Q1 FY2024 (April 1, 2023 – June 30, 2023)
Financial Announcement – August 10, 2023
Transcript

Moderator: Opening Remarks
Now it's time for us to start the Tokyo Electron Financial Announcement of the first quarter of the fiscal
year ending on March 31, 2024. Thank you very much for joining us today despite your very busy
schedule. I am Koichi Yatsuda from the IR Department, acting as a moderator for today's session. I would
like to introduce today's attendees.
Mr. Toshiki Kawai, Representative Director, President and CEO.
Kawai: I'm Kawai. Nice to meet you, everybody.
Next, Mr. Hiroshi Kawamoto, Senior Vice President and General Manager in charge of the Finance
Division.
Kawamoto: I am Kawamoto. Nice to meet you.
Prior to the presentations, let me explain the flow of today's conference. First of all, Mr. Kawamoto andMr. Kawai will make presentations. After that, until 6:30 Japan time, we will have a question-and-answer
session where we take questions from the audience. This meeting uses two channels of WebEx for thesimultaneous interpretation between Japanese and English. As we explained in our email, you are kindlyrequested to use apps on PCs or mobile terminals if you plan to ask questions. But if you are not goingto ask questions, you can use telephones. In addition, since this conference is intended for institutional
investors and analysts, we would appreciate your understanding that we receive questions only frominstitutional investors and analysts. We will post the audio contents of this conference in Japanese andEnglish on our website within a couple of days. It would be appreciated if you could also visit our website.
Now, Mr. Kawamoto will present the consolidated financial summary. Mr. Kawamoto, please.

Q1 FY2024 Consolidated Financial Summary
Hiroshi Kawamoto - Senior Vice President and General Manager, Finance Unit
Once again, I am Kawamoto. Now, I would like to present the consolidated financial summary of the firstquarter of this fiscal year.
Financial Summary: Slide 4First of all, I would like to present the quarterly financial summary. The blue portion represents the resultsof the first quarter. In the first quarter, we generated net sales of ¥391.7 billion, a 29.8% decline from theprevious quarter due to the drop in customer WFE spending. Along with the decline of net sales, grossprofit was ¥162.3 billion, a 35.5% decrease from the previous quarter, and operating income was ¥82.4billion, a 46.0% drop from the previous quarter. Net income attributable to owners of parent was ¥64.3billion, a 45.8% decline from the previous quarter. R&D expenses shown on the bottom was ¥43.6 billion,
increasing from the previous quarter as we continue R&D investment for future growth. Capital
expenditures were ¥39.3 billion, an increase of 49.2% from the previous quarter, as we are constructing
a development building in Miyagi and purchased evaluation tools in order to prepare for future businessexpansion.
Financial Performance (Quarterly): Slide 5This is a graphic representation of the financial summary shown on the previous page.
Composition of Net Sales by Region (FY2024 Q1): Slide 6
This slide shows net sales by region for the first quarter. This is the composition of company-wide net
sales by region. We have switched to a single segment disclosure from this fiscal year. As you can see,proportion of sales to China rose to 39.3% due to active WFE spending on matured nodes in this region.
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Q1 FY2024 (April 1, 2023 – June 30, 2023)
Financial Announcement – August 10, 2023
Transcript
SPE New Equipment Sales by Application (Quarterly): Slide 7
This slide shows SPE new equipment sales by application. In the first quarter, on the right-hand side,from the bottom of this chart, sales to logic customers accounted for 70%, non-volatile memory accounted
for 14%, and DRAM accounted for 16%. Compared with the previous quarter, the proportions of logic andnon-volatile memory declined while the proportion of DRAM increased.
Field Solutions Sales (Quarterly): Slide 8This slide shows Field Solution sales. In the first quarter, sales amounted to ¥100.2 billion. Sales declined
from the previous quarter, which is attributed to the decrease of modifications due to the decline ofcustomer WFE investment. On the other hand, parts and service sales remained strong since theutilization ratio of the customers' fabs was maintained.
Balance Sheet (Quarterly): Slide 9This slide shows the balance sheet. Total assets were ¥2 trillion, 179.0 billion. Cash and cash equivalents
were ¥401.0 billion, decreasing by ¥72.0 billion from the previous quarter due to dividend payments, tax
payments and share repurchases. There was progress in the collection of notes and accounts receivable;
trade and contract assets were ¥368.8 billion, a decrease of ¥96.0 billion. Inventories were ¥716.5 billion,increasing by ¥64.3 billion, due to procurements to get us ready for future shipments. Other current assets
were ¥65.0 billion, decreasing by ¥85.7 billion due to refunds of consumption tax. For the liabilities andnet sales assets shown on the right-hand side, liabilities were ¥639.9 billion, decreasing by ¥72.0 billion.
This is primarily attributed to the decrease of tax payments and accrued employee bonusses. Net assets
were ¥1 trillion 539.0 billion, decreasing by ¥60.4 billion from the end of the previous year, due to dividend
payments and share repurchases. The equity ratio was 69.9%, just for your information.
Cash Flow (Quarterly): Slide 10
This slide shows the cash flow. The cash flow from operating activities was 125.7 billion yen. The cash
flow from investing activities was minus ¥36.8 billion. The cash flow from financing activities was minus¥164.1 billion, primarily due to dividend payments and share repurchases. As a result, free cash flow was¥88.8 billion, as shown in the line chart.
Status of Share Repurchase: Slide 11
Finally, I will present updates on the share repurchase. As of July 31, 2023, the total number of sharespurchased amounted to 3,069,200 shares. The total cost of share repurchase was about ¥60.9 billion. As
you can see on the bottom, we will continue share repurchases up to ¥120 billion till December 31, 2023.
So far, we have purchased about half of the maximum amount.

This concludes my section on the consolidated financial summary of the first quarter of the fiscal year
ending in March 2024.

Moderator: Introduction of the next presentation
Now let’s move on. Mr. Kawai will provide a presentation regarding the business environment andfinancial estimates. Mr. Kawai, please.

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Q1 FY2024 (April 1, 2023 – June 30, 2023)
Financial Announcement – August 10, 2023
Transcript

Business Environment and Financial Estimates
Toshiki Kawai - Representative Director, President & CEO
Good afternoon. Thank you very much for joining us today. Once again, I am Kawai. I will report on thebusiness environment and financial estimates.
Business Environment (WFE Market Outlook as of August 2023): Slide 13
Let me start with the current business environment. The full year forecast of WFE market size in 2023 isabout $70 to 75 billion. In terms of market size, there have been no changes in terms of the previous
financial announcement in May. However, there have been slight changes in its breakdown, specifically,in leading-edge logic/foundry, where there are some signs of delayed investment while Chinese
customers are accelerating their investment in mature nodes.
Though recovery timing may be shifted slightly depending on macro-economic dynamics, the WFE
market is expected to recover and grow to around $200 billion in total for the years 2024 and 2025. Oneof the drivers of this recovery, as shown in the chart, is servers whose annual growth rate is 8%. In
addition, there are business opportunities in leading-edge CPU, DRAM and NAND, as well as GPU forgenerative AI and HBM. We can also expect recovery of demand for PCs and smartphones after theiradjustments following the COVID-19 pandemic. Continuous steady growth is expected in power
semiconductors for EV, and diversified semiconductors supporting the digital economy, namely in theMAGIC market.
Q1 FY2024 Business Progress: Slide 14
This shows business progress in the first quarter of fiscal 2024. Regarding financial performance, as Mr.
Kawamoto presented, both net sales and profit stayed on track. We also made steady progress in criticaldevelopment projects and products toward the achievement of our Medium-term Management Plan. In
particular, for HARC etching, which is one of our strategic processes, we succeeded in an innovativetechnology development targeting 3D NAND channel hole application. This is an important technology,
contributing to our future net sales and profit, and our customers highly value this technology. Regarding
bonders used in advanced packaging, we received orders for bonders to be installed in high-volume
manufacturing lines of HBM for generative Al application. New bonder development and evaluation havealso been in progress for 3D NAND and advanced logic.
FY2024 Financial Estimates: Slide 15, 16
Next, I will present the financial estimates for fiscal 2024. The financial estimates remain unchanged fromthe previous announcement in May. As reported earlier, in calendar 2023, the WFE market is expected
to decrease by 25-30% from calendar 2022. Our financial performance will be affected by this WFE
market trend, but we are planning record-high R&D investment of ¥200 billion in order to prepare for WFE
market growth in 2024 and 2025 and our business recovery by stepping up our R&D activities.
FY2024 SPE New Equipment Sales Forecast: Slide 17
This slide shows the SPE new equipment sales forecast in this fiscal year. As shown here, we expect togenerate ¥580 billion in the first half, and ¥690 billion in the second half of this fiscal year. The diagramon the right shows a quarterly breakdown on the sales forecast for the first half of this fiscal year. Though
there have been some changes in timing of customer WFE investment, there will be no major changes
in logic/memory composition.
FY2024 R&D Expenses and Capex Plan: Slide 18
This shows our plan for R&D expenses and capex. This plan again remains unchanged. For FY2024,
both R&D expenses and capex are expected to hit record highs. As I said earlier, we are planning R&D
expenses of ¥200 billion and capex of ¥124 billion. Depreciation is expected to be ¥57 billion.
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Q1 FY2024 (April 1, 2023 – June 30, 2023)
Financial Announcement – August 10, 2023
Transcript
Last month, construction of a new development building in Yamanashi was completed as planned. Thisnew building was built for the purpose of developing film deposition systems, gas chemical etchingsystems, patterning technologies and process integration. To address the expanding market and fulfill
increasingly diversified leading-edge technology needs, we will continue active R&D and capital
investments.
FY2024 Dividend Forecast: Slide 19
This slide shows the dividend forecast. This also remains unchanged. Based on the financial estimatesof this fiscal year and payout ratio of 50%, the full-year dividend per share is expected to be ¥320.
Total Return Amount: Slide 20
This shows total return amount over the past few years. As Mr. Kawamoto described earlier, as of July
31, we purchased 3,069,200 shares, worth about ¥60.9 billion. If we are able to accomplish share
repurchase as planned, total return amount in this fiscal year, including dividend payments based on apayout ratio of 50%, is expected to be ¥270.3 billion. We will take continuous efforts to enhanceshareholder value.

This concludes my presentation. Thank you very much for your time.

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