Tower, 3-1 Akasaka 5-chome,
Minato-ku, Tokyo 107-6325, Japan
Tel: +81-3-5561-7402
www.tel.com

差し替え
（ダミー）

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

PR57-182

Contents

Editorial policy
The purpose of this report is to communicate the roles and responsibilities of Tokyo Electron (TEL) in promoting asustainable society, and various activities toward value creation. For each of TEL’s five material issues, the report describes
priority themes, medium- and long-term goals, and global initiatives aimed at contributing to the resolution of industry
and social issues. Data sets are included at the end of the report, with an accompanying third-party assurance reportattached for those items which are considered to be of particularly high importance.
TEL remains committed to understanding the demands from all of its stakeholders and committed to disclosing
information in a timely and transparent manner. For more detailed information, please consult the company’s website.

URL

www.tel.co.jp/csr/

Scope of disclosure

Editorial policy
Contents

1
2

Tokyo Electron’s business
CEO’s message

3
5

CSR-oriented operations
Identifying material issues
CSR goals and results

7
9
11

Value creation through business

13

Product
competitiveness

About product competitivenessResearch and development
Tackling technological innovation
Environmental contribution of products

15
16
18
19

Responsiveness tocustomers

About responsiveness to customers
Solutions that create value for customers
Initiatives for integrated proposals
Ensuring safety for customers
Improvement of customer satisfaction

21
22
23
25
26

Higher productivity

About higher productivity
Quality management/Improvement of quality in the value chain27
28

People andworkplaces

About people and workplaces
Human resource management/Diversity and inclusion
Career development/Human resource development initiatives
Work-life balance
Health and safety

33
34
35
36
37

Management

About management foundation
Corporate governanceRisk management
Compliance
Respect for human rights
Supply chain management
Environmental management
Social contribution activities

39
40
43
44
45
46
47
49

Website:Update rate

www.tel.com/csr/

Sustainability
ReportInformation volume

Scope
This report covers the entire Tokyo Electron Group (34 consolidated companies),with some exceptions (indicated in the content).
Reference guidelines
Global Reporting Initiative (GRI): Sustainability reporting standards
Environmental Reporting Guideline 2018, Ministry of the Environment, Government of Japan
Published dateAugust 2019 (Next report: August 2020)
Period covered
Fiscal year 2019 (April 1, 2018 to March 31, 2019), some content also covers fiscal year 2020
Contact
Akasaka Biz Tower 3-1 Akasaka 5-chome, Minato-ku, Tokyo 107-6325, JapanTokyo Electron Limited
CSR Operations, Tokyo Electron Limited
Tel: +81-3-5561-7402

URL

Inquiry point URL: www.tel.com/contactus/

foundation

Data
Performance summary: Social
Performance summary: Environment
Independent practitioner’s assurance report
Corporate profile

1

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

51
54
57
58

TOKYO ELECTRON SUSTAINABILITY REPORT 20192

Tokyo Electron’s businessTokyo Electron (TEL) operates worldwide as a leading company in semiconductor and flat panel display (FPD) production equipment.
TEL will contribute to building and developing a sustainable society through its business.

Tokyo Electron
EuropeSales by region (consolidated)

Main Group company locations

Number of employees by region (consolidated)

地域別売上高（連結）

地域別従業員数（連結）
Other
Other
60.5
60.5 billion
billion yenyen (4.7(4.7％)％)

EuropeEurope93.1
93.1 billion
billion yenyen (7.3%)(7.3%)
Tokyo Electron Korea

Korea
Korea
311.1
311.1 billion
billion yenyen (24.3(24.3%)%)

North
North America
America
132
132 billion
billion yenyen (10.3%)(10.3%)

Tokyo Electron(Shanghai)Tokyo Electron
India

12,782 billion yen

12,742(Fiscal(Fiscal year
year 2019)2019)(Fiscal(Fiscal year
year 2019)2019)

TaiwanTaiwan164.9
164.9 billion
billion yenyen (12.9%)(12.9%)Japan

Tokyo ElectronTokyo Electron
Malaysia

China
China
307.9
307.9 billion
billion yenyen (24.1%)(24.1%)

Japan
Japan
208.8
208.8 billion
billion yenyen (16.3%)(16.3%)

Tokyo Electron
America

Asia
Asia
2,834
2,834 (22.2%)(22.2%)

Semiconductor manufacturing process and TEL main productsTokyo Electron Technology
Solutions (Yamanashi)Tokyo Electron Technology
Solutions (Tohoku)

EuropeEurope513
513 (4.0%)(4.0%)

North
North America
America
1,598
1,598 (12.5%)(12.5%)

Deposition

Japan
Japan
7,797
7,797 (61.2%)(61.2%)■ Wafer process (Front-end) ■ Assembly and Test process (Back-end)

Etching

Cleaning

Plasma Etch System
Tactras TM

Single Wafer
Cleaning System
CELLESTATM -Lithography(Photoresist coating, Development)

Tokyo Electron Taiwan

Tokyo Electron
Singapore
Tokyo Electron Miyagi

ThermalProcessing System
TELINDY PLUSTM

Tokyo Electron Kyushu

Single Wafer
Deposition System
Trias + TM

Silicon dioxide film

TEL’s changing business conditions

Atomic Layer
Deposition System
NT333 TM

Coater/Developer
CLEAN TRACKTM
LITHIUS ProTM Z
Photoresist

Silicon nitride film
Wafer

Repetition

Distributor of other suppliers’ products

Established development/
manufacturing functions

Globalization

Oxide/Nitride film deposition

Photoresist coating

Innovation and new growthInterconnect Formation

1,500

Etching

Ashing/Cleaning

Completed Transistor
Before Wiring
Gate ElectrodeTesting

Packaging/Inspection

14,000（予）1,000

11,307500

Single Wafer
Deposition System
Trias TM

Plasma Etch System
Tactras TM

1500000

Metal film

Metal film

DRAM

3D NAND

1000000
Interconnect Formation

Contact Formation

1963

1970

1968 / Established firstmanufacturing JV(TEL-Thermco)

1980

1990

2000

2010

2019 (FY)

Semiconductor
applications

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

MainframecomputerWafer/Dicing Frame
Prober
WDFTM 12DP+

Logic

CMOS image sensor

Completed
Semiconductor Packaging

Completed Integrated Circuit
Wafer Probe Testing

Wafer Bonding/Thinning/Debonding

Inspection

Packaging/Assembly

500000FPD production
equipment

Listed on TSE #2 in1980
and #1 in 1984

1975 /Discontinued export business of
consumer products

Wafer Bonder/
DebonderSynapseTMV/
Synapse TM Z Plus

Wafer Prober
PrecioTM/PrecioTMXLIntermetal dielectric film

3

Development

Isolation Formation/Gate Formation(Billion Yen)0

Exposure

1997/Strengthened corporate governance1994/Began overseas
direct operations

PC

0
Mobilephone

Consumerelectronics,etc.

FPD Coater/Developer
ExcelinerTM

FPD Etch/Ash System
ImpressioTM

FPD Etch/Ash System
BetelexTM

Inkjet Printing System for
manufacturing OLED panels
EliusTMTOKYO ELECTRON SUSTAINABILITY REPORT 20194

On behalf of Tokyo Electron (TEL), I would first like to express my sincere gratitude to all stakeholders fortheir continued support and patronage.

CEO’smessage

Recently, activities are being expanded in various fields worldwide for building a sustainable society, suchas an increase in United Nations Sustainable Development Goals (SDGs) initiatives, and Environmental,
Social and Governance (ESG) investment activities. Companies are required to utilize their management
resources effectively and to create and provide new value through their business activities in order tocontribute to the resolution of social issues.
The arrival of the age of IoT, where almost everything is connected to the Internet, is seeing the spread of
big data and AI, and progress in preparation for the introduction of 5G next-generation communication
standard on a global level. Semiconductors and flat panel display (FPD) are taking on a central role for thedata society, and expanded application and demand for technological innovation is leading further growthin their production equipment market.
Our Corporate Philosophy urges us to “contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support.” In order to realize our Corporate
Philosophy, we strive for the steady promotion of effective governance and compliance, as well as
contributing through business to the development of the industry and society, and improving ourcorporate value both in terms of financial and social value.
In fiscal year 2017, we established three pillars of product competitiveness, responsiveness to customers,
and higher productivity in our medium-term management plan, and identified two additional material
issues: people and workplaces, which is important as a source for value creation, and managementfoundation, which relates to corporate governance, the environment, and human rights. This fiscal year,
we again set annual medium-term goals tied to these material issues and are deploying company-wide
activities for their achievement. Moving forward, we will continue to promote sustainability-focusedmanagement, aiming to remain a company which is trusted by the community, and in which our
employees take pride.
TEL became a signatory to the UN Global Compact in 2013 to promote sustainability management in linewith international frameworks, and is implementing SDGs initiatives on a company-wide basis.
Your continued support and patronage are very much appreciated by all of us at TEL.

Toshiki Kawai
Representative Director, President & CEOTokyo Electron Limited

5

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 20196

国連グローバル・コンパクト

CSR-oriented operations
Tokyo Electron’s Corporate Philosophy
We strive to contribute to the development of a dream-inspiring society through our leading-edge
technologies and reliable service and support.
CSR policy
The CSR operations of Tokyo Electron (TEL) are initiatives that realize TEL’s Corporate Philosophy. The company pursues
sustainable operations from the viewpoints of corporate governance, legal and regulatory compliance, and businessethics while creating new value through its products and services. Based on these efforts, TEL implements CSR activities
to help address social issues. The company will continue to pursue CSR activities to build stakeholder trust, improve
corporate value and, by doing so, promote the growth of a sustainable and dream-inspiring society.

Advancementof dream-inspiring society

Sustainable operations
Through business activities

Contribution to
the solution ofsocial problems

Improvementof corporate
value

Creation of new value

Pay taxes

Distribution of profit

CSR-oriented operations

Rights

国連グローバル・コンパクト

EICC

Conference name

Participants

CSR Management Council







CSR Global Promotion Committee

CSR Monthly Meeting

Chairman, Representative Director
President and CEO
Directors and Managers

国連グローバル・コンパクトの10原則
Principle 1: Businesses should support and respect theof internationally proclaimed
原則 1 protection
人権擁護の支持と尊重
human rights; and原則 2 2: make
人権侵害への非加担
Principle
sure that they are not complicit inhuman rights abuses.

原則 3

LabourPrinciple
Businesses should support a
原則
7 7: 環境問題の予防的アプローチ

Environment

結社の自由と団体交渉権の承認

Principle 3: Businesses should uphold the freedom ofand the effective recognition
強制労働の排除原則 4 associationof the right to collective bargaining;
児童労働の実効的な廃止
原則 5 4: thePrinciple
elimination of all forms of forced andcompulsory labour;
雇用と職業の差別撤廃
原則 6 5: thePrinciple
effective abolition of child labour; andPrinciple 6: the elimination of discrimination in
respect of employment and occupation.

Chief CSR Director
Heads of related departments
CSR officers of affiliates and overseas companies
Person in charge of CSR at each division

AntiCorruption

環境問題の予防的アプローチ
環境に対する責任のイニシアティブ
原則9 A CSR promotion group focused 環境にやさしい技術の開発と普及
on the electronics industry









Set CSR targets
Implement global projects
Share information on CSR activities
Discuss cross-division CSR initiatives

Internal initiatives—CSR Promotion AwardTEL is conscious of the connection between work, and industrial and social issues

腐敗防止の取組み

マネジメント
システム

原則 7

原則 8
Environment
RBA
framework (five sections)

安全衛生

倫理

 TEL signed in 2015

危険の評価
および管理

最高の
倫理水準の維持Environmental conservation C. ENVIRONMENTAL

Upholding the highest standards of ethics D. ETHICSTEL’s CSR activities have received high appraisal from evaluation organizations in various countries, and the company has
been selected as a constituent stock under leading global ESG investment indices.
In fiscal year 2019, following from the previous fiscal year, TEL was again selected as a constituent stock under indicesincluding DJSI2 Asia Pacific 2018, FTSE4Good,3 FTSE Blossom Japan Index,4 MSCI World ESG Leaders Index,5 and MSCI JapanESG Select Leaders Index.6

Meeting frequency
Twice annually

Initiatives for Sustainable Development Goals (SDGs)
The SDGs are a universal set of goals to achieve by 2030, which wereunanimously adopted by the United Nations Sustainable Development
Summit in 2015. TEL conducts activities on a company-wide level, and foreach material issue, it has clarified the SDGs it is working toward throughbusiness.

and development, and in order to promote CSR initiatives, invites contributions from
employees worldwide of cases of CSR in the workplace that contribute to resolving issues
in the industry and society. They are assessed with focus on their alignment with SDGs,
contribution to the resolution of industry and social issues, and the improvement of TEL’s
corporate value and other aspects. Based upon this, TEL conferred one CSR Promotion
Award and three CSR Merit Awards.

7

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

2
DJSI (Dow Jones
Sustainability Index):
ESG (Environmental,social and governance)
investment indicesdeveloped by U.S.-based
S&P Dow Jones Indices
LLC and Switzerlandbased RobecoSAM AG. The
Asia Pacific index covers
companies in that region.
3
FTSE4Good: An index
related to environmental
performance andcorporate social
responsibility developedby the UK-based FTSE
Group.
4
FTSE Blossom Japan
Index: An index thatreflects the performanceof Japanese companies
that demonstrate strong
environmental, socialand governance (ESG)
practices.
5
MSCI World ESG Leaders
Index: Companies
that have high ESG
performance are selectedfrom the MSCI Global
Sustainability Index,
an ESG investment
index developed by
Morgan Stanly CapitalInternational (MSCI).

Twice annually

Monthly

危険の評および管Principle 10: Businesses should work against
corruption in all its forms, including
原則 10 強要や贈収賄を含むあらゆる形態のextortion and bribery.

Evaluation from third-party institutions

Decide company-wide CSR policy
Discuss important matters

安全衛Principle 8: undertake initiatives to promote greater
環境にやさしい技術の開発と普及
environmental responsibility; and原則 9

尊敬と敬意をもっ環境保全
Principle 9: てencourage the development and diffusionof environmentally friendly technologies.
労働者を処遇する

B. HEALTH and SAFETY Risk assessment and risk management

CSR Global Promotion Committee held in November 2018

労働

precautionary approach to environmental
労働 原則 8 環境に対する責任のイニシアティブ
環境
challenges;

E. MANAGEMENT SYSTEMSFunction

人権侵害への非加担

1
RBA: The RBA, formerly
known as the Electronic
Industry Citizenship
Coalition (EICC®), wasrebranded to the current 尊敬と敬name in October 2017. 労働者を

2013
An international
原則 4年に署名 initiative for sound globalization and sustainable societies 2015 年に加盟
Labour TEL signed in 2013
原則 5

原則 10 強要や贈収賄を含むあらゆる形態の腐敗防止の取組み
and dignity
A. LABOR Treating workers with respect

TEL implements sustainability management which is integrated into the
management strategy from a medium- to long-term perspective of corporate
value enhancement. The company promotes CSR activities centered on thefollowing three bodies. The CSR Management Council, the highest decisionmaking body regarding CSR, conducts discussions regarding the policy forthe entire Group and important projects. CSR representatives from aroundthe world participate in the CSR Global Committee, which discusses short- to
medium-term CSR targets, promotion of global projects, and other matters.
Representatives from each division attend the CSR Monthly Meeting, where
information is shared regarding CSR activities, and which builds cooperative
systems to tackle cross-division themes.

原則 2

原則 3 結社の自由と団体交渉権の承認
電子機器サプライチェーンの行動規範
強制労働の排除
児童労働の実効的な廃止
原則 6（ 5雇用と職業の差別撤廃
EICC のフレームワーク
つのセクション）The
Ten Principles of the UN Global Compact“健全なグローバル化”“持続可能な社会”の国際的な取り組み

AntiCorruption

CSR promotion framework

EICC のフレームワ

TEL is a corporate member of the United Nations Global Compact and the Responsible Business Alliance (RBA),1 both global
原則 1 from
人権擁護の支持と尊重
CSR initiatives, whereby the company strives to build a sustainableHuman
management foundation
a global perspective.

Reinvest
Distribute toshareholders andemployees

電子機器サプラ2015 年に加盟

国連グローバル・コンパクトの10原則

Participation in global initiatives

Human
RightsMaterial issues

EICC“健全なグローバル化”“持続可能な社会”の国際的な取り組み
2013 年に署名Tokyo Electron supports the SDGs

6
MSCI Japan ESG SelectLeaders Index: The
MSCI Japan ESG SelectLeaders Index is anindex constructed fromcompanies that havehigh ESG performanceselected from its parent
index (MSCI Japan IMI
Top 500 Index: Top 500
securities based on free
float-adjusted market
capitalization). The Index
targets 50% of the free
float-adjusted market
capitalization within each
GICS sector of the parent
index.

TOKYO ELECTRON SUSTAINABILITY REPORT 20198

Identifying material issues
Analysis and selection
TEL has ascertained the social and business environment, has considered therisks and opportunities, and made arrangements according to the wishes of all
stakeholders. The company has deliberated material issues from the perspectivesof their importance to both the building of a sustainable society and importanceto the business to lead to increasing TEL’s corporate value.
As a result, the company has defined its material issues as productcompetitiveness, responsiveness to customers, and higher productivity, which
are items identified for enhancement in the medium-term management
plan, in addition to people and workplaces, which are important as a resource
for creating value, and management foundation, which concerns corporate
governance, the environment, human rights, and other issues.

Issues awarenessSocial environment
While steady growth is forecast for the global economy, humans are also faced with various social issues, including
abnormal climate conditions and natural disasters, conflicts between states and cyber-terrorism, water and food crises.
TEL is deepening its awareness of social environments that may affect the value chain as a whole, and social issues witha high degree of relevance to the business, giving consideration to SDGs, the United Nations Global Compact, RBA, andrecommendations from third-party organizations.
Business issues
With the spread of big data1 and AI,2 the dawn of IoT,3 and the introduction of the 5G4 next-generation communication
standard, applications are expanding for semiconductors and flat panel displays (FPDs) that support social infrastructureand demand for technological innovation is also growing. In these circumstances, TEL, whose core business issemiconductor and FPD production equipment, must accurately grasp social trends and customer needs, and consider
them from the early stages of development, in order to provide products for the market in a timely manner. Furthermore,
it is important to provide high-value-added maintenance services for improving the productivity of delivered equipment,
extending service life, and so on.
Risks and opportunities
TEL examined the risks and opportunities closely related to sustainable business development in consideration of social
issues and social/business environments such as SDGs.
Social trends

Risks for TEL
Dealing with environmental issues

Evolution of technology

Increased reliance on cyberGovernance and compliance







Supply chain management



Opportunities

Failure to comply with laws and regulations
or industry codes of conduct
Increases in business costs
Reduction in customer satisfaction
Lost business opportunities
Loss of core information
Stoppage of business operation
Ethics and compliance violations
Loss of society’s trust
Weakening of supply system
Loss of business continuity





















Promotion of environmental management
Improvement of product environmental performance and creation ofbusiness opportunities
Generating of innovative products and services
Maintaining competitive advantage
Strengthening of information infrastructure
Networking for productivity improvement
Development of highly effective governance
Sustainable corporate management

TEL learned about stakeholder opinions and requests through ongoing dialogue, before sorting through them andreviewing the important themes to be addressed.
Communication opportunities

Key opinions and requests


Shareholders/investors









CustomersSuppliersEarnings announcement
ESG surveys
Interviews
Technology conference
Customer satisfaction survey
Individual technology
collaboration
Production update briefing
Partners day
STQA* audit











Employees



Local communities


Governments/
associations

Employee meetings
Global engagement survey
Career interest survey (Japan)

Community contribution
activities
Tours of factories and offices
Industry group activities
Collaboration with various
initiatives

Understanding of diverse application needs
Proposal of high-value-added solutions
Comprehensive and optimal solutions



















Sharing of higher-quality, timely information
Improvement of own processes through compliance with quality
standards
Sharing of management messages, direct dialogue
Support for medium- to long-term career development for
employees
Creation of opportunities for promoting and recognizing
productivity in the working environment and the spirit ofchallenge among diverse employees
Coexistence of company with communities
Creation of employment
Revitalization of local economies, such through purchasing andlogistics
Creation of innovation leading to the resolution of social issues
Initiatives targeted at climate change and respect for humanrightsBuilding of sound supply chains

Importance to businessWith regard to the defined material issues, an examination of validity was conducted at the review council which included
external experts.

2
AI: Artificial Intelligence
3
IoT: Internet of Things
4
5G: Fifth-Generation
mobile communication
system. It is the nextgeneration wirelesscommunication
system that is currently
becoming standardized.

Key opinions and advice obtained from Review Council
 Integrated thinking is exhibited in the fact that goals are set after identifying material issues which are linked to the medium-term management plan and which
relate to both strengthening management foundation and creating value High-level goals as well as unique indicators are evident, reflecting an eagerness for action Going forward, further improvements are expected, such as combining both outcome indicators and process indicators for goals

Material issues
Material issues

Medium-term goals

Product competitiveness

Responsiveness tocustomersHigher productivityCreate strong next-generation products

Become the best and sole strategic partner

Priority themes









Tackling technological innovation
Environmental contribution of products

Solutions that create value for customers
Improvement of customer satisfaction

Relevant material issues












Product competitiveness
Higher productivity
Management foundation
Product competitivenessResponsiveness to customers
Higher productivity

Constantly pursue higher management efficiency







People and workplaces

Maximize dreams and drive













Medium- and long-term growth scenario and associatedmeasures
Further initiatives for corporate governance
Sharing of market perspectives and improved accuracy ofbusiness forecasts

Product
competitiveness● Responsiveness tocustomers● Higher productivity● People and workplaces● Managementfoundation●

Examination of validity

Creation of new value through collaboration
Ongoing collaboration by building relationships of trust

Stakeholder engagement

Stakeholders

1
Big data: To record,
store, and immediately
analyze massive
data groups that are
difficult to record,
store, and analyze withconventional databasemanagement systems
or similar

Material issues

Importance to society

Tokyo Electron (TEL) uses the following process to identify important and priority material issues (key issues) to beaddressed for the medium- to long-term enhancement of corporate value.

Higher productivity
Management foundationManagement foundation














People and workplaces
Management foundation

Build a management foundation for increasing value







Quality management
Improvement of quality in the value chain

Diversity and inclusion
Career development
Work-life balance
Health and safety
Corporate governanceCompliance
Human rights
Environmental management
Supply chain management

People and workplaces
Management foundation
Product competitiveness
People and workplaces
Management foundation* STQA: Supplier Total Quality Assessment

9TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201910

CSR goals and results
Tokyo Electron (TEL) sets fiscal year and medium-term goals taking into consideration each material issue and its priority themes. The
departments responsible are made clear and efforts are undertaken systematically toward the achievement of these goals, going throughthe cycle of examining the status of conduct and making improvements. Besides contributing toward the achievement of related SDGs, TEL
strives to improve its corporate value further.

FY2019Material issues

FY2020Priority themes

Annual goals
Product
competitivenessTackling technologicalinnovationEnvironmental
contribution of
products

Responsivenessto customers

Quality management
Improvement ofquality in the value
chain
Diversity andinclusion
Career development

People andworkplaces

Ensure that 20% or more (three-year moving average) of all equipment
models are new products for next-generation technologies



Maintain the previous year’s global patent application rate

Achieved 81.2%, higher than the level of the previous fiscal year

Reduce per-wafer consumption of energy and pure water by 10% by
fiscal year 2019 (as compared with fiscal year 2014)

Achieved for 8 out of 9 relevant models

Increase TEL’s value to customers



Solutions that create
value for customers

Improvement ofcustomer satisfaction

Higherproductivity

Results

Work-life balance















Increase field solutions business sales from the fiscal year 2018 level

Get 3 points (“Satisfied”) or more on 100% of customer satisfaction
survey items



Reduce quality improvement costs from the fiscal year 2018 level

Revise business processes to reduce staff-hours used for sales
operations from the fiscal year 2018 levelComplianceManagementfoundation

Human rights









Product
competitivenessEnvironmental
contribution of
products

Responsivenessto customers

Achieved 84.4%

Improvement ofcustomer satisfaction

Implemented medium- to long-term improvement plan thatincorporates quality improvement costs

Improvement of quality

Developed systems that support sales operations

Higherproductivity

Improvement ofcustomer productivity/
yield

Increase number of training sessions attended per person by 10% fromthe fiscal year 2018 level

Number of training sessions attended per person: 11.6

Diversity and inclusion

Increased from 64.3% in fiscal year 2018 to 67.2% in fiscal year
2019

Career development

Reach at least 70% of take-up rate of annual paid leave
Reduce gap between health age* and actual age by 1.5 points by fiscal
year 2021 (as compared with fiscal year 2018)

Ensure that the number of workplace injuries per 200,000 work hours(the total case incident rate) is less than 0.5

People andworkplaces

Improve on issues identified in evaluations of the effectiveness of theBoard of Directors

Establish external hotline and reorganize internal hotline at groupcompanies overseas

100% participation in human rights training
Reduce energy consumption by 1% from the fiscal year 2018 level (perunit basis*) at each plant or officeWork-life balance

Decrease of 0.02 points

Increase sales in field solutions business from the fiscal year 2019 level













Maintain water consumption at the fiscal year 2012 level according to
per-unit basis* set at each plant or office

Relevant SDGs

Create strong nextgeneration products

Reduce per-wafer emissions of CO2 by 20% by fiscal year 2025 (ascompared with fiscal year 2014)



Become the best andsole strategic partner

Get 3 points (“Satisfied”) or more on 100% of customer satisfaction
survey items
Utilize knowledge and strengths within the group

Promote and implement front loading and traceability

Constantly pursue
higher management
efficiency

Double percentage of female managers by fiscal year 2021 from 1.8% in
fiscal year 2018
Increase number of training sessions attended per person by 10% fromthe fiscal year 2019 level
Reach at least 70% take-up rate of annual paid leave

Maximize dreams anddrive

Reduce gap between health age and actual age by 1.5 points by fiscal
year 2021 (as compared with fiscal year 2018)

Health and safety










Achieved 0.20
Held discussions at offsite meetings and during exchangesof opinion with outside directors, in order to enhance
consideration of medium- to long-term issues, such as growthstrategies
Continued to examine the ratio of outside directors on the
Board of Directors, as well as its diversity, such as gender andinternational mindedness

GovernanceCompliance

Achieved 100%



Achieved at 5 out of 11 factories or officesConducted selection of outside agencies at which to establish
external hotlines
Reviewed structure of internal hotlinesManagementfoundation

Ensure that the number of workplace injuries per 200,000 work hours(the total case incident rate) is less than 0.5
Improve on issues identified in evaluations of the effectiveness of theBoard of Directors
Reorganize internal hotline and establish hotline for suppliers, etc. atgroup companies overseas (ongoing)
Achieve at least 90% recognition among employees concerninginternal hotline
Revise Code of Ethics, conduct basic annual training, and achievepledge rate of at least 90%

Reduce energy consumption by 1% from the fiscal year 2019 level (perunit basis) at each plant or office

Build a managementfoundation forincreasing value

Environmental
management


Maintain the previous year’s global patent application rate

Increase TEL’s value to customers

Medium-term goals

Ensure that 20% or more (three-year moving average) of all equipment
models are new products for next-generation technologies

Solutions that create
value for customers

Increased from 1.8% in fiscal year 2018 to 2.0% in fiscal year 2019

* Per-unit basis: Calculated using complex weighting of the number of developed
evaluation machines, units produced, floor area, and labor-hours for each district

Environmental
managementAchieved sales growth for major customers on the back ofvigorous demand for memory
Increase of 25% from the fiscal year 2018 level

Annual goals

Tackling technologicalinnovation

GovernanceAchieved 20% or more

Priority themes

Double percentage of female managers by fiscal year 2021 (ascompared with fiscal year 2018)* An indication of the risk of lifestyle diseases in years, based on the
results of health checkups

Health and safetyMaterial issues

Maintain water consumption at the fiscal year 2012 level according to
per-unit basis set at each plant or office

Achieved 12 out of 14 goals* Per-unit basis: Calculated based on floor area and labor-hours, etc. for each district

Supply chain
management

11

TOKYO ELECTRON SUSTAINABILITY REPORT 2019



Implement supply chain CSR assessments for 80% or more of suppliers(procurement volume basis)Assessed key suppliers accounting for more than 80% of our
procurement spend

Supply chain
management

Implement supply chain CSR assessments for 80% or more of suppliers(procurement volume basis)

TOKYO ELECTRON SUSTAINABILITY REPORT 201912

Value creation through businessTokyo Electron (TEL) effectively utilizes management resources to create value such as leading-edge production technologies, productivity
improvement, and reduction of environmental impact in the business processes of semiconductor and FPD production equipment, andprovides this value to customers. The semiconductors and FPDs produced by TEL’s customers play central roles in this digital society, andare found in various products on the market, including mobile devices, audio/visual equipment, and data servers. These semiconductors
and FPDs contribute toward the spread of technologies including 5G, IoT, big data, and AI, as well as the realization of a more convenientand affluent society.
Through its business operations, TEL is contributing to the resolution of social issues, development of society, and achievement of
SDGs.

Value creation process through TEL business operations
Initiatives in the value chain

TEL’s capital

Value provided to customers and society

Products and services

1. Research and development
Capital throughbusiness
activities■

Research and development → pp. 16–17■

Tackling technological innovation → p. 18■

Environmental contribution of products → pp. 19–20■

Improvement of quality in the value chain → pp. 28–31

2. Procurement and production
Development andproduction, sales,and service
expertise■

Quality management → p. 28■

Improvement of quality in the value chain → p. 31■

Supply chain management → p. 46■

Environmental management → pp. 47–48■

Leading-edge semiconductor/FPD production technology■

Maximizing productivity■

Reducing environmental impact

Providing value to customers through products and services

Semiconductors/FPDs

3. SalesIntellectual
property

Solution of social
issues and contribution
towards SDGs■

Solutions that create value for customers → p. 22■

Improvement of customer satisfaction → p. 26

Value provided to society by customers

AI/IoT/5G

4. Service
Personnel
able toperform globally■

Initiatives for integrated proposals → pp. 23–24■

Ensuring safety for customers → p. 25

Manufacturing

Social Networking

Foundation for value chain
Relationships oftrust withcustomers andsuppliers

13

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

People and workplaces

Governance and compliance→ pp. 33–38→ pp. 40–44

Finance

Transportation

Medicine

TOKYO ELECTRON SUSTAINABILITY REPORT 201914

Research and development

Product
competitivenessResearch and development for the future
As lifestyles and business models undergo dramatic changes in the era of the IoT, it is anticipated that the use of
semiconductors will expand in all industries, and there will be demands for even more advanced technologies. As
electronics become even familiar for people, semiconductors become a larger part of everyday life. In readiness, Tokyo
Electron (TEL) formulated and released the TEL Technology Vision 2030. TEL is continuously engaged in rigorous debate
regarding technology for the future and TEL’s contribution, and is actively communicating the results of this within thecompany.
TEL Technology Vision 2030

Technology for
GrowthSociety will experience a communications revolution due to the introduction of 5G next-generation communication standard,
while the coming age of IoT linking everyday objects will see the advancement of big data processing by AI, together withdiversifying services which use it, and semiconductors and FPD plays a central role in these developments. It is important thatTokyo Electron (TEL) promotes leading-edge research and development to meet various demands for technological innovation, andprovides equipment and services to meet expanding applications. TEL strives to preserve the global environment by recognizing
environmental impact throughout the value chain, and offering products that are conscious of reducing this impact. The company
will contribute to the further development of industry and society through the timely creation of high added-value and competitive
next-generation products.

Medium-term goals (1)Ability to
ExecuteSolution provider forthe semiconductor industry

Solution provider for all industries withconnections to semiconductors

Employee
Vitality

Now

2030

Development system
TEL attaches weight to promoting technology development and technology innovation for the next generations, andhas built a system in which its Development & Production Divisions collaborate with Business Divisions to bring highvalue-added products into the market in a timely fashion. In 2018, TEL established the Corporate Innovation Division,
which strives to further strengthen process integration capabilities maximizing TEL’s strengths in deposition and etching
technologies, based on its wide lineup of semiconductor production equipment. Under this new structure, TEL has been
accelerating technological innovation as well as cross-functional development.

Create strong next-generation products
Front-loading
Priority themes, Main activities:

SDGs initiatives■Aim to build a more sustainable society by promoting further
innovation through innovative technology

Tackling
technologicalinnovation

Environmental
contribution of
products■Contribute to the reduction of environmental impact ona global level by providing products and services that areconscious of the environment

TEL is focusing on front-loading, investing resources (including technology, personnel, and money) in the early processesof product development. The company shares its technology roadmap with customers who aim for next-generation andnext-next-generation research and development and beyond, and is engaged in development of the various technologies
required for its realization. TEL proposes its unique technologies to promote on-site collaboration for early introductionof evaluation units at customers’ plants and research and development laboratories, aiming for acceleration andmaximum efficiency of technology development and conversion to mass production equipment.

Front-loading

Advanced field solutions

 Sharing of multi-generation technology roadmap with Business deployment utilizing the industry’s largest

customers Promotion of early engagement
 Maximization of yield for customer devices andequipment operating rate from early stages of mass
production, and also reduction of environmental impact Promotion of improvement in work efficiency and perperson productivity, and further increase in investments
into human resources and development

number of products delivered(69,000 units) TELeMetricsTM remote maintenance Predictive maintenance using machine learning■R&D
R&D for the future, front-loading, collaboration with consortia,
IP management■Tackling technological innovation
Integrating analog and digital, leveraging AI technology,
responding to developments in display■Environmental contribution of products
Products that contribute to a sustainable society, initiatives
concerning environmental laws and regulations related to
products

15

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Industry, innovationand infrastructure

Climate action

TOKYO ELECTRON SUSTAINABILITY REPORT 201916

Product competitivenessTackling technological innovation

Intellectual property management
In its intellectual property-related activities, TEL’s basic policy is to contribute to increased corporate revenues by
supporting business activities through appropriate protection of intellectual property (IP). IP personnel assigned at
R&D/manufacturing sites and headquarters assess each project from various angles including R&D and marketing
perspectives, building IP portfolios aligned with technology and product strategies in an effort to boost competitiveness.
In 2018, in order to uphold the company’s worldwide advantage in the IP field, TEL maintained a global patent application
rate* of approximately 70% for the eighth consecutive year, and achieved high patent approval rates (83% in Japan and
85% in the United States). TEL is also increasing patent application in China in line with changes in market circumstances.
To increase IP awareness, TEL continuously educates its engineers, who are the foundation of TEL’s R&D strategy,
and in total around 4,200 engineers have become inventors. Additionally, because TEL often handles highly confidential
information including technological information of its customers and collaborative partners, the company also focuses on
confidential information management education.
Cumulative number of technology inventors

4,200

*
Global patentapplication rate:
Percentage of invention
applications filed in
multiple countries

Integrating analog and digital
In this era of IoT, when a multitude of devices can connect to the internet, semiconductors are required to process
massive amounts of data quickly and efficiently. At the same time, progress is taking place in the development ofneuromorphic devices, inspired by human neural circuits. Computers used in data centers that use conventionalarchitecture consume tens of kilowatts of power, while the human brain uses only about 20 W. Similarly, whereas theoperating frequency1 of today’s semiconductor devices is 5 GHz, the human brain is believed to run at just several tensof hertz. Neuromorphic devices utilize synaptic connections2 based on analog devices to replace the processing andmemory functions, which had previously been only divided between the digital logic and memory of a conventional
microprocessor. The aim is to achieve a higher degree of information processing with low power consumption.
Furthermore, the development of neuromorphic devices requires an approach of integrating analog to digital. In addition
to conventional pursuit of circuit miniaturization, development is underway of semiconductors that mimic human neuralcircuits, including resistive analog neuro device,3 nonvolatile resistive random access memory4 and so on. Leveraging
its strengths in deposition and patterning technologies, TEL has initiated research efforts into new materials needed forsemiconductors that will be the core of next-generation computing, such as neuromorphic devices, quantum computers
beyond that, as well as manufacturing processes for utilizing these materials.

Collaborating with consortiums
Along with enhancing its own research and development capabilities, TEL is also engaged in the development of cuttingedge technologies in collaboration with international and domestic consortiums. With bases including the United States,
Belgium, and Singapore, TEL collaborates with device manufacturers worldwide and with global research institutes topromote research into next-generation semiconductor production technology. From 2018, TEL is participating in a global
research hub developing next-generation AI hardware. In this consortium, TEL is mainly responsible for development thatraises the added value of software, such as advanced control software, in addition to manufacturing technology for chips
designed for AI computing.
Consortium

Korea

Tokyo Electron development sites

U.S.

Tokyo Electron Korea(as of April 1, 2019)

Japan
Tokyo Electron Technology Solutions
Tokyo Electron Kyushu

Belgium
imec

TaiwanTEL Technology Center, Taiwan
CNSE

France
CEA-Leti© CEA / Pierre Jayet

17

TOKYO ELECTRON SUSTAINABILITY REPORT 20193
Resistive analog neurodevice: Electronic
devices capable ofcontinuously changing
resistance4
Nonvolatile resistive
random access memory:
Random access memorythat uses nonvolatile
resistance transformers

Addressing advancements in display

Tokyo Electron Miyagi

IME

TEL is promoting the use of AI and striving to achieve highly stable equipment operation and greater efficiency indevelopment activities. By monitoring the operating status of semiconductor production equipment in real-time, andusing AI to analyze that data, TEL aims to improve equipment operation efficiency such as maintenance of equipment
performance, achieving wafer process uniformity, and avoiding unexpected downtime. TEL’s specialized AI department,
launched in 2017, plays a key role in the development of algorithms and other projects to use AI to analyze the vast
volumes of data output from equipment. From 2018, the company has held AI workshops, aiming to share the latest
technology trends and to boost internal collaboration, to achieve more efficient development activities.

2
Synaptic connections:
A junction formed
between neurons (cells
making up the nervous
system of an animal)
regarded as having
an important role inlearning and memory.

TEL Technology Center, America

TEL Technology Center, Korea

Singapore

Using AI technologies

1
Operating frequency(or clock speed): The
number of signals per
second to adjust thepace of processing ofmultiple electronic
circuits. Indicates theprocessing performanceof the computer. The
higher the frequency,
the more power isconsumed.

Displays used in personal computers, televisions, and mobile devices have been
constantly evolving, growing in size and resolution. Furthermore, in recent years,
progress has also been made in the adoption of organic EL that is self-luminous andthat offers superior contrast. Such cutting-edge display production is supported byphotolithography technology to create minute electronic circuits on glass substrate.
TEL develops, manufactures, and sells FPD coater/developer equipment and FPD dry
etch system. In 2017, TEL launched a product compatible with production of the world’s
FPD Coater/Developer
largest glass substrate, the Generation 10.5 substrate (2,940 mm x 3,370 mm).
FPD coaters/developers can coat and develop a light-sensitive material known as aphotoresist with extreme uniformity. The air floating coater unit, which was developed
independently by TEL and which was the world’s first to be used in mass production by TEL,
simultaneously realizes stable glass substrate transfer, greater productivity, and improved
uniformity.
The FPD dry etch system etches various thin-film materials using a photoresistdrawn pattern as a mask. Important here is uniform processing in the surface of glass
substrates, which are becoming increasingly bigger. TEL has independently developed
FPD Etch/Ash System
plasma source for large substrates. By assessing and proposing processes suited tovarious film types and processing patterns, the company is contributing to the mass production of high-quality displays.
In the field of organic EL displays, which are now being adopted for smartphones and large-screen televisions, TEL is
striving to provide new technologies for developing even higher resolution and improved productivity for organic EL
displays, under the joint development of inkjet printing equipment with a partner company.
Going forward, TEL will develop and deploy new technologies that contribute to the advancement and expansion of
displays.

TOKYO ELECTRON SUSTAINABILITY REPORT 201918

Product competitiveness

Environmental contribution of products
Environmental risks and opportunities

Products that contribute to a sustainable society

The various issues related to the environment have an impact on our daily lives and on the business activities of companies.
Physical risks, such as rising average global temperatures, strong winds, disasters, and water shortages caused by climatechange and abnormal weather, heighten the risks to businesses, such as damage to assets, increased operating costs, andimpacts on the supply chain. In terms of legal risks, tougher environmental laws and regulations require action at businesssites and with products. At the same time, promoting environmental initiatives leads to more opportunities to provide
outstanding environmentally friendly products, reductions in operating costs, and further improvements in corporate value.
Based on the requirements of ISO 14001, Tokyo Electron (TEL) identified and analyzed internal and external issues in relation to
the environment, namely, its relationship with the climate, air quality, and water quality. TEL also identified the environmental
needs and expectations of customers, suppliers, governments, and employees, as well as the company’s complianceobligations. From this information, TEL has set the following as its risks and opportunities to address: (1) environmental
management by reducing the environmental impact of its business activities, (2) compliance with applicable laws, and (3)enhancing product competitiveness with the environmental contribution of products.

Of the total CO2 emissions from the value chain of TEL, emissions arising from product use account for 88% of its total
CO2 emissions. For this reason, TEL has made it a key corporate objective to promote environmentally friendly productdesign, and lower the energy consumption of its products. In fiscal year 2015, the company established a goal to reduceenergy and pure water consumption by 10% by fiscal year 2019, using fiscal year 2014 consumption as the baseline. To
achieve this goal, the company has worked to reduce energy use and improve overall throughput. As a result, in addition
to achieving the goal for four models prior to fiscal year 2019, TEL achieved its goal for a further four models in the target
fiscal year of 2019.1 Specifically, the company aimed for improved efficiency in Tactras™ Vigus™, plasma etch systemfor 300 mm wafer processing that offers high reliability and high productivity, managing to reduce energy consumption
per wafer by 12%. In addition, the company also achieved above-target energy-saving results for the EXPEDIUS™ series
batch cleaning system, NS300Z scrubber system, and CELLESTA™ series surface preparation system, including improved
throughput and wafer-process optimization. From fiscal year 2020, TEL has set the new medium-term goal of “30%reduction by fiscal year 2031 in comparison with fiscal year 2014 for the key models of each business unit (30% or more
reduction in CO2 emissions when compared with equipment shipped in fiscal year 2014).” With this goal, the company
endeavors to address not only energy and water as done conventionally, but also use of process gas and chemical
substances, to reduce product footprint, volume, and weight, and the frequency of parts maintenance, while increasing
the lifespan, and shortening the launch time of equipment, in order to incorporate its contribution to CO2 reduction.

CO2 emissions across the value chain
TEL recognizes environmental impact throughout the value chain, and develops business activities that are conscious of reducing this
impact. TEL aims to resolve environmental problems through leading technology and reliable services, in line with its environmental
slogan “Technology for Eco Life.”

453 kilotons
Scope 3 upstream

174kilotons
Scope 1 & 2

6,014 kilotons
Scope 3 downstream

Not from the TEL GroupOwn emissions

Not from the TEL Group

Fuel- and energy-related
activities

Employeecommuting

12 kilotons

12 kilotons

Capital goods

Business travel

150 kilotons

10 kilotons

Purchased goods andservices

Waste generated inoperations

259 kilotons

Direct emissions
from fuel & gas use
Scope 1

24 kilotons
150 kilotons

1 kilotons

Scope 2:
Indirect GHG emissions
from use of electricity,
steam and heatpurchased by TEL

End-of-life treatment ofsold products

2 kilotons

Use of sold productIndirect emissions
from electricity use &heat purchase
Scope 2

Upstream transportationand distribution

5,873 kilotons
Downstream
transportationand distribution

139 kilotons

9 kilotons
Upstream

Scope 1:
Direct GHG emissions
from use of fuel and gas
owned or controlled
by TEL

Downstream

Scope 3:Emissions from
corporate value chains(excluding scope 1 and2 emissions), such as
product transportation,
employee businesstravel, and major
outsourced production
processes*
Scope 3 is divided into
upstream activities,
which include emissions
associated withpurchased or procured
products and services,and downstream
activities, which include
emissions associatedwith sold products andservices

1
Based on TEL’s specificusage conditions

Initiatives for product environmental laws and regulations
In order to comply with each country’s environmental laws and regulations pertaining to products, TEL proactively collects
information and takes appropriate action as required. An example of its efforts for EU REACH2 regulations is that the company
investigates the presence of any substances of very high concern (SVHC) in articles, and disclose information appropriately. As
for efforts for GHS3 requirements, TEL provides safety data sheets (SDS)4 when selling chemical goods. In fiscal year 2019, thecompany partially revised the environmental IT system introduced in fiscal year 2018 in order to continue to share information
more efficiently with its supply chain. In addition, TEL has also continued to offer “web-based training for Product Environment
Compliance” to all employees, providing a description of the frequently revised environmental laws and regulations and productcompliance. The company also provides suppliers with information on the relevant environmental laws and regulations.
TEL will continue to monitor each country’s environmental laws and regulations rapidly, and strive to take appropriate action.

Biodiversity

URL

2
EU REACH: An EU
regulation pertaining
to the registration,
evaluation,authorisation, andrestriction of chemicals
3
GHS: Globally
Harmonized Systemof classification andlabeling of chemicals
4
SDS: Safety Data
Sheet (for chemical
substances, etc.)

https://www.tel.com/csr/environment/office/In carrying out its business activities, the TEL Group has a not insignificant impact on biodiversity, and yet without thebenefits yielded from biodiversity, the company could not sustain its activities. In recognition of this, the Group willdevelop a framework for promoting initiatives in an effort to conserve biodiversity.

Green procurement

URL

https://www.tel.com/csr/environment/green-procurement/

TEL promotes green procurement, prioritizing the purchase of environmentally friendly parts, products and materials.
The total of Scope 1 and Scope 2 of the TEL Group is 174 kilotons, while Scope 3 accounts for a total of 6,467 kilotons,
which is approximately 97% of the total. TEL believes that it is particularly important to develop products with low CO2
emissions during operation, as CO2 emissions from the use of products sold amount to 5,873 kilotons, which is 88% of theoverall total.

Logistics initiatives

URL

https://www.tel.com/csr/environment/product/

As logistics regulations have become more stringent in recent years and the demand for a lower impact on theenvironment rises, TEL has been promoting modal shifts5 and other activities designed to reduce the environmental
burden of its logistics.

Medium- and long-term environmental goals
Medium-term goals (2030)
Equipment

30%

Reduce per-wafer CO2
emission (as compared with 2013)

Facilities

20%

Total CO2
emissions(as compared with 2018)

1%

Reduce year-over-year
energy consumption ateach factory and office(per-unit basis, annual goal)

Environmental communication

URL

https://www.tel.com/csr/environment/office/

TEL’s environmental policy requires that, based on a shared understanding with a broad range of stakeholders, thecompany promotes cooperative partnerships with them, and it takes appropriate steps to live up to their expectations. In
promoting initiatives for the environment, TEL will maintain close communication with all its stakeholders.

5
Modal shift: Efforts totransform the meansof transportation.
Refers to switching themeans of transportationfrom truck or aircraft
to ones with a lower
environmental impact,
such as rail or ship.

Long-term goal (2050)
As a leading corporation in environmental management, Tokyo Electron works actively to conserve the global environment.
We strive to contribute to the development of a dream-inspiring society by proactively promoting the reduction ofenvironmental burden of both our products and facilities, and at the same time, providing evolutionary manufacturing
technologies that effectively reduce the power consumption of electronic products.

19

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201920

Solutions that create value for customers

Responsivenessto customers

Building systems for creating value for customers
Tokyo Electron (TEL) is building an organization to implement more effective global operations aimed at providing
cutting-edge technology products and the best technology services as required by customers.
In 2018, TEL strengthened its customer responsiveness through the establishment of the Account Sales Division, whichleads to new technology development based on needs for next-generation cutting-edge technology such as memory,
logic, and foundry, and the Global Sales Division, which appropriately provides for new needs in fields such as electricalappliances, automobiles, medical treatment, and healthcare, which are continuously expanding with the arrival of theage of IoT and AI. Each sales division further strengthens its close collaborative relationships with each business unit andmoreover with each overseas subsidiary whereby it provides solutions to customers with high-quality support and asense of speed.
Furthermore, TEL is currently working to build globally unified systems and operations in order to further enhance
the quality of sales and service activities. The Global Service Committee, a regular gathering of the service leaders ofeach department and each overseas subsidiary, shares information and undertakes in-house coordination, leading to
improvement of TEL’s ability to make proposals to meet customer needs and resolve problems, including improving thetechnical skills and interpersonal skills of the more than 3,000 field engineers worldwide, the localization of start-ups,
improving work efficiency using the work-time management system and the concept of the Total Support Center.

In the era of IoT, when a variety of objects can connect to the Internet, semiconductor and FPD applications are expanding, anddemand for technological innovation is growing. In such circumstances, Tokyo Electron (TEL) works to accurately grasp thedemands of customers and to reflect this during consideration of product planning, and uses its strength as a production equipment
company with a diverse product range to propose comprehensive solutions contributing to value creation for customers. TEL is also
promoting the reuse and recycling of equipment main units and parts, and also provides high added-value maintenance services,to support the stable operation of equipment of various generations that handle a diversity of applications. TEL strives to further
enhance customer satisfaction, which is a key management theme it has tackled since the company’s founding, aiming to be thebest and sole strategic partner for customers.

Process integration
TEL leverages its broad lineup of semiconductor production processes such as thin film deposition, coating/development,
cleaning, and etching to be the first to devise and develop new integration technologies that aim for reciprocal
optimization of multiple processes to propose to customers.
In response to the new growth in technological requirements for semiconductor production processes, TEL isadvancing joint development with customers from an early stage, based at its Process Integration Center (PIC),
established in 2017. One important issue that PIC is addressing is combination optimization of new deposition
and related processing technology required for next-generation memory, AI, devices for 5G, and devices for future
quantum computing. Development activities at PIC lead to the provision of the latest technology to customers and thestrengthening of partnerships, for seamless work in research, development, integration, production, and services.

Medium-term goals (2)Become the best and sole strategic partner
EXPEDIUSTM -i

Priority themes, Main activities:

TactrasTM VigusTM

SDGs initiatives■Contribute to customer innovation generation and value
creation through the proposal of comprehensive solutions
CELLESTA -i

CertasTM

Etching

Cleaning

TM

Solutions thatcreate value
for customers

Improvementof customer
satisfaction■Ensure a sustainable form of production and consumption
throughout product life cycles by responding todiversifying needs, considering safety and theenvironment, and so on■Solutions that create value for customers
System construction for customer value creation, processintegration, initiatives for comprehensive proposals, field
solution business■Ensuring safety for customers
Provision of information, training■Improvement of customer satisfaction
Customer satisfaction survey

21

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

CLEANTRACKTM
LITHIUSProTM Z

Coating/development

EXIMTM

Film deposition
Trias +TM

TELINDY PLUS TM

Industry, innovationand infrastructure

Responsible
consumption andproduction

NT333 TMTOKYO ELECTRON SUSTAINABILITY REPORT 201922

Responsiveness to customers

Initiatives for integrated proposals
Knowledge management

Total Support Center

TEL promotes company-wide knowledge management1 to deliver high-quality service to its customers.
In the area of field service, the company creates a database of customers’ equipment records (support and incident
history) which can be accessed by global field engineers, thus providing an environment that enables TEL to quickly
respond to calls from customers. Furthermore, from April 2019, TEL released a system (in Japanese, English, and Chinese)that allows engineers from around the world to search in their own natural language for information they require, fromthe vast amount of accumulated technical documentation. These systems have made it easier to retrieve knowledge
on issues, whereby the causes of phenomena that arise can be predicted with greater accuracy. This has enabled thecompany to respond to customers more quickly and more efficiently.

1
Knowledge
management:
Management approachto promote internal
company sharing of
tacit knowledge held byindividuals, in order toencourage innovationand to improve overall
productivity

Field solutions businessKnowledge Management Tool
2:
BI: Business Intelligence

Multi Database
Trouble Information

Machine Karte(Power BI2)

WisdomKnowledge SearchComprehensive search ofdevice history“Serial Number” axis

Service CRM

Comprehensive search ofdevice history“Trouble” axis

Parts Order History

Oversea Report
Serial Number
SearchSymptom
SearchScheduled to be
introduced

BKM

TEL has built a system to provide global support for its customers based on its Total Support Center (TSC), situated in Japan,
the United States, and China. At each TSC, dedicated representatives use accumulated data on information about customers’
equipment and similar incidents, collaborating with field engineers and plants in an effort to promptly and appropriately
respond to inquiries and troubles that arise.

Semiconductors are seeing advances in miniaturization and integration, focused on demand for MPU1 and DRAM,2 while
demand is also increasing for general-purpose semiconductors in a wide range of fields, such as medical treatment,
finance, transportation, and manufacturing. Extending the life cycle of products is another challenge, evidenced bydemand for the long-term stable operation of semiconductors for automobiles and industry.
TEL leverages its strength in having delivered more than 69,000 units of equipment the most in the industry, providing
used equipment and enabling the provision of remanufactured equipment restored by disassembling used TEL products
into modules, modifying those parts that are still usable, and adding new parts where they are lacking.
Also, the company is working to meet the needs of customers, establishing products that accommodate renewal
models centered on 200 mm wafers, providing more added value than used and remanufactured equipment, forcustomers who produce IoT-related products using previous-generation equipment. Renewal models replace old units
and parts with new ones, maintaining compatibility with existing processes and offering performance approaching thatof the latest equipment in terms of transfer speed, and other aspects. In addition to strengthening its renewal model
supply system, TEL is also working on the accumulation and transfer of technology and knowledge related to previousgeneration equipment. The company will contribute to customers’ businesses while responding appropriately tochanging semiconductor needs.

1
MPU (Micro ProcessingUnit): Microprocessors
or semiconductor chipsthat mainly provide thecomputing power forcomputers
2
DRAM (Dynamic Random
Access Memory): A typeof semiconductor storage
element for computers, etc.

Flowofofremanufactured
remanufacturedequipment
equipment
Flow
Procurement

Disassembly

Production

Best Known Method
Trouble shooting manual

Work optimization

Modified parts

TEL is striving to improve work efficiency and to enhance service quality by implementing precise work-time management
covering about 3,000 field engineers active worldwide. A global timesheet is used for unified management of the types oftasks that engineers undertake, including work involved in starting up equipment and repair work, and the time is taken forthem. By analyzing the work data thus accumulated through the global timesheets, the company is intent on improving
Multi Database
the efficiency of work, the adjustment of personnel, and approaching issues, leading to the provision of value to customers.

Equipment

Respond to new customer needs
New parts

Trouble Information

Our products

RTISS,QVICS

Human
resourceKarte
training
MachineWisdomKnowlege
SearchTEL is engaged
inskillsengineersenhancementof its training structure
to provide
customers（Power BI）management of fieldTSR（Servise andReport）, CAT（Call log）

Customers

Customers

with a high level of service. TEL built a group-wide skills management system in accordance with standards established by
装置履歴一括検索
SEMATECH(a U.S. consortium for the joint development ofCRM
semiconductors) and provides service
with the most suitable
装置履歴一括検索
Case,Work Orderhuman「装置番号resource （S/N）
placementforcustomers,
based
on
an
objective
understandingoftheskillsofeachengineer. 軸
TEL is」軸「トラブル」
working on a global basis to review and improve its training curricula and content, with the aim of providing optimal training
Parts Order History
programs that match the skills of each field engineer.
投入予定
NCDR
Oversea Report

TEA：YKMS, TEK：Hyperbiz, TES：WDS

Serial Number
Search23

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Symptom
SearchBKMBest Knnown Method
Trouble shooting Manual

TOKYO ELECTRON SUSTAINABILITY REPORT 201924

Responsiveness to customers

Ensuring safety for customers

Improvement of customer satisfaction
Customer satisfaction survey

Information provisionTokyo Electron (TEL) is committed to providing relevant safety information to customers to enable the safe handling of products.
All products purchased by customers come with a standard TEL Safety and Environmental Guidelines manual. This manual
describes the potential risks associated with the use of our products together with the methods for averting those risks, divided
into such categories as chemical, electrical, mechanical, and ergonomic. It also describes safety measures applied to products
and recommended methods for product disposal. The manual has been translated into 11 languages* to ensure that customers
around the world can accurately understand the information and use the company’s products safely.
Furthermore, the company provides the TEL Safety and Environmental Guidelines together with a manual specificto each equipment, thereby adapting to the specifications of each equipment. In cases where new warnings relating tosafety are issued after shipment, TEL advises respective customers individually. TEL is thus providing safety information
for its various customers.
In addition, TEL pays close attention to safety when delivering its products that involve the use of hazardous chemicals
or high voltage electricity. Particularly when delivering its products to a customer’s new production line, the company
checks its facilities, equipment, and workplace safety standards beforehand according to its internal rules to ensure a safe
environment.

*
11 languages: Japanese,
English, German, French,
Italian, Dutch, Russian,Portuguese, Korean,
Traditional Chinese, andSimplified ChineseTokyo Electron (TEL) conducts a customer satisfaction survey (TEL CS Survey) every year, with the goal of making
continual improvements based on customer feedback. The survey started in 2003, aimed at just a limited numberof divisions. It was expanded to include all semiconductor production equipment divisions in 2014, and later the FPD
production equipment division and overseas subsidiaries in 2016, and currently it is implemented company-wide as the
Customer Satisfaction Survey Program (CSSP).
Under the CSSP, we conduct customers a survey of specific questions that can lead to practical improvements once ayear. Results from the survey are analyzed by product, account (customer), and function (software, development, etc.),
and given as feedback to customers. In an effort for improvement, the results are also shared with relevant divisions, suchas sales, production, and support. Improvements are also made continuously to all aspects of the actual survey method,from the questions asked, to the analytical methods, and overall operation of the survey activities.
In the CS Survey for fiscal year 2019, responses were received from approximately 1,300 individual customers, which is
67.8% of all customers. TEL received evaluations three points* or higher on 84.4% of all questions asked.
TEL will continue to aim for three points or higher on 100% of the questions asked, and the entire company will work inunity to drive improvements initiated from the customer perspective.

*
On a four-point scale,three points or higher
represents “VerySatisfied or Satisfied”■ Improvement example
Results of the customer satisfaction survey brought to light certain issues that would not have ordinarily been
identified, and the persons-in-charge and managers who are in direct contact with customers took the lead in making
improvements, with the cooperation of the relevant divisions.
Continuing from last fiscal year, as a result of efforts to implement more accurate and quick responses to the demands
and issues of customers, including enhancing support for software operating across multiple pieces of equipment, TEL
improved the evaluation scores received from customers for all questions.
Percentage of responses thatindicated customer satisfaction

TEL Safety and Environmental Guidelines

84.4%

Training
TEL provides its customers with training on equipment operation and maintenance procedures to ensure they are able tohandle TEL products correctly and safely. Centered around its manufacturing sites, TEL has established training centers
all over the world, with approximately 50 dedicated instructors conducting practical training courses using actual TEL
equipment. So that the training the company provides is always of the highest quality, it uses its own certification system
for instructors to ensure that training is delivered by personnel recognized as having the necessary skills. In addition topractical training, TEL also implements web-based education and on-site training at customer sites.
In addition, in order to speed up its response to requests from customers, TEL is promoting the development of surveys
using online systems. Through its surveys, TEL collects and analyzes customer feedback on the content of its programs
and its equipment, and strives to make improvements based on the survey results, in an effort to develop an enrichedtraining environment.

CS Survey activity
preparation

Plan

Do

ActionCheck

Conduct surveyof customers

Feedback to customers

Analyze survey results

Implement improvement
activities in each division

Report and investigate
improvement plan

Confirm progress ofimprovement activities

25

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201926

Quality management

Higherproductivity

Quality policy
Tokyo Electron (TEL) has a quality policy shared by all group companies which it has developed and is rolling out.
1. Quality Focus
Focusing on quality to satisfy customers, meet production schedules, and reduce required maintenance even with temporary cost increases.
2. Quality Design and Assurance
Building quality into products and assure in-process quality control, from the design and development phase throughout every process.
3. Quality and Trust
When a quality-related problem occurs, working as a team to perform thorough root cause analysis and resolve problems as quickly as
possible.
4. Continual Improvement
Ensuring customer satisfaction and trust by establishing quality goals and performance indicators and by implementing continual improvement using
the PDCA cycle.
5. Stakeholder Communication
Listening to stakeholder expectations, providing timely product quality information, and making adjustments as needed.

In initiatives to enhance corporate value, it is important to strive to improve productivity in all business activities, and tocontinuously increase management efficiency. Tokyo Electron (TEL) is reviewing and optimizing its business processes across thecompany as a whole, in development and manufacturing divisions as well as in sales and administration divisions, and the company
is promoting quality management throughout the value chain. In addition, the company is developing various educational programsin an effort to enhance the awareness and capabilities of each employee regarding productivity, as well as implementing continuous
quality improvement activities throughout the supply chain in collaboration with suppliers. By implementing quality-focus
operations, TEL is further improving productivity, in its efforts to build strong relationships of trust with all stakeholders.

Management system
TEL is building quality assurance systems under the leadership of the Representative Director, President & CEO. To
provide consistent, high-quality products, TEL has been acquiring ISO 9001 quality management system certification at
various sites since 1994, and now, all of the group’s manufacturing companies have successfully obtained certification.
ISO 9001 certified factories and offices
Company nameFactory/Office nameTokyo Electron Technology Solutions
Tokyo Electron Kyushu

Medium-term goals (3)Constantly pursue higher management efficiency

Priority themes, Main activities

Improvement of quality inthe value chain■Promote quality management throughout the value chain,
ensuring sustainable forms of production and consumption■Quality management
Quality policy, management system, enhancement of qualityrelated awareness and capabilities■Improvement of quality in the value chain
Initiatives at the development and design stages,
improved productivity in software development, support
optimization, response when issues arise

December 1994

Koshi Office

March 1997

TEL Magnetic Solutions—

November 2009

Tokyo Electron Korea

Balan Factory

September 2011

Tokyo Electron Miyagi

Taiwa Office

September 2012

TEL FSI—

March 2013

TEL Epion—

May 2014

Tokyo Electron (Kunshan)—

May 2018

Decent work andeconomic growth

Improvement of quality in the value chain
Quality management throughout the value chain
Tokyo Electron (TEL) believes that implementing continuous improvement, not only of products and services but alsoof all work processes, contributes to improved quality and productivity. The company strives to improve operations
throughout the value chain, while strengthening collaboration within the company and externally, reflecting the needs ofcustomers.

Improved
qualityand productivity

Responsible
consumption andproduction
Marketingand sales

27

September 1994

Tohoku Office

SDGs initiatives■Promote improvement of productivity, continuously increasing
management efficiency, contributing to the developmentof the industry and society, and contributing to continuous
economic growth

Quality management

Certification date

Yamanashi Office (Fujii/Hosaka)

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Development

DesignProcurement

Manufacturing

Sales

Installation

Maintenanceand service

TOKYO ELECTRON SUSTAINABILITY REPORT 201928

Higher productivity

Raising awareness and skills
TEL believes in the importance of every employee having a high awareness and understanding of quality, and conducts
various educational programs to this end. In addition to the fundamental quality education that all new employees
receive, we focus on PDCA education for all employees, including those overseas. Through e-learning courses, employees
learn the need for continuous improvement using the iterative four steps of the PDCA cycle. As of May 2019, 93.7% of ouremployees had completed the courses.
In addition, the company implements its own education program called TEL 6-Step for employees closely involvedin quality control, such as developers, designers, quality managers, and service personnel, through which they acquire a
problem-solving model to handle important issues. It is a partially altered version of the eight discipline (8D) problemsolving method,1 widely used in quality control, customized to replace TEL’s problem-solving process. The program
enables thorough investigation of the true nature of problems to determine the technical factors and root causes,
cultivating skills that lead to quick resolution and prevention of similar problems arising. TEL currently uses e-learning
training for delivery, and as of May 2019, approximately 5,500 employees had completed the program. In addition, thecompany conducts group training, focused on quality control leaders at its bases, for practical, exercise-based learning
about resolution of quality issues, in an effort to enhance work improvement skills at production and development sites.
Moreover, TEL encourages employees to obtain external QC certification2 through the Quality Management (QM)
and Quality Control (QC) examinations and recommends their acquisition of fundamental skills, so that they canautonomously tackle quality improvement. Since fiscal year 2012, the number of certified employees has increased eachyear to approximately 2,200 as of March 2019.

1
8D problem-solving
method: A method forsolving problems inquality improvement
through eight disciplines
or processes
2
QC certification:
Quality management
certification operated
by the JapaneseStandards Associationand the Union ofJapanese Scientists
and Engineers. The
total number of people
qualified nationwide
exceeds 520,000 (as of
September 2018).

■Example initiative
Through the Quality Management Committee, Tokyo Electron Technology Solutions Yamanashi Plant implements
consistent quality control, from the development and design stage through to mass production, managing the progressof development, sharing quality issues, and so on.
With new development projects, the Yamanashi Plant checks thoroughly to ensure quality and reliability requirements
are sufficiently fulfilled, by establishing “gates” at each stage of conceptual design, transition to release of plans, shipmentof evaluation units to customers, and transition to mass production.
To ensure this initiative, session-based DRs1 are held by persons in charge of design development, quality control,
production, purchasing, sales and other related divisions, together with experts who possess technical knowledge.
When transitioning to mass production of equipment, a “mass production package,” comprised of a BOM,2 a QC
process chart,3 a manufacturing quality instruction manual,4 a startup manual5 and so on, is prepared to ensure mass
production operations are also carried out in full, and self-process assurance systems are established. Providing education
to workers and managing their skills is also conducive to activities aimed at the release of high-quality equipment.
Going forward, to further develop quality improvements, ongoing improvement activities will be promoted so that,based on an original evaluation model, essential evaluation points are applied without fail in order to maximize quality ateach stage of the manufacturing process, from planning (concept level) through to the parts and materials level.

Development projectsystem

Improve DR quality

Improve businessprocesses(as of March 2019)

Comply with change
management

Initiatives at the development and design stages
Promotion of front-loading and self-process assurance systems
In order to improve the quality of products, it is important to avoid contamination by defects in upstream processes,
and to ensure quality in each process so that defective products are not allowed to flow into later processes. From thisperspective, TEL is promoting front-loading and self-process assurance systems. In order to raise the degree of productquality at an early stage, TEL implements thorough risk detection and mitigation measures (FMEA)3 from the initial stagesof product design in an effort to suppress the occurrence or outflow of defects. The company also conducts thoroughinspections in each process and verification using simulation in the self-process assurance system. Together with thispromotion of front-loading and self-process assurance systems, TEL is also focusing on the deployment of Product Lifecycle Management (PLM). By deploying and promoting this concept of PLM, TEL comprehensively manages and analyzes
all processes from product planning, development, design, and production through to service, in an effort to achieve early
release of products on the market, work efficiency enhancement, quality improvement, and cost reduction.

Profit3
QC process chart:
A chart recording
the process flow for
one product fromprocurement of raw
materials and parts
to shipment of thefinished product,
including management
characteristics andmethods
4
Manufacturing quality
instruction manual:Technical informationtransmitted from thedesign team to the
manufacturing teamManage shipping ofevaluation units

PDCA of Quality
Review Committee

New employee training conducted in April 2019Market research/planning

2
BOM (bill of materials):
A chart of parts showing
how many of each areused for each finishedproduct

5
Startup manual:
Summary of procedures
and warnings whenstarting up equipment

QC certification holders

2,200 employees

1
DR: Design Review

Development/design

Production/sales

Service/maintenanceImprove supplier quality

Improve manufacturing
quality

Response to safety laws and regulations
TEL regularly checks the safety regulations and guidelines concerning equipment, and has established systems forresponding to them. Equipment is checked by a third party inspection company before shipment to ensure that theequipment complies with international safety standard and the guidelines like SEMI S2.6 Also, regarding the Machinery
Directive and EMC Directive,7 we obtain certificates of conformity from the Notified Bodies in Europe.

6
SEMI S2: This is a set ofenvironmental, health,and safety guidelines
for semiconductor
manufacturing
equipment
7
EMC Directive: Thisis one of the New
Approach Directives
that apply to the EU
member states

Improve profit
marginAccelerate time-tomarket for products

3
FMEA (failure modeand effects analysis):
Method to grasp risks
in advance, prevent andmitigate

Evaluate reliability

Extend lifetime
value of products

Cost

Time

29

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Reduce development
costsTOKYO ELECTRON SUSTAINABILITY REPORT 201930

Higher productivity

Response to quality problems

Software development initiatives
Streamlining product development
Since 1995, Tokyo Electron (TEL) has used platform software developed in-house in its semiconductor production
equipment, leading to streamlined operations and improved product quality. By introducing common platform software
the company is able to reduce the hours spent on developing duplicate functions for each type of equipment, toguarantee real-time1 control, and endeavors to connect this to enhancement of its response capability to new demands
and technologies.
In addition, TEL is also adopting concepts such as object-oriented2 for the more efficient software development,
while also promoting development and introduction of new platform software for development of next-generationequipment.
Realization of smart equipment
With the rapid progress of innovation in manufacturing utilizing IoT and AI, TEL is working on designing the form of future
semiconductor production equipment required in the smart fabs3 which customers aim to realize, and to develop thevarious software and systems that will be required there. The specialized development units responsible for advanced
data utilization and system development cooperate with each business unit and production site in the pursuit of smart
equipment that offers simple operation, presentation of the causes and resolutions of troubles, and autonomous
operation through prediction of results.

3. Control
Actual reproduction of
results of data analysis

1
Real-time: The propertyof time limitation until
the completion of work
2
Object-oriented:
A software engineering
theory3
Smart fab: A fab which
realizes production
innovation throughanalysis and utilizationof data from all of theequipment, facilities,
and human work within
the fab2
TIRS: TEL Incident
Report System
3
QA-BOX: TEL Group
internal information
sharing and horizontal
deployment tool

Response to serious accidents
4
FCN (Field Change
Notice): Refers togeneral recall notice

TEL Group

Seriousaccident

Visualization ordigitization of situation

Autonomy refers to
self-learning and self-judgment
Forms after (1), (2),and (3)Customer

2. AnalyzeFiredepartment
Policedepartment

Accident
reportingsystem(TIRS)(Q-VICS)

Report and workplace recovery

Customer
contact
point

Prediction and forecasting based on digital analysis

Initiatives with suppliers
Developing strong partnerships with suppliers is essential to improve product quality. In efforts to maintain and improve
quality, since 2000, TEL has conducted its unique Supplier Total Quality Assessments (STQA) to enable its suppliers toproperly understand the level of quality that the company expects from suppliers. Before starting business with new
suppliers, an STQA is conducted via self-assessment to evaluate their product quality, costs, and information security.
The assessment also includes CSR issues, including human rights, ethics, safety, and the environment. If any risks toquality are found, TEL representatives visit the supplier on-site to explain the problems, TEL’s expectations for the level ofquality required. After the supplier understands the issues, TEL asks that they plan and make improvement measures, andprovides continuous support until all of the improvements have been completed. The company conducts on-site audits
once every three years at suppliers who manufacture important components and at suppliers where quality issues havebeen found.
In recent years, TEL has been particularly focused on process improvement activities using statistical process control(SPC).4 Equipment that TEL provides to its customers must always be controlled to avoid variations, to ensure accurate
process repeatability, and to realize high productivity. To achieve this, TEL works to ensure understanding of theimportance of, and agreement to, these activities by suppliers which handle specific important parts, and works on
SPC together with suppliers, in order to reduce variations in the quality of parts, in an effort to maintain and improve
processes to produce good products.

1
EN (European Norm):
Uniform standard for
the European Union
complimenting partsof technical standards
not stated in European
Commission directives(“New Approach”
directives)

Management

1. Monitoring
4. Autonomy

In addition to compliance with ISO and EN1 safety standards, TEL establishes design rules applicable to its own equipment
to achieve the highest level of safety possible. In addition to developing systems to manufacture safe products,
the company fulfill its mission as an equipment manufacturer by establishing systems for responding to design- or
manufacturing-related issues or accidents arising from operation-related problems.
If an accident occurs, TEL uses its TIRS2 accident reporting system to report and share information with all levels ofmanagement, from safety and quality personnel in each division to senior management. We immediately conduct anaccident investigation to identify the cause and plan preventive measures.
In addition, TEL uses a proprietary system called QA-BOX3 to share accident information within TEL Group. The resultsof accident investigations are quickly implemented on the problem equipment, as well as on equipment operated
by other customers, and, for example, reflected in design standards in operation. As well as sharing problems andcountermeasures through QA-BOX, it is also used to prevent recurrence of accidents. Accident-related data accumulated
in QA-BOX is used for the cumulative analysis of trends to visualize the types of equipment which frequently experienceproblems and the types of problems that they experience, whereby we can implement countermeasures that have an
immediate impact, leading to a reduction in the number of accidents attributable to equipment.

4
SPC (statistical processcontrol): Refers to using
statistical methods toanalyze manufacturing
processes, takemeasures forestablishing andmaintaining stableprocesses, and improve
process capability. In
many cases, statisticalmethods indicate
techniques with a focus
on control charts.

Permanent measures

Investigate andidentify causes
Issue FCN4

Operations
divisions
Safetydivision
Qualityassurance
division

Servicedivision

Accident information:

Relevant divisions
Investigation of causes and development ofrecurrence prevention measures

Share with Group(QA-BOX)

Confirm spread

Reflect in design
standards
Determine measures

Revise standards
Notify revision

Establish
implementation plan

Information sharing:Operations and information flow:■Example initiative
At all of its production sites, TEL collaborates with suppliers to implement initiatives to reduce the occurrence of defective
goods. Company employees visit the production sites of suppliers to learn about their production environment in order
to discuss and implement effective improvement proposals. In addition, Tokyo Electron Technology Solutions Yamanashi
Plant works closely with business partners to share data on parts and unit manufacturing, and to promote quality
management through SPC, and is thereby delivering results in defect rate reduction.

31

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201932

Human resource management

People andworkplaces

Human resource management system
Tokyo Electron (TEL) regularly conducts a global engagement survey which aims to enhance employee work satisfaction
and motivation, achieving growth for both the company and its employees. Questions on issues such as pride in thecompany and work, and awareness and evaluation of the work environment help TEL to grasp the current situation. The
company uses a continuous improvement cycle based on the characteristics of each region and workplace, whereby itaims to improve the workplace environment.
In fiscal year 2019, TEL established a new evaluation system to support the global human resources system
introduced the previous year. The company also focused on the four topics of diversity and inclusion, careerdevelopment, work-life balance, and health and safety, to promote the creation of a workplace environment where
employees can work more happily.
Implementation ofEngagement Survey
Reviewing of
circumstances

Recently, it has become important for companies to develop operations that are sustainable from the perspectives of people
and workplaces, meeting the new demands of society, responding to new demands of society, such as the decline in the working
population and diversification of workstyles, employing people with diverse values, and so on. By promoting work-life balance, as
well as diversity and inclusion, Tokyo Electron shows respect for various work styles, as well as the individuality and values of eachof its human resources, treasuring the new value introduced when individuals exercise their capabilities. In addition, the company
is strengthening operation of a global human resource system, evaluation system, and its human resource development program,promoting health and safety, among other measures, in an effort to nurture employees who feel their work is rewarding, and whoare proud of the company.

Improvement for
further improvement

Improvement of
measures

Implementation ofEngagement Survey

Confirmation ofeffects

Planning formeasures

Consideration of
measures toaddress issues

Implementation of
Implementation of measures, deployment
measuresin the workplace

Diversity and inclusion
Medium-term goals (4)Maximize dreams and drive

Priority themes, Main activities

Systems and initiatives

SDGs initiatives■By globally promoting a highly transparent human resource
system, together with fair appointment and remuneration,
strive to facilitate rewarding, human-focused employment(decent work)

Diversity andinclusion

Careerdevelopment

Work-life
balance

Health andsafety■Human resource management
Human resource management system■Proactively develop work-life balance, diversity andinclusion, and pursue equality among people and in theworkplace■Diversity and inclusion
System and initiatives, Conference for Women Engineers■Career development■Human resource development initiatives■Work-life balance
Basic skill enhancement initiatives, global human resource system,
promotion of paid leave-taking, childcare and nursing systems■Health and safety
Support systems for health, self-care platform, safety
initiatives, accident reporting system

33

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Decent work andeconomic growth

Reducedinequalities

Overseas sales account for over 80% of total sales for Tokyo Electron (TEL), positioning the company in circumstances
requiring extremely fast technological innovation. In order for TEL to generate innovation and continue to grow, it isessential for the company to be one where personnel with diverse individuality and strengths can play an active role
while exercising their capabilities. TEL is actively promoting the creation of an environment where the diversity of talentleads to greater competitiveness, by developing a workplace where anyone, irrespective of gender, nationality, age,background, disability, or stage of life, can work while feeling at ease, tackle challenges with strong motivation, and beable to grow.
In fiscal year 2019, TEL launched a Diversity Promotion Team. It conducted an employee awareness survey, focusing
on female employees, managers, regarding one element of diversity: gender diversity, achieving a response rateof approximately 80%. The company has built a foundation that promotes diversity, through lively debate, with agreater workplace perspective, on what kind of workplace to create, on work styles, and on what is needed to support
development of abilities, to ensure that employees from various backgrounds, including those with time constraints,
can continue to work at TEL. In fiscal year 2020, the company will launch a dedicated taskforce to promote diversity andinclusion, which it will develop with a core human resource strategy of promoting an environment where diverse talentfrom around the world can play an active role and produce results irrespective of gender, nationality, or disability, while
minimizing the impact of the stage of their lives.
Furthermore, TEL is putting effort into harassment prevention education and awareness activities in order to realize aworkplace where diverse employees can play an active role with greater mutual understanding. In fiscal year 2019, legal
advisors conducted live seminars to raise awareness of the issue of power harassment in particular, attended by roughly
90% of the company’s approximately 1,100 executives and managers. TEL is working to establish an environment where
employees with disabilities can work with peace of mind, and is driving efforts to hire such people. In fiscal year 2019,
people with disabilities accounted for 2.04% of employees in Japan operations overall.

TOKYO ELECTRON SUSTAINABILITY REPORT 201934

People and workplaces

Conference for Women Engineers

Life support

Since fiscal year 2018, TEL has held a Conference for Women Engineers, linking Akasaka headquarters with offices
throughout Japan via a video conferencing system, to support networking among women engineers, and to provide
opportunities for learning and awareness. At the third conference, held in February 2019, an external speaker was invited
to talk about careers for women, and other lectures were given by young women engineers and women in management.
On this occasion, around 100 employees, including men, participated. Feedback included comments that the opinionsfrom external parties help the participants to broaden their horizons, and that they were able to exchange information
and build communication with other engineers, indicating that they recognized the impact of the event. In the future, thecompany plans to expand the scope of such events beyond engineers.

TEL provides employees with various programs so that they can make full use of their abilities and feel peace of mind
while in the company. Within Japan, TEL conducts a life design seminar every year for employees aged 51 or over in orderto provide important information for retirement, including how to spend their years until retirement as well as financial
planning beyond retirement. In an effort to support staff development, the company also conducts seminars for otherage groups on topics relevant to many employees, including nursing of family members and psychological self-care.

Career development

Initiatives to improve basic skills

Work-life balance

Human resource development system
Tokyo Electron (TEL) has established TEL UNIVERSITY as an in-house educational establishment for the entire company
to help employees to develop their careers and realize their personal goals independently. The curriculum of TEL
UNIVERSITY includes courses that provide world-class knowledge and skills, with training programs adapted to different
levels and goals.
Corporate education system (TEL UNIVERSITY)
Management

Executives

Leaders

Mid-level
employees

1
OJT: On the JobTraining

Junior employees
New employees

2
WBT: Web-Based
Training

Introductory programs (new graduates, mid-career recruits)OJT1 programs (new graduates, mid-career recruits)

Level-based
programs

Manager programs

Mid-level employees

Junior employee programs

Leader programs

Compulsory WBT2Business skills
Goal-based

Global communication

programs

Life support
Technical programs (seminars & workshops)

Management education costs¥49 M

Human resource development initiatives
Leader programs
TEL conducts succession programs to identify and systematically nurture staff who will advance into management andrealize medium- to long-term improvement of corporate value. In fiscal year 2019, TEL conducted training for selected
next-generation management candidates and dispatched them to external training, supporting them to gain a broader
perspective and to build networks outside the company. TEL is also developing practical programs that meet the
expectations and development needs of each person.

Tokyo Electron (TEL) has set its vision to be “A truly global company generating high added value and profits in thesemiconductor and flat panel display industries through innovative technologies and groundbreaking proactive solutions
that integrate diverse technologies.” To realize this, each employee must be able to strike a balance between their workand private life, so that synergy is created between employees and the company to enable each to grow.
Based on its global human resources system, TEL is promoting the creation of an environment to enable employees
to both improve their basic skills and grow while striking a balance between their work and private life. TEL works toenhance and offer an education program whereby employees can learn business skills adapted to their individual level,
aims, and schedule. TEL provides a skill map whereby employees can grasp the business skills expected of them, a skills
development guide that summarizes the importance of learning and techniques for learning, and a course guide thatoutlines details of lectures offered in order to support each individual in proactive study.

Global human resources system
The global human resources system, introduced in 2017, considers the role each individual is expected to play and theircareer, to encourage proactive contribution to improving the corporate value of TEL. In order to achieve this, the systemclarifies individual roles and responsibilities, and allows absolute evaluation of the level of achievement by individuals
against goals set, to facilitate more acceptable remuneration.
By evaluating the autonomous challenges of employees, TEL is able to make their treatment more transparent, as thecompany strives to nurture an organizational culture with dreams and vitality where individuals who proactively accept
challenges without fear of failure can flourish.

Encouraging leave-taking
In order to enable employees to continue working while taking sufficient leave,
TEL strives to correct long work hours and aims to enhance the leave system,and promote leave-taking.
In fiscal year 2019, TEL set a target of 70% annual leave-taking, promoting
management to improve leave-taking rates through initiatives such as fiveTake-up rate of annual paiddays planned leave every six months, regular monitoring of annual leave-taking
leave (global)
status, and encouraging awareness of planned leave-taking, resulting in leavetaking rates of 67.2% in Japan and 80.9% overseas during fiscal year 2019.
In addition, TEL has introduced a unique refreshment leave system. It aims toprovide refreshments for employees and to thereby boost their motivation towork. The system grants special (paid) leave from two weeks to one month of service to employees who have worked formore than 10 years. In fiscal year 2019, 605 employees in Japan took refreshment leave, and 473 overseas.

72.5%

Manager programs
The role of managers is important for enabling value creation by each individual. In fiscal year 2019, the company
conducted group training for newly appointed managers, incorporating third-party assessment and other elements inorder to nurture the practical skills and mindset required for managers, including the development of subordinates, selfreflection, and personnel evaluation.

Step-up activities
TEL implements step-up activities for about six months from the summer of each employees’ second year in thecompany, to encourage autonomy among junior employees. Junior employees set their own themes and targets in theworkplace while planning activities, which they advance, that provide opportunities to develop learning and awareness ofgrowth. This is done with the involvement of their superiors and colleagues.

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TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201936

People and workplacesChildcare and nursing systems

Stress checks

Percentage of those who

In order to allow each employee dealing with childcare and nursing to adopt
returned to work after childcare
leave (Japan)
a flexible approach to work according to their individual lifestyle and stage inlife, TEL has established a support system, in addition to that which is legallydefined. In Japan in particular, we are working to enhance work styles for
employees.
In addition to allowing extension of the childcare leave period until the child reaches three years of age at the longest,
TEL also expanded measures to reduce working hours for childcare to employees raising children until their graduationfrom elementary school. We have also established leave to care for a sick or injured child and childcare support leave. As aresult, in Japan, we have achieved a return to work rate of 93.5 %, and 41 % of female TEL employees are working mothers.
Furthermore, in addition to allowing paid nursing care leave up to the fifth day, we are also improving the nursing caresystem to make it possible to take nursing care leave three times per person requiring care and to allow nursing care leaveof a total of one year.

93.5%

Within Japan, TEL has implemented comprehensive measures for mental
Stress check take-up rate
(Japan)health. Using a questionnaire recommended by the Ministry of Health, Labourand Welfare, employees complete a stress check once a year, and if determined
to be under high stress, they are put in contact with an occupational healthphysician or public health nurse for in-depth face-to-face support as stipulated
under law. In addition, the company also implements thorough mental support
for employees whereby those who wish to may meet for discussion with an occupational health physician or publichealth nurse in the form of a health consultation. The company also undertakes organizational analysis to deal withorganizations which have a comparatively heavy burden.
During fiscal year 2019, the stress check was taken by 92.2% of employees in Japan.

92.2%

Self-care platform
We have introduced the Pep Up personal healthcare platform, enabling employees to check the results of their medical
checkups quickly, and to understand their daily health management data, such as weight, blood pressure, and body fat
ratio, as well as their health age.1 Using this platform, we hold walking events, and distribute activity trackers to help
employees in managing their diet and exercise.

New work styles
TEL is continuing to seek new work styles for employees. In addition to introducing a flextime system, we are testing a teleworking
system that enables employees to utilize time more effectively by eliminating commuting time at Tokyo Electron Headquarters.

Safety management framework

Health and productivity management promotion
So that employees can realize a fulfilling life’s work, and at the same time,
contribute to the advancement of TEL’s business by harnessing their full
capacity, it is important that every employee can maintain their health anddynamism while at work. By putting systems in place, we strive to build anenvironment where employees can work with peace of mind.
In acknowledgment of these initiatives, TEL was recognized as a White
500 company under the 2019 Certified Health & Productivity Management
Outstanding Organizations Recognition Program.1 Taking advantage of thisopportunity, we will continue to promote global initiatives with each TELGroup company to drive efforts to improve the health and productivity of its
employees.

1
Certified Health& Productivity
Management
Outstanding
Organizations
Recognition Program:
The program
publicly recognizes
particularly outstandingorganizations thatare practicing healthoriented business
management, basedon initiatives attuned
to local health-related
challenges and on
health-promotion
initiatives led by the
Nippon Kenko Kaigi.

Health and safety
Support systems for health
TEL has built systems that are mindful of employee health. Besides conducting various medical checkups in accordancewith the law, TEL also offers face-to-face consultations by designated occupational health physicians for employees who
work long hours. We have also set up health help desks supported by occupational health physicians so that employees
and their families can seek advice if they have any health issues to discuss. TEL also offers counseling services supported
by external industrial counselors if requested by an employee. Regular “line-care”2 seminars are also held, targeted at line
managers.
In fiscal year 2019, in order to strengthen its support structure, we held liaison meetings with the designatedoccupational health physicians at each company to share information on current issues faced by the TEL Group. In the
future, we will continue to steadily carry out initiatives to resolve these issues.

2Line-care: A workplacemeasure for mental
health, in which
managers andsupervisors take a leadrole in responding torequests by workers
for advice, with anaim of improving theworkplace environment

Based on a culture of “Safety First,” TEL carries out ongoing activities for safety promotion. In its effort to raise theoverall level of safety and occupational health, TEL uses a management system based on OHSMS2 to manage safety andoccupational health and follows the PDCA cycle, to reduce the potential risk of work-related accidents. Moreover, by
sharing information of any issues with the EHS council and the manufacturing company presidents’ council, the company
promotes safety management as a company-wide initiative.

Activities for safety
Total case incident
At each factory and office, monthly safety and health committee meetings
rate (TCIR)
are held to discuss measures for any workplace safety or employee healthissues and to conduct safety inspections. TEL has also set up a system forautonomous problem-solving at manufacturing sites, with safety inspections
by representatives from appropriate departments at least once per month.
Before starting work at TEL manufacturing sites, the details of the job and the risks are shared with all workers
involved, and they each increase their awareness in an effort to prevent accidents. In addition, effort is also being
directed to safety managers giving advice on how to manage hazards, as well as to make workers stop work and takecorrective action in the event of an unforeseen incident while on the job.
In addition, TEL is implementing two education programs globally for the establishment of safe work environments.
TEL’s program on basic safety targets all employees and is provided as introductory training for new hires as well as
refresher training every third year of employment. In total, more than 50,000 employees have completed this program.
Our other program, advanced safety, targets employees working in cleanrooms and on production lines. Participants
are required to complete the course every year. Some portions of rules pertaining to safety are based on Japanese law,
therefore when employees are transferred overseas, they undertake training regarding any differences in a language thatthey understand, with the aim of standardizing the company’s education.
To eliminate accidents, TEL also provides risk assessment training and web-based training at offices and factories inJapan and overseas. Finally, we also provide safety information to suppliers as part of support for initiatives to prevent
accidents.
As a result of having maintained a high priority on creating safe work environments, TCIR3 has been maintained at or
below the company’s target of 0.5, with 0.20 in fiscal year 2019.

0.20

1
Health age: An indicatorshowing risk of lifestylediseases, calculated
based on the resultsof an employee’s
medical checkup. The
difference in years withthe employee’s actual
age is displayed, helping
them understandtheir equivalent age interms of their healthconditions.
2
OHSMS (Occupational
Health and Safety
Management System):
A management system
to improve the overalllevel of safety andoccupational health3
TCIR (Total Case
Incidence Rate): The
number of workplace
accidents per 200,000
work hours

Wellness declaration
Accident reporting system

Based on the wellness declaration announced in 2012, we have promoted theimprovement of employees’ exercise habits based on a program of Eat-RestWalk-Talk. In regards to the “Eat” aspect, the renovated company cafeteria at
Fuchu regional office offers healthy food choices. In addition, nine of our plants
and offices in Japan offer activities to support daily health development, such as
body composition measurement sessions.

If a safety-related accident occurs, the information is shared with related parties and persons in charge through theaccident reporting system, creating a system which resolves issues and leads to the proposal of measures to prevent
reoccurrence.
In fiscal year 2019, the company commenced operation of TEL Incident Report System (TIRS), a newly developed
accident reporting system, to further improve the accuracy of report content.
Company cafeteria at Fuchu Technology Center
incorporating SDGs colors

37

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201938

Corporate governanceManagementfoundation

Sustainability of a Board of Directors appropriate for resolution of management issues
Based on an effective governance structure that supports improving corporate value over the medium- to long-term,in order for the Board of Directors to fulfill its roles and responsibilities, Tokyo Electron (TEL) is committed to both
assembling talented people with a good balance of knowledge, experience, and skills and ensuring diversity, as well asworking to nurture the next generation of management personnel. In addition, by operating a Board of Directors capableof properly overseeing and evaluating (monitoring) the strategic decision making of the management team responsible
for business execution, TEL is putting effort into maintaining the sustainability of a Board of Directors appropriate forresolving management issues.
Diagram of the corporate governance framework, internal control system, and risk management framework*
CSS: Corporate Senior
Staff

Shareholders' Meeting
Appointment or
dismissal

Appointment or
dismissal

Board of Directors

Audit

Appointment or
dismissal

Audit &
Supervisory Board

Nomination Committee / Compensation Committee

Audit

Independent Auditors
Cooperate

Cooperate
Cooperate

In recent years, the role played by companies has become more important for establishing a sustainable society. Furthermore, in
the area of investment, ESG investment, which emphasizes corporate environmental, social, and governance initiatives, is becoming
mainstream. In these circumstances, companies are required to steadily develop highly effective governance, to build a solidmanagement foundation that forms the basis of business activities, to contribute to solving environmental and social issues, andto creating new value. Tokyo Electron (TEL) is working to further improve its governance system, including a review of the Boardof Directors, and to ensure compliance throughout the Group, recognizing that corporate governance is essential to sustainablegrowth. In regards to the environment, the company is conscious of exacerbation of climate change and abnormal weather, andhas established a new medium- to long-term environmental vision, and is proactively working to reduce the environmental impact
of business activities. In addition, the company is promoting activities in compliance with global standards to achieve sustainable
operations not only within the company, but throughout the supply chain. TEL endeavors to build a strong and sound managementfoundation and aims to further enhance its corporate value.
Medium-term goals (5)Business execution

CSS* & Executive
Officers

Representative
Directors

Audit

Internal Control Executive Officer

Internal Audit Dept.

Risk Management Executive Officer(Global Audit Center)

Compliance Executive Officer

Various committees●

Ethics Committee●

Information Security Committee●

Export Trade Control Committee

Audit

Departments responsible● Risk Management (General Affairs Dept.)●

Build a management foundation for increasing value

Compliance (Compliance Dept.)

Business Execution Organization (All Division / All TEL Group companies)

Priority themes, Main activities

SDGs initiatives■Steadily developing highly effective governance and establishinga solid management base in order to contribute to thedevelopment of society in order to improve corporate value

Governance andcompliance

Human Environmental
rightsmanagement

Supply chain
management■Corporate governanceSupervision and evaluation of strategic decision-making, profit
sharing policy, design and results of director compensation
system, process of effectiveness evaluation of Board of
Directors, management issues■Promoting compliance as an important business strategy, anddeveloping operations in consideration of the environmentand human rights, in order to contribute to the creation of asustainable, fair, and equal society■Risk management ■Compliance ■Respect for human rights■Supply chain management Procurement initiatives■Environmental management
Global warming prevention/energy-saving initiatives, renewableenergy initiatives, water consumption reduction initiatives,
waste reduction initiatives, chemical substance management,
promotion of green procurement■TEL FOR GOOD Social contribution activities

39

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Decent work andeconomic growth

ClimateactionPeace, justice andstrong institutions

Corporate governance framework
TEL adopts the Audit & Supervisory Board System, consisting of a Board of Directors and an Audit & Supervisory Board.
Currently, among the 16 members who attend the Board of Directors meeting, which includes Audit & Supervisory Board
members, there are six outside directors and statutory auditors, including three independent outside directors, and threeoutside Audit & Supervisory Board members. Independent outside directors and outside Audit & Supervisory Board members
express frank opinions from an independent standpoint so that discussions by directors coming from within the company
do not tend toward homogeneity. This guides discussion within the Board of Directors in an appropriate direction so thatthe company can be competitive and succeed globally. TEL believes the lively exchange of opinions arising from proactive
comments by independent outside directors and Audit & Supervisory Board members is the foundation supporting optimal
decisions at TEL’s Board of Directors meetings. The Board of Directors works to achieve sustainable growth and to increase
corporate value over the medium- to long-term based on its fiduciary responsibility to shareholders. Furthermore, it strives toachieve an appropriate sense of productive tension and constructive debate through the presence of executive directors, whopossess diverse experience, knowledge, and achievements, and outside directors, who maintain objectivity.
The Audit & Supervisory Board provides a structure that enables its board members to obtain sufficient informationnecessary for audits by collecting information through on-site surveys conducted by full-time Audit & Supervisory Board
members, and by ensuring appropriate coordination with the Internal Audit Department and Independent Auditors.
Established to ensure fair, effective, and transparent management, the Nomination Committee and the Compensation
Committee support growth-oriented governance for TEL by making proposals to the Board of Directors regarding theelection of candidates for the management team and regarding compensation.

TOKYO ELECTRON SUSTAINABILITY REPORT 201940

Management foundation

Skills and diversity of the president and management teamIn the selection of executive directors, the Nomination Committee emphasizes people with outstanding execution
capabilities backed by experience, knowledge, and achievements as a manager. They must also possess high sensitivity
to all risks and the ability to accurately analyze and judge them. Furthermore, they are required to be able to directly
express their honest opinions in meetings. At the same time, in order to ensure constructive discussion incorporating
diverse backgrounds and expertise, personnel with an in-depth knowledge of all departments are proposed to the Boardof Directors as director candidates, taking into consideration the balance between Sales and Service, Manufacturing, R&D,
and Corporate Administration.
In addition, based on the TEL Succession Plan, we endeavor to nurture successor candidates, in particular from among
executive officers, who will be responsible for the next generation of executive management. Furthermore, through theexecution of daily duties, the CEO and Representative Director assesses successor candidates from various perspectives,
including capability, character, quality, and discernment, and provides constant support for them by arranging
opportunities such as job rotation and training.

Skills and diversity of outside directors
With regards to independent outside directors or outside Audit & Supervisory Board members, they are required toexpress frank opinions from an independent standpoint whereby they can guide discussion within the Board of Directors
in an appropriate direction so that the company can be competitive and succeed globally. In making these selections, TEL
aims to assemble talented people with a balance of knowledge of global business, broad insight into related industries, anextensive network of personal contacts, objectivity from the social, capital market, and other perspectives, knowledge offinance and accounting, broad legal knowledge. In addition to requirements under the Company Act, TEL has establishedseparately specified Independence Requirements to avoid conflicts of interest with general shareholders, and to ensure
the independence of outside directors and outside Audit & Supervisory Board members.

Planning and outcomes of the director compensation system
Compensation Committee
In order to secure transparency and fairness in management and appropriateness of compensation, the company has
established the Compensation Committee, which is composed of three or more directors (excluding representative
directors), including an independent outside director. The Compensation Committee obtains advice from external
experts, and analyzes and compares compensation levels and other details with high-tech companies inside and outside
Japan. Based on this analysis, it makes proposals to the Board of Directors regarding the compensation policy for directors
and executive officers, the most appropriate, globally competitive compensation system for the TEL Group, as well as
individual compensation amounts for the Representative Directors.
Annual performance-linked compensation
In regards to Corporate Director compensation, TEL uses a profit-sharing style method of calculating compensation that
determines the level of annual performance-linked compensation linked to the actual net income attributable to ownersof the parent company. In addition, from fiscal year 2019, TEL has decided to have the Compensation Committee assess
the individual performance of Representative Directors and to reflect this in the individual annual performance-linked
compensation amount.
Medium-term performance-linked compensation
TEL has introduced a medium-term performance-linked compensation system in order to link Corporate Director
compensation amounts to medium-term corporate value improvements. The payout rate varies between 0% and150% according to performance goal achievement levels for the three-year period covered, relative to a base amountcalculated based on the position and responsibilities of each Corporate Director. The consolidated operating margin andconsolidated ROE are used as performance indicators.

Supervision and evaluation of strategic decision-making
The TEL Board of Directors convenes approximately nine times per year by ensuring sufficient time for debate. The
Board of Directors meeting annual schedule is set in an effort to provide sufficient time for debate and to increase theattendance by all directors, including outside directors. In addition, prior explanations are provided to outside directors
and outside Audit & Supervisory Board members in a timely manner from the administrative office. TEL strives to provide
sufficient information to and dialog among independent outside directors and Audit & Supervisory Board members,
and, for example, in regards to matters of particular importance, TEL establishes a venue for dialog with TEL executive
management in advance.

Policies for allocation of earnings
TEL’s basic approach is for appropriate allocation of company earnings to all stakeholders.
TEL’s basic policy of allocation to shareholders is to link dividend payments to business performance on an ongoingbasis for a payout ratio of around 50% based on net income attributable to owners of the parent company.
TEL effectively uses internal capital reserves to raise corporate value through earnings growth by concentrating
investment in high-growth areas and provide returns directly to shareholders by linking dividend payments to businessperformance and earnings. Furthermore, the company flexibly implements share buybacks as part of shareholder returns.

Dividend payout ratio: 50%

Process for evaluating the effectiveness of the Board of Directors and management issues
TEL discusses and evaluates the effectiveness of the Board of Directors every year in accordance with the TEL
Corporate Governance Guidelines. In fiscal year 2019, TEL again conducted a questionnaire of all directors and Audit &Supervisory Board members regarding the effectiveness of the Board of Directors, the Nomination Committee, and theCompensation Committee. In addition to the results of this questionnaire, exchange of opinion and deliberation was
held, mainly among outside directors and outside Audit & Supervisory Board members, which was shared with the whole
Board of Directors in order to evaluate the effectiveness of the Board of Directors. For this questionnaire, in its effort
to obtain highly objective supervisory insight and evaluation, the company seeks perspective and input from external
consultants, and analyzes the results. Issues which became apparent as a result of analysis and evaluation are debatedin depth by the Board of Directors, and efforts are taken to make improvements as appropriate. Based upon this, TEL
believes that the Board of Directors, including the Nomination Committee and Compensation Committee, is functioning
effectively and fulfilling its role as stipulated in the TEL Corporate Governance Guidelines “Establishing management
strategy and vision,” “Making major operational decisions based on strategic direction,” and “Engaging in constructive,
open-minded debate.”
Management issues identified through the process of evaluating effectiveness are discussed at Board of Directors
meetings by Corporate Directors and Audit & Supervisory Board members with a diversity of opinions and experience.
Aside from Board of Directors meetings, separate off-site meetings are also held as an opportunity for focused discussion
away from individual matters for resolution.

Annual DPS of not less than 150 yen
Review dividend policy if the company does
not generate net income for two consecutive
fiscal years.

Off-site meetings are held at outside facilities.

41

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201942

Management foundation

Risk management

ComplianceApproach to risk management

Approach to compliance

Reflecting changes in society and the business environment, the risks facing businesses are growing increasingly complex
and diverse. Tokyo Electron (TEL) considers understanding and appropriately addressing the risks that it may face in its
businesses, as well as their impacts, to be a crucial factor to sustainable corporate growth.

Stakeholder trust is essential to business activities. In order to maintain this trust, it is essential to ensure compliance andenhance corporate ethics continuously. The Fundamental Policies concerning Internal Controls within the Tokyo Electron(TEL) Group and TEL’s Code of Ethics (Code of Ethics) stipulate that all TEL Group executives and employees must comply
with laws and regulations and act with high ethical standards and a strong awareness of compliance.

Risk management system
In order to promote more effective risk management, TEL carries out enterprise risk management through a bodyestablished within the General Affairs Department at its headquarters. This body supervises risk management, analyzing
a wide range of risks arising in business activities (such as compliance risk, human resource and labor risk, and business
continuity risks) to identify key risks. It then monitors the management of these risks by the respective departments
responsible and supports their risk management activities. The status of these activities is regularly reported to the Boardof Directors and the Audit & Supervisory Board.

Auditing by the internal audit department
The Global Audit Center serves as the internal audit department for the entire Group and implements audits based on theaudit plan. Based on the results of these audits, the Center then gives instructions for making improvements as needed,follows up on progress toward these improvements and provides support. The Group’s internal control over financial
reporting in fiscal year 2019 was evaluated as effective by the independent auditors.

Risk management initiatives
Each year, we set priority management targets and strive to steadily reduce risk. In fiscal year 2019, we reinforced
measures in the following areas.
Compliance
We appointed people responsible for compliance at key overseas bases and established a system whereby they report the
progress of compliance-related activities to the Group headquarters each month. In addition, compliance risk audits are
conducted through systematic visits to overseas subsidiaries.
Business Continuity Plans (BCPs)
TEL is improving its plans based on lessons from past disasters and is surveying the earthquake risks at its overseas
locations. We are also working, on an ongoing basis, to establish alternate production structures within our network andto develop multiple sources of important parts.
Mental health, long work hours, and harassment
TEL carries out mental health-related measures based on employee stress checks and multiple seminars aimed at helping
managers look after their employees. In addition, we have introduced a mechanism to monitor excessive work hours that lead tohealth risks. TEL also holds harassment prevention seminars led by lawyers.
Management of confidential information
The Human Resources Department and the Intellectual Property Department cooperate to strengthen measures toprevent leaks of confidential information, particularly targeting employees who leave the company to ensure the proper
return and destruction of confidential information.

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TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Compliance systems and initiatives
Compliance system
TEL has built a structure to implement its compliance program globally. Under the head of the Legal, Compliance Division,
compliance representatives have been newly appointed at major overseas bases to create a system for direct reporting
through the chain of command to the Legal, Compliance Division. The company has restructured its compliance system.
Specifically, compliance-related issues are immediately reported by the head of the Legal, Compliance Division to theCEO, Board of Directors, and the Audit & Supervisory Board so that they can be addressed quickly and effectively.
Corporate ethics
TEL has established the Code of Ethics as a standard of conduct by which employees and executives should abide.
To ensure awareness of this code, we distribute it in the form of booklets in Japanese and four other languages to all
employees. TEL revises its Code of Ethics as needed, in response to changes to external and internal conditions. In
addition, an Ethics Committee has been established to support and supervise the activities of Group companies inJapan and overseas aimed at more effectively promoting and raising awareness of compliance and corporate ethics.
Furthermore, directors, officers, and senior executives sign an oath to uphold the Code of Ethics and comply withcorruption-related laws every year.
Compliance regulations
Based on its Code of Ethics, each Group company in Japan and abroad has established its own compliance regulations
to ensure that every individual taking part in the business activities of the Group clearly understands the pertinent laws,
regulations and internal company rules, and consistently apply these in all of their activities.
Compliance education
TEL conducts online education and face-to-face training on topics including
corporate ethics and the basics of compliance, export compliance, insider
trading prevention, the Act for Subcontracting, and the prevention ofharassment. Depending on the topic, this education is implemented for specificlevels or across the board. We also implement ongoing testing to check thedegree of understanding among employees. From fiscal year 2020, we will
deploy a more comprehensive, systematic education program, advancing
multilingual support in an effort to foster compliance awareness and reinforce
behavior-oriented awareness-building activities among all Group employees.

Percentage of employees who havereceived web-based training

99.2%

Internal reporting system
As a means for employees to provide information outside the chain of command about behavior that may be in violationof laws or corporate ethics, we have established a hotline (organized around the tenets of confidentiality, anonymity, andprohibition of retribution) to receive internal reports. In addition, we established an external contact point for employees
and another contact point specifically for suppliers and third parties. Each overseas location has its own internal reporting
hotline, and we are building a unified internal reporting system for all overseas bases.
As a result of these initiatives, in fiscal year 2019, there were no reports or cases of noncompliance with laws,
regulations, or the Code of Ethics that could have had a material impact on the TEL Group’s business or local
communities.

TOKYO ELECTRON SUSTAINABILITY REPORT 201944

Management foundation

Respect for human rights

Supply chain management

Approach to human rights

Supply chain principles and system

Conscious of its corporate social responsibility, Tokyo Electron (TEL) recognizes that it is important to conduct itself witha strong sense of integrity. Based on this recognition, TEL has firmly upheld human rights since its founding as reflectedin the spirit of its Corporate Philosophy and Management Policies. For TEL, respecting human rights means a significant
undertaking, not only to fulfill its responsibility for eliminating adverse impacts on people caused through businessactivities, but to respect those people who support the company’s business activities, and contribute to the realization ofa sustainable dream-inspiring society. TEL incorporates the concept of respect into every aspect of its business activities,
and strives to nurture a dynamic corporate culture where each person can realize his or her full potential.
Commitment
In fiscal year 2018, TEL published its Human Rights Policy, summarizing the company’s approach to human rights inbusiness. TEL has specified the human rights it believes are particularly important in business activities as Freedom;
Equality & Non-Discrimination; Freely Chosen Employment; Product Safety & Workplace Health and Safety; Freedomof Association; and Appropriate Working Hours & Breaks/Holidays/Vacations. In preparing the Human Rights Policy, thecompany referred to the United Nations’ Guiding Principles on Business and Human Rights in addition to the International
Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work which are referred to therein.
Additionally, in order to understand the demands of the times and human rights issues in the industry, the company also
refers to the Ten Principles of the UN Global Compact and the Responsible Business Alliance (RBA)* Code of Conduct.
Awareness and education
TEL is implementing on-site efforts to communicate principles relating tohuman rights not only within the company, but also with its suppliers. In fiscal
year 2019, TEL also implemented a human rights e-learning program targeting
all TEL executives and employees.

Participation inhuman rights training

100%

Impact assessment and remediation (Human rights due diligence)
TEL is currently identifying and evaluating risks and impacts relating to human rights and, based on the results,
is promoting corrective action aimed at eliminating those risks. Within the company, it utilizes self-assessment
questionnaire (SAQ) based on the RBA Code of Conduct and, for suppliers conducts a CSR survey in order to evaluate
human rights risks throughout the value chain. It analyzes and evaluates the results of these surveys conducted once per
year, and implements corrective action as required. By continuing the impact assessment and remediation process in the
future, the company will eliminate medium- to long-term human rights risks, leading to the creation of opportunities.
Grievance mechanism
TEL has constructed a framework for impact assessment and remediation, and is striving to establish an effective
business-level grievance mechanism. To date, the company has established hotlines in Japan and overseas for employees
and suppliers, and it continues to develop initiatives for grievance mechanism in-house and in the supply chain.

Awareness and education

Commitment

Promote respect for
Impact assessment and remediation

Grievance mechanism

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TOKYO ELECTRON SUSTAINABILITY REPORT 2019

human rights initiatives*
Responsible Business
Alliance (RBA): The
RBA establishes a setof standards for supply
chains in the electronics
industry for a safe labor
environment, to ensurethat workers are treatedwith respect and dignity,
and that companies
take responsibility forenvironmental impact
in the manufacturing
process.

Procurement principles and system
The high-value manufacturing that Tokyo Electron (TEL) strives for is based on the functions of all materials andcomponents that make up the products and the pursuit of high quality. TEL values communications with suppliers andseek to grow manufacturing on a global scale with its suppliers based on ongoing trusting relationships.
TEL engages in procurement activities in line with a procurement policy which the company formulated based on thelaws, regulations, and social norms of each country as well as the RBA Code of Conduct, and which it has disseminatedinternally and to its suppliers. Under the leadership of the TEL Representative Director, President & CEO as the top of
the procurement system, issues identified during procurement activities are shared with the manufacturing company
presidents’ council and the purchasing department manager council for consideration of specific improvements.

Procurement initiatives
CSR procurement
With an aim of keeping track of its suppliers’ engagement in CSR activities, TEL has conducted a CSR Survey since fiscal year 2014.
The survey is in accordance with the RBA Code of Conduct. TEL analyzes the responses and provides feedback to suppliers inan effort to build on improvements. In fiscal year 2019, the company made extensive revisions to the survey content based on
auditing standards stipulated by the RBA and implemented the survey targeting materials suppliers,1 from which the company
procures parts and raw materials for products.
According to the survey results, no suppliers were engaged in any of the practices given particular emphasis in the RBA codeof conduct, namely child labor, forced labor, bonded labor, inhumane treatment, false reports, falsification of records, or bribery.
Neither were any suppliers of a sufficient size2 to be considered high risk in terms of compliance.
Furthermore, from fiscal year 2019, the company has begun surveying staffing and logistics suppliers, focusing on major
logistics/customs clearance operators.

1
Suppliers accounting for
more than 80% of TEL’s
procurement spend
2
500 employees or more

Supply chain CSR process
STEP 1

STEP 2

STEP 3

Appeal for CSR activities
to suppliers

Supply chain
CSR assessment

Provision of feedback
based on the results, andrequest for improvements

Responsible procurement of minerals (conflict minerals)
TEL regards taking action against conflict minerals (3TG)3 obtained through illegal exploitation, including sources
with human rights violations or poor working conditions, an important part of corporate social responsibility. The
company’s resolute goal is to eliminate the use of raw materials made from these conflict minerals as well as any parts orcomponents containing them.
In fiscal year 2019, TEL conducted its fifth annual survey on countries of origin and smelters of potential conflictminerals, using the reporting template (CMRT)4 developed by the RMI.5 As a result, TEL identified 253 RMAP6 conformant
smelters, providing the company confidence that 3TG sourced from these smelters were conflict-free. None of thematerials procured were found to contain conflict-affected 3TG.
Procurement BCP
As part of its Business continuity plans (BCP), TEL collaborates with suppliers for disaster preparation. The company
maintains a database of suppliers’ production sites so that if a crisis arises, it can promptly identify impacted suppliers
and quickly collaborate in recovery efforts. During fiscal year 2019, about 18,000 supplier sites were registered, andpost‑disaster impact surveys were conducted seven times.
In addition, for key suppliers accounting for more than 80% of the TEL’s procurement spend, it conducts a BCP survey,
analyzes their responses, and gives the results to suppliers as feedback to promote further improvement. In the fiscal year
2019 survey, improvements in overall rating level were observed at 19% of suppliers and improvements in the overall raw
score were seen at 42%.

3
3TG: Tantalum, tin,tungsten, and gold
4
CMRT: Conflict Minerals
Reporting Template
5
RMI (Remote Method
Invocation): An
organization that
inspects 3TG smelters tocertify they do not haveconflict minerals
6
RMAP (Responsible
Minerals Assurance
Process): A program
promoted and led by the
RMI for auditing smelters/
refiners that do not use
conflict minerals

TOKYO ELECTRON SUSTAINABILITY REPORT 201946

Management foundation

Environmental management
Environmental management system

Initiatives to reduce water consumption

To continuously improve its environmental activities, Tokyo Electron (TEL) has operated an environmental management
system based on ISO 14001 since 1997, primarily at its manufacturing subsidiaries. In March 2017, TEL acquired multisite ISO 14001 certification for its factories and offices in Japan that had previously acquired certification separately.
Coinciding with the multi-site certification, the company has developed a standardized Group format for environmental
impact assessments, the identification of useful environmental aspects, environmental management programs, andinternal audit checklists. During fiscal year 2019, TEL established approximately 100 environmental goals for different
levels across the entire company and carried out these improvement activities. Progress of activities and compliancewith laws and regulations are confirmed through internal audits and third-party audits. The issues identified throughthese activities are reviewed by the EHS Council, reported to the Manufacturing Company Presidents’ Council, and used inpromoting environmental activities across the entire TEL Group. Under such a management system, fiscal year 2019 wasagain free from environmental incidents, accidents, violations, and associated legal proceedings.

With the growing importance of water resource preservation in global environmental initiatives, TEL Group has
established a goal of keeping water consumption at the same level or below that of the baseline year (fiscal year 2012
for factories and offices in Japan and a fiscal year of their choosing for each overseas operation). TEL’s ongoing efforts
to achieve these goals include reusing pure water from its manufacturing operations, installing water-saving devices,
watering lawns with rainwater, and implementing the intermittent operation of cafeteria faucets.
During fiscal year 2019, an increase in its volume of production and an increase in water consumption associated withproduct development and evaluation resulted in water consumption of 1,240,000 m3, up 8% year-over-year. Moreover,
TEL achieves 12 of the 14 goals at its sites worldwide. It also discharged an estimated 905,000 m3 of wastewater.
■Example initiative
In construction of the new development building completed at Tokyo Electron Miyagi in October 2018 (Development
Building No. 2), facilities were installed to reuse water which is conventionally disposed of as sewage after processing to
remove harmful substances. These water reuse facilities are also able to reuse wastewater from the existing developmentbuilding. As a result, they expect to reuse approximately 15,000 m3 of water annually.

ISO 14001 certified factories and offices
Company nameFactory/Office nameTokyo Electron

EHS Promotion Center (Fuchu Technology Center)

Tokyo Electron Technology Solutions

Yamanashi Office (Fujii/Hosaka) Tohoku Office

Tokyo Electron Kyushu

Koshi/Ozu Office

Tokyo Electron Miyagi

Taiwa Office

Certification date

Initiatives to reduce waste

May 1998

Tokyo Electron (Kunshan)—

March 2013

TEL FSI—

March 2013

Tokyo Electron Korea

Balan Factory

July 2014

TEL Epion—

May 2018

99.2%

Initiatives to prevent global warming and save energy
Each TEL plant and office has an established goal of reducing energy consumption by at least 1% year-over-year.
Initiatives to achieve this goal include energy-saving cleanroom operation, appropriate temperature settings for officecooling and heating, the introduction of highly energy-efficient equipment, and the adoption of renewable energies.
As a result of these initiatives, in fiscal year 2019, TEL reduced energy consumption per unit sales at its plants and offices by 5%
year-over-year. However, an increase in its volume of production and an increase in energy consumption associated with productdevelopment and evaluation resulted in power consumption of 306 GWh in fiscal year 2019, up 8% year-over-year; and energyderived CO2 emissions* of 159 kilotons, up 5% year-over-year. Based on the correlation between business operations and energyuse, TEL changed to an appropriate metric at plants and offices in Japan, and standardized it across the company. Specifically,
the company adopted a metric calculated using a complex weighting of data from each area on the number of evaluation units
used in development, the number of units produced, total floor area and staff-hours. Of all 11 of its plants and offices, both thoseoverseas plus those in Japan that had set goals based on this method, goals were achieved at five of them.
■Example initiative 1
When Tokyo Electron Kyushu produces pure water, it was heating the water first, using a gas boiler, because the watertemperature was too low. Then, after the pure water had been used, it was disposed of while the temperature wasstill high. Using heat exchange between the two types of water enabled the elimination of the addition of heat before
preparation of pure water, whereby it was possible to reduce the volume of boiler gas use by 70% or more.
■Example initiative 2Tokyo Electron Miyagi is reusing waste oil from the staff cafeteria to produce biofuel, equivalent to approximately 500
kg/month in terms of CO2. In the future, they plan to use the biofuel produced in company cars.
Renewable energy initiatives
TEL promotes the use of renewable energies. At the Tokyo Electron Miyagi (Taiwa) and Tokyo Electron Technology
Solutions (Yamanashi), renewable energy generated from solar panels is used to power the factories, and monitors
displaying their energy profile have been set up at the entrances to the factories. At its Tokyo Electron Kyushu (Koshi),
generated energy is sold, helping to prevent global warming. In fiscal year 2019, TEL generated a total of 4,392 MWhof renewable energy in Japan. In addition, Tokyo Electron U.S. Holdings has continued to purchase green power, 3,834
MWh in fiscal year 2019.

47

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

In an effort to curb the amount of waste generated and to recycle it wherever
possible, TEL Group promotes initiatives for reducing waste. In addition
to participating in the electronic manifest system1 to ensure proper waste
management, TEL is also engaged in maintaining an appropriate amountof parts inventory and in reusing cushioning material. The company is also
Recycling rateachieving lower waste processing costs, by promoting waste sorting activities
and by modifying and increasing the capacity of space used for storing
waste so as to reduce the frequency that it is collected. In fiscal year 2019,the company conducted checks of waste disposal operators in Japan using aunified on-site checklist and shared the results. In fiscal year 2019, TEL generated 116 tons of incinerated and landfill waste
in Japan. As a result of its waste-reduction initiatives, the recycling rate2 at sites in Japan in fiscal year 2019 was 99.2%,
achieving its goal of maintaining a recycling rate of 97% or higher for the 13th consecutive year since fiscal year 2007. The
company has also maintained a high level of recycling at its overseas factories and offices of 90.0%.
■Example initiative 1
Tokyo Electron Taiwan revised its method of disposing sludge, which had been processed as landfill, to recycle it asmaterial for cement, thereby increasing the base’s recycling rate to 99%. Furthermore, the revision allowed them tosignificantly reduce the processing cost.
■Example initiative 2
As one aspect of reducing waste, the company is also proactively working to reduce the amount of copier paper used.
Some factories and offices are switching from using paper to tablets for viewing and checking procedures and plans
used at manufacturing sites. As a result of this initiative, the company not only reduced the amount of paper used, it also
expects to reduce the environmental burden and cost of toner, shredder, and paper disposal.

*
In calculating CO2
emissions, the emission
factor for TEL’s
electricity consumption
in Japan in fiscal year
2019 was substituted
by adjusted emission
factors for the electrical
power providers
concerned. The emission
factor for TEL’s overseas
electricity consumption
was substituted byestimated factors
calculated by theFederation of ElectricPower Companies
of Japan-based onvalues published by theInternational Energy
Agency (IEA)

1Electronic manifest
system: A system forelectronically tracking
the flow of industrial
waste instead of using
paper-based manifests(i.e. paper forms for
tracking industrial
waste). The system
uses a communications
network of dataprocessing centers,
businesses thatgenerate waste, andwaste collection/
disposal companies.
2
Recycling rate:(Recycled amount/
Amount of waste
generated) x 100

Management of chemical substances
TEL uses chemical substances in its product development and manufacturing phases. The use and release of chemical substances
subject to the Japanese PRTR3 law are constantly monitored and managed. Whenever TEL introduces a new chemical substanceor change the way an existing substance is used, the company checks for environmental, health, and safety risks beforehand.
It disposes of substances properly after use, either through expert waste disposal contractors or by using in-house processing
equipment. In response to the Act on Rational Use and Proper Management of Fluorocarbons, TEL conducts simple, regularinspections based on the law in an effort to monitor the amount of fluorocarbons used and recovered. During fiscal year 2019, no
TEL factories or offices exceeded the level of fluorocarbon leakage that requires reporting.

3
PRTR (Pollutant Release
and Transfer Register):A framework for
tracking, tabulating, anddisclosing quantitative
data on chemical
substances that may
be hazardous tohuman health and theecosystem, including
the amounts used anddischarged into theenvironment and theamounts transferred(as part of waste) off
the original business’s
premises

TOKYO ELECTRON SUSTAINABILITY REPORT 201948

Social contribution activities
Initiatives around the world

Approach to social contribution
The social contribution activities of Tokyo Electron (TEL) aim to contribute to the development of local communities and the resolution ofsocial issues through various initiatives while deepening relationships of trust with all stakeholders. With Innovation and Technology, Education,

Japan

Science Intercollegiate

U.S.

SEMI High Tech U

Environment, and Community Involvement as its four focus areas, TEL conducts activities according to the United Nations SDGs.
Science Intercollegiate is an eventfor university and technical college
students to present findings of theirown research. TEL has been a featured
sponsor since the first competition. In
providing an opportunity to present
their research, the event aims tomotivate students to undertake
research and to foster richly creative
scientists and engineers. The 8th
Science Intercollegiate was held at Rikkyo University on March 2–3, 2019, bringing
the total number of students presenting their research to more than 1,850 since theevent’s inception.

4 focus areas and relevant SDGs

EuropeInnovation andTechnology

Education

Environment

Community
involvement

Tokyo Electron Europe has participatedin corporate partnership activities
with educational institutions forfive consecutive years since 2015.
Through to April 2019, TEL has provided
opportunities for 360 teenagers toparticipate in the program, learning
about science and the semiconductor
industry while having fun. It was acomprehensive program, where TEL’s periodic table was distributed to participants,
and finally, a graduation ceremony was held.

Japan

TEL FOR GOOD is the new brand name that represents TEL’s social contribution activities.
From fiscal year 2019, we are using it as a collective term for social contribution events andvarious programs, donations and volunteer activities sponsored by our company aroundthe world.

Special Topics

Support for areas affected by torrential rain in western Japan in July 2018 and the Hokkaido Eastern Iburi
Earthquake
The number of victims resulting from torrential rain that
occurred in western Japan in July 2018 was the largest
recorded of all torrential rain disasters for the Heisei era(1989-2019).
In addition, the Hokkaido Eastern Iburi Earthquakethat occurred in September of the same year, caused alarge amount of damage, and much time is being spent
in recovery efforts.
TEL sincerely hopes that the areas affected can realize
a quick recovery, and made relief donations to this end.

49

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Corporate partnership activities with educational
institutions

Afforestation activities for groundwater recharge

Approximately 80% of Kumamoto
Prefecture’s water supply resources areunderground. For Kumamoto City inparticular, because 100% of the waterworks
are supplied by groundwater, preservationof groundwater is an important activity
for securing future water resources. Since
2006, Tokyo Electron Kyushu has beenworking on broadleaf afforestation suited
to groundwater recharge in Nishihara
Village, in the outer rim of southern Mount Aso. Up to March 2019, 2,800 employees andfamily members have planted a total of 4.2 ha with 13,800 trees.

Japan

Earthquake memorial event

Since 2013, Miyagi Prefecture andKahoku Shimpo Publishing Co. have held
the 3.11 Earthquake Memorial Event toencourage the prefecture’s citizens tomove on with positivity without letting
the memory of the 2011 Great East
Japan Earthquake fade. Endorsing theobjective of the event, Tokyo Electron
Miyagi has been sponsoring it since 2016.
The event featured a cheering performance by the Miyagi Recovery Cheering Squad incollaboration with local children, and a concert by a local singer.

As an official Certified Partner of SEMIHigh Tech U, Tokyo Electron America(TEA) participates by dispatching
instructors to this three-day programthat teaches STEM* skills to high school
students who seek to pursue high-tech
careers. TEA believes that linking STEM
to real-world applications at SEMI HighTech U makes learning more enjoyable for students and contributes to their growth.
* STEM: General name for the educational category of Science, Technology, Engineering, andMathematics

China

TEL Fudan ScholarshipTokyo Electron established the TEL
Fudan Scholarship Program at the
School of Microelectronics at Fudan
University in order to nurture humanresources and to raise technicalstandards within China. In 2018, the first
award ceremony was held at the school.
Six students were presented withscholarships and honorary certificates,and shared their research and accomplishments. Tokyo Electron Shanghai has further
expanded research projects with Fudan University, and building on their friendly
relations, is working to nurture even more talented graduates.

TaiwanBeach cleanup for preserving a beautiful coastline

In June 2017, Tokyo Electron Taiwan
held a charity event to coincide with its
beach cleanup in Hsinchu City, pledging
to make a donation proportionate to
the number of participants and thevolume of waste collected. On the dayof the event, many ordinary residents
who happened to be at the beach joinedwith the more than 150 employees
and volunteers, collecting over 300 kg of waste. This resulted in a donation of TWD
450,000, which was given to the National Nantou Special School.

Japan

Food Bank Yamanashi, an authorized non-profit
organization

Since 2015, as part of its “Community
Involvement” activities, Tokyo Electron
Technology Solutions Yamanashi
Regional Office has been participating in
the activities of Food Bank Yamanashi,
an authorized non-profit organizationthat delivers food items to families withchildren in need of assistance. During
summer and winter school holidays,
the office donates food items fromthe employees, with a matching gift of an equivalent amount of money from thecompany. This endeavor is ongoing.

TOKYO ELECTRON SUSTAINABILITY REPORT 201950

Performance summary: Social
Composition of employees

Employee retention (Japan)
FY2015FY2018FY2019FY2015

10,306

10,92011,696

12,469

Japan

6,853

6,737

6,967

7,268

7,526

Rest of Asia

1,386

1,543

1,850

2,218

2,832

670

440

448

492

513

1,622

1,586

1,655

1,718

1,598

Europe and Middle East
North America

FY2015

Employees(Employment type/Japan)

FY2017

10,531

Number of employees

Regular employees(Region/Group)

FY2016FY2016FY2017FY2018

7,166

7,060

7,288

7,516

7,797

6,853

6,737

6,967

7,268

7,526

Men

5,982

5,874

6,079

6,292

6,479

Women

871

863

888

976

1,047

313

323

321

248

271

Men

183

201

209

181

220

Women

130

122

112

67

51

Recruitment/employment (Japan)

New graduates hired

72

167

199

72

163

198

Men

65

20

70

131

166

Women

8

4

2

32

32

30–49 yrs old

0

1

0

4

1

0

1

0

4

1

0

0
0

0
0

0

0

0

0

0

0

0

0

0

Men
Women
30–49 yrs old

11.0
62

16.0
66

2.8
279

19.2
262

11

17

102

102

85

3

13

85

85

67

8
45

4
47

17
170

17
156

18

29

31

155

135

119

Women

16

16

15

21

26

Over 50 yrs old

6

2

7

4

9

Men
Women
Percentage of women

4
2
41.9

2
0
30.3

6
1
11.8

3
1
14.9

4

2.00

1.96

2.13

2.22

2.18

1.94

1.98

1.98

1.91

2.04

Number of people

32

39

42

20*

22*

Percentage

1.3

1.5

1.6

1.8*

2*

Men

74
74

101
98

125
123

156
155

201

0

3

2

1

5

49

34

31

30

Men

59

43

30

30

28

Women

10

6

4

1

2

Percentage of regular employees who received regularperformance and career evaluations

100.0

100.0

100.0

100.0

100.0

* Grade resetting through global human resources system

51

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

92.9

93.4

93.0

94.1

94.1

94.3

93.5

90.2

85.2

87.1

88.0

17 yrs. 1 mos.

17 yrs. 1 mos.

17 yrs. 2 mos.

Men

16 yrs. 6 mos.

17 yrs. 2 mos.

17 yrs. 4 mos.

17 yrs. 4 mos.

17 yrs. 5 mos.

Women

15 yrs. 3 mos.

16 yrs. 0 mos.

15 yrs. 5 mos.

15 yrs. 7 mos.

15 yrs. 8 mos.

198

131

102

103

108

Men

164

94

82

82

88

Women

34

37

20

21

20

2.7

1.8

1.4

1.4

1.4

64.3

67.2

Number of those who took leave

1,285

1,045

586

639

605

Men

1,091

926

499

556

507

Women

194

119

87

83

98

Number of those who took leave

192

172

179

180

155

Number of those who took leave

52

42

44

41

56

3

2

2

4

8

49
(94.5)

40(93.3)

42(95.7)

37(93.2)

48(100.0)

46

46

44

44

43

2

1

2

6

6

Women (percentage who
took leave)
Number of those who returned
to work after leave

44

45

42

38

37

Percentage reinstated

88.5

85.2

93.6

93.6

93.5

Retention rate

94.3

91.3

95.7

90.0

88.9

Number of those who used

183

188

170

176

153

Men

11

13

23

24

8

Women

172

175

147

152

145

460

453

464

455

517

Men

246

245

263

281

334

Women

214

208

201

174

183

96

103

106

120

129

Men

24

15

16

19

26

Women

72

88

90

101

103

2

0

2

3

5

Men

0

0

1

2

2

Women

2

0

1

1

3

20

31

50

47

63

Number of those who took leave

Extended nursing care leave

Number of those who took leave

Short nursing care leave

Men

11

10

31

25

38

Women

9

21

19

22

25

1

0

0

0

2

Men

1

0

0

0

0

Women

0

0

0

0

2

Number of those who used

Shorter working hour system
for nursing care

FY201964.1

Number of those who took leave

Childcare support leave

FY2018

62.6

Number of those who used

Leave to care for a sick/injured child

FY2017

61.8

Women

Shorter working hour system

FY2016

Take-up rate

Men

196

69

Women
Number of users

Childcare leave

20.1

Percentage hired (Group)

93.6

95.0

17 yrs. 0 mos.

Men

5

Percentage hired (TEL)

Number of users

Paternity leave

145

Men

94.2

FY2015
Annual paid leave

16.1
239

FY2019Work-life balance (Japan)

00FY2018* Average in recent five years

0

Women

Under 30 yrs old

Second career support system

0

0

Men

Number hired

Reemployment system

0

FY2017

90.3

Turnover percentage

FY201924

Percentage of women

Female managers (Group)

FY201825

Over 50 yrs old

Employees with disabilities

FY201773

Women

Career-track recruits

FY201673

Men

Turnover

FY2016

16 yrs. 4 mos.

Women
Average service years

Refreshment leave

FY2015
Under 30 yrs old

Employee retention

FY2019Regular employees

Number hired

Men

Employee turnover

Number of employees

Non-regular employees

Retention after three years of
joining TEL*

SafetyFY2015FY2016FY2017FY2018FY2019Percentage of employees who received training on basic safety

100

100

100

100

100

Percentage of employees who received training on advanced safety

100

100

100

100

100

Lost time incident rate (LTIR)

0.53

0.42

0.46

0.77

0.40

Number of workplace injuries per 200,000 work hours (TCIR)

0.24

0.21

0.28

0.38

0.20

TOKYO ELECTRON SUSTAINABILITY REPORT 201952

Performance summary: Social

Performance summary: Environment
The scope for calculating environmental data is the Tokyo Electron Group (34 consolidated subsidiaries).

Products/Innovation

Within Japan: Tokyo Electron Ltd. and six consolidated subsidiaries (including Tokyo Electron Technology Solutions Ltd., Tokyo Electron Kyushu Ltd., Tokyo
FY2015FY2016FY2017FY2018

Electron Miyagi Ltd., and Tokyo Electron FE Ltd.)FY2019Overseas: 27 consolidated subsidiaries (including Tokyo Electron America, Inc., Tokyo Electron Europe Ltd., Tokyo Electron Korea Ltd., Tokyo Electron Taiwan Ltd.,

Total number of incidents of non-compliance withregulations and voluntary codes concerning the health andsafety impacts of products and services

0

0

0

0

0

Number of active issued patents

Active issued patents (country)

16,421

16,30016,023

16,767

17,473

Japan

5,288

5,172

4,984

5,091

5,304

North America

4,326

4,361

4,224

4,321

4,415

Scope

Europe

354

241

199

185

179

Korea

2,847

2,784

2,672

2,864

3,076

Emissions metric (sales)(t-CO2/billion yen)

2.61

2.22

1.77

1.34

1.24

Emissions (kt-CO2)

160

148

141

152

159

Japan

126

115

110

119

127

Overseas

35

33

31

33

32

Scope 11 emissions (kt-CO2)

10

8

8

9

9

Japan, energy-derived

7

6

6

7

7

Overseas, energy-derived

3

2

2

2

2

Scope 22 emissions (kt-CO2)

Taiwan

1,983

2,131

2,387

2,675

2,817

China

1,623

1,611

1,557

1,631

1,682

CY2013*Global patent application rate
Patent application success rate

Tokyo Electron (Shanghai) Ltd., and Tokyo Electron Singapore Pte. Ltd.)Japan
North America

CY2014*

CY2015*

CY2016*

Greenhouse gas consumption/emissions

CO2 from energy consumption

CY2017*

69.5

68.0

70.0

76.1

81.2

74.0

78.0

66.5

71.5

82.9

62.8

71.2

72.3

78.0

85.1

* Calendar year when patents were filed/granted

CO2 by scope

Customers
FY2015Percentage of customers who said they were satisfied in thecustomer satisfaction survey

FY201680.5

FY201781.1

FY201882.6

FY201981.2

85.3

Governance
FY2015
Total number of critical incidents notified to Board of Directors

FY2016—

Total number of incidents subject to legal action on thebasis of anti-competitive conduct, anti-trust activity,
or monopolistic practices where the governance body’s
involvement was revealed
Number of executive officers who received training on anticorruption*
Total number (percentage) of directors who provided
instructions on the body’s policies and procedures in relation
to anti-corruption*

FY2017—0

FY20181

0

FY201900Non-energy-derived
greenhouse gas
0

0

—

12

13

0

—

—

11
(100)

12
(100)

12
(100)

Total number (percentage) of directors who received training
on anti-corruption*——

9(81.8)

9(75.0)

0(0.0)

Payment to industry groups, etc. (thousand yen)

—

—

—

16,616

17,374

Payment to politically affiliated organizations (yen)

—

—

—

0

0

Average tenure of directors

—

—

—

8.04

7,36

Average rate of attendance for board meetings

—

—

—

99.46

98,24

Percentage of employees who have received web-based
training on business ethics and compliance*
Percentage of employees who have consented to theinformation security agreement
Significant fines and non-monetary sanctions for noncompliancewith laws and regulations in the social and economic area

99.7

98.4

FY2018
98.0

140

133

143

150

109

104

112

120

Overseas

31

30

29

31

30

Scope 33 emissions (kt-CO2)

3,566

3,491

4,028

5,855

6,467

Emissions (kt-CO2e) (Japan)

22

33

28

26

47

HFCs

2

1

3

3

3

PFCs

6

8

8

11

18

SF6

14

17

9

4

11

Other

0.01

6

8

8

15

10

12

9

8

15

Resource consumption

denotes data with third-party assurance.

FY2015Scope

FY201999.4

Japan*
99.2
Water

100

99.9

0

99.9

0

99.9

0

100.0

0

0
* Scope: Japan

Procurement

Copier paper

FY2016FY2015FY2016—FY2017100

FY2018100

FY2018FY2019

1,546

1,076

1,055

1,143

1,240

1,043

896

861

966

1,054

Groundwater

403

314

251

359

363

Tap water

416

368

385

387

422

Industrial water

224

214

225

220

269

Overseas

503

180

194

177

186

Use (t) (Japan)

162

128

157

194

165

FY2019100

100

Rate of improvement after supply chain CSR assessment(including green procurement survey from fiscal year 2016)

25.3

33.8

16.9

20.7

Unable to compare with previous
fiscal year due to comprehensive
revisions, including the survey

Rate of improvement after supply chain BCP assessment

41.2

26.5

32.3

21.2

19.4

Number of identified RMAP conformant smelters

117

204

237

249

253

CO2 emissions from energy consumption

Water consumption(kt-CO2)(thousand m3)

126

115

127

119

110

1,043
403

Social contribution
FY2015FY2016FY2017FY2018FY2019

35

184

277

242

238

281

Charity donations (providing donations/relief
supplies to charity organizations)

2

14

17

13

11

Community investment (charitable expenses
for long-term cause for community)

47

52

43

49

55

Spending on social contribution (million yen)

Commercial initiatives (charitable expenses
with anticipated effects on business growth)

53

FY2017* With regard to water consumption in Japan, past figures have been revised based on the actual situation.

Percentage of new important suppliers screened using social criteria

Cash donations
breakdown

FY2019119

Consumption (thousand m3)

FY2017FY20181
Scope 1: Direct GHG emissions from use of fuel and gas owned or controlled by TEL.
Calculation method: Emissions = Σ (fuel consumed ×CO2 emission factor)
Emission factor based on Japan’s Act on Promotion of Global Warming Countermeasures2
Scope 2: Indirect GHG emissions from use of electricity purchased by TEL.
Calculation method: Emissions = Σ (purchased electricity × CO2 emission factor)
Adjusted emission factors for the electrical power providers concerned based on Japan’s Act on Promotion of Global Warming Countermeasures were used as the emission factor for Japan
Estimated factors calculated by The Federation of Electric Power Companies of Japan based on values published by the International Energy Agency (IEA) were used as the emission factor for overseas electricity
consumption
3
Scope 3: Emissions from corporate value chains (excluding scope 1 and 2 emissions), such as product transportation, employee business travel, and major outsourced production processes.
The entire scope is divided into 15 categories, of which calculations were made for categories 1, 2, 3, 4, 5, 6, 7, 9, 11, and 12. Calculations for categories 8, 10, 13, 14, and 15 were not made as they are either not included in TEL’s
activities, or have already been included in other categories.
4
Scope 1: Non-energy-derived CO2 and greenhouse gases other than CO2.
Calculation method: Emissions = Σ (consumption ×emission per unit consumption – amount recovered/properly treated)

Compliance
FY2016FY2017151* Scope: Japan

FY2015FY2016

Japan

Scope 14 emissions (kt-CO2e)0—denotes data with third-party assurance.

FY2015

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

33

31

33

416

32

503

Japan

2016
Overseas

2017

2018

2019

(FY)

251

368

385

180

2015

2016

Industrial water (Japan)

225

1,054

966

861

314

214

224
2015

896

363

359
387

194

220

2017
Tap water (Japan)

422

177
2018

269

186
2019

(FY)

Groundwater (Japan)

Overseas use
51

34

40

38

34

TOKYO ELECTRON SUSTAINABILITY REPORT 201954

Performance summary: Environment
Energy consumption/generation

Amount of waste generated
FY2015

Scope
Consumption metric(energy consumption/sales)(kL/billion yen)Consumption (crude oil
equivalent) (kL)

Energy0.66

0.63

73,421

67,49967,45775,03380,91854,97352,002

52,676

59,613

Overseas

18,44815,497

14,781

15,42015,161

274,368

254,201

253,300

282,274

305,795

Japan

208,753

198,404

200,547

226,747

250,911

Overseas65,61555,79752,75355,52754,884

3,501

2,748

2,877

3,083

2,991

1,929

1,602

1,666

1,947

1,948

Overseas

1,572

1,146

1,211

1,136

1,043

Overseas

Japan
Overseas
Power generation (MWh)PV power generation system

Japan
Overseas
Power sales (MWh)*

Power sales

65,757Japan

Purchase (MWh)

871

706

797

875

915

870

706

796

874

915

1

0

1

1

0

2,405

3,833

3,334

3,458

3,834

0

0

0

0

0

2,405

3,833

3,334

3,458

3,834

4,559

4,486

4,436

4,414

4,392

4,536

4,486

4,436

4,414

4,392

23

0

0

0

0

1,337

Japan
Overseas

1,331

1,346

1,386

1,337

1,331

1,346

1,386

1,382

0

0

0

0

0

Environmental impact of logistics
FY2015Emissions (kt-CO2)
CO2

FY2016
74

Japan

5

Overseas68

Proportion of marine transport(international)

31.0

FY2017FY2018

65
6

122

7

59
36.1

Recycling

137

36.4

FY201914,435

14,960

Japan

8,858

7,721

11,393

13,694

14,208Overseas

1,206

663

925

741

752

Amount generated (t)(Japan)

2,842

2,125

3,683

4,904

6,619

Recycled amount (t)

9,828

8,182

12,128

14,211

14,770

Japan

8,764

7,599

11,281

13,561

14,092

Overseas

1,064

583

847

650

678

236

202

190

224

190

Japan

94

122

112

133

116

Overseas

142

80

78

91

74

Water discharge volume(thousand m3)
Water discharges

FY201812,318Amount of waste (t)Incinerated and landfill waste

—

904

874

905

1,006

Japan

—

750

709

759

850

Overseas

—

154

165

146

156

Chemical substances consumption/emissions (Japan)
FY2015Scope

FY2016FY2017FY2018FY2019Volume handled (t)

48

35

64

100

101

Ferric chloride

38

21

33

82

84

Hydrogen fluoride andits water-soluble salts

7

9

25

12

11

Methylnaphthalene

2

4

5

5

5

Other

1

1

1

1

1

46

31

59

95

96

PRTR Class I designatedchemical substances

Amount transported (waste
amount) (t)Consumption (t)

2

4

5

5

5

NOx

Emissions (t)

12

7.5

7.9

11.5

9.6

SOx

Emissions (t)

2.7

2.2

2.5

2.7

2.8

FY2015Scope

FY2016

Number of certified offices

9

110

31.9

Specially controlled industrial
waste

FY2017
8,384

146

12

90

Waste

FY2016

10,064Other

FY201997

Amount generated (t)1,382* Heating, cooling and steam not soldScope

FY2015

Scope

0.84

Japan

Green power

FY20191.02

Consumption (crude oil
equivalent) (kL)FuelFY2018

1.2

Consumption (crude oil
equivalent) (kL)Gas

FY2017

Japan

Consumption (MWh)Electricity

FY2016

ISO 14001

35.9

FY2019

8

9

9

Japan

4

4

5

5

5

Overseas

4

3

3

4

4

13

15

18

22

17

69

281

396

718

595

0

0

0

0

0

Number of ecosystem tour
participants*
Number of breaches ofenvironmental laws andregulations
Amount of fines on legal
breaches

Environmental laws andregulations

FY2018

7

Number of ecosystem tours*
Biodiversity

FY2017

8

Total product shipment (t)*

0

0

0

0

0

13,596

17,342

20,445

34,11032,715* Scope: Japan

CO2 emissions from logistics and the proportion of marine transport(kt-CO2)
35.9

Electricity consumption(Million kWh)

208.8

198.4

200.5

226.7

250.9

31.0
74

65.6
2015
Japan

55.8
2016

52.8
2017

Overseas

55.5
2018

54.9
2019

36.1

5

65

68

(FY)

2015
Logistics in Japan

36.4

31.9

122

146

9

98.4

99.0

99.0

99.2

12

7

97

94

Overseas logistics

2018

2019

122

112

133

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

2
7
38

116

82

84

2015

2016

2017

2018

2019

Incinerated and landfill waste (t)

(FY)

2015

5
25

35 1

4
9
21

(FY)

Proportion of marine transport
in international logistics (%)

5
11

64 1

48 1

110

90

2017

101 1

5
12

137

6

100 1
Target: Maintain recycling rate of 97% or more

Recycling rate (%): (Recycled amount / Amount of waste generated) × 100

55

Volume of PRTR Class I designated chemical substances handled in Japan
(t)

98.9

59
2016

Recycling rate/generation of incinerated and landfill waste in Japan

2016

33
2017

2018

2019

Ferric chloride

Hydrogen fluoride and its water-soluble salts

Methylnaphthalene

Other

(FY)

TOKYO ELECTRON SUSTAINABILITY REPORT 201956

Independent practitioner’s assurance report

Corporate profile

Corporate profile
Company name: Tokyo Electron Limited
Address:

Established:

Akasaka Biz Tower
3-1 Akasaka 5-chome, Minato-ku, Tokyo
107-6325, Japan
November 11, 1963

Representative: Toshiki Kawai
Representative Director,
President & CEO

Main business:

Semiconductor production equipment business,flat panel display (FPD) production equipment business

Capital:54,961 million yen

Number of employees: 13,021 (consolidated)
1,559 (non-consolidated)
Number of locations:Japan: 7 companies at 27 locations
Outside Japan: 27 companies at 50 locations in
16 countries and regions
Worldwide total: 34 companies at 77 locationsin 17 countries and regions(as of April 1, 2019)

Financial data
Earnings Release
URL

http://www.tel.com/ir/library/report/

Securities Report
URL

https://www.tel.co.jp/ir/library/fs/

Tokyo Electron’s logo
Our logo was created as a symbol for Tokyo Electron’s next stage of growth,
based on our corporate philosophy and vision.
This simple design represents our reliability and the engaging presence
we bring to a competitive industry. The green square at the center of thelogo signifies the core of innovation supporting development in industry;
the translucent blue expresses Tokyo Electron’s leading-edge advanced
technology.
We contribute to the development of a dream-inspiring society through ourleading-edge advanced technology and reliable service and support.

57

TOKYO ELECTRON SUSTAINABILITY REPORT 2019TOKYO ELECTRON SUSTAINABILITY REPORT 201958