TOKYO ELECTRONINTEGRATEDREPORT 2022

Cover Image“Technology Enabling Life” is our corporate message that
expresses the Corporate Principles which consist of our
Corporate Philosophy, Management Policies, Vision and
TEL Values. It represents how technological innovation insemiconductors contributes to the development of a
dream-inspiring society.

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

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

PR60-424

Editorial Policy
Issuance of an Integrated Report
Tokyo Electron issues an integrated report for the purpose of reporting our medium- to long-term profit expansion and continuous
corporate value enhancement to our stakeholders. In the 2022 report, we explain how we continuously create value through thevalue chain of our business activities in conjunction with our sustainability initiatives. We also describe our Vision in our newly defined
philosophy system as well as our Medium-term Management Plan through to fiscal 2027. We remain committed to accurately
comprehending all of our stakeholders’ demands and disclosing information timely and transparently.

Scope
This report and related data cover the entire Tokyo Electron Group (27 consolidated companies), with the exception of somedomestic (Japan-exclusive) content.

Contents
Chapter1

Reference Guidelines• IFRS Foundation: Integrated Reporting Framework• Ministry of Economy, Trade and Industry: Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for
Collaborative Value Creation• Global Reporting Initiative (GRI): GRI Standards• Environmental Reporting Guideline 2018, Ministry of the Environment, Government of Japan• Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
Chapter2

Issued Date
September 2022

About Tokyo Electron
CEO’s Message

3

Corporate Principles System

7

Company Overview

9Highlights of Key Indicators for Continuous Corporate Value Enhancement

11

Medium- to Long-term
Value Creation Story
Material Issues

13

Fiscal 2022 (April 1, 2021, to March 31, 2022), some content also covers fiscal 2023

Medium-term Management Plan

15

Contact

Value Creation Model

23Tokyo Electron Limited
Akasaka Biz Tower 3-1 Akasaka 5-chome, Minato-ku, Tokyo 107-6325, Japan
www.tel.com/contactus/

Stakeholder Engagement

25

Period Covered

Chapter
Chapter

Main Company-related Information Disclosures• Integrated Report• Consolidated Financial Statements• Medium-term Management Plan
• Sustainability Report• Corporate Governance Guidelines and Report• Corporate Profile

www.tel.com/ir/library/ar/
www.tel.com/ir/library/consolidated-financial-statements/
www.tel.com/ir/policy/mplan/
www.tel.com/sustainability/report/
www.tel.com/about/cg/
www.tel.com/about/document/corporate_guide_e.pdf

Tokyo Electron’s Logo
Tokyo Electron’s logo was created as a symbol for our next stage of growth, basedon our Corporate Philosophy and Vision in 2015. This simple design represents ourreliability and the engaging presence we bring to a competitive industry. The
green square at the center of the logo signifies the core of innovation supporting
development in the industry; the translucent blue expresses our leading-edge
advanced technology. We strive to contribute to the development of a
dream-inspiring society through our leading-edge technologies and reliable
service and support.

1 TOKYO ELECTRON Integrated Report 2022

3

4

Value Creation by theValue Chain
Initiatives in the Value Chain

27

Research and Development

29

Procurement and Manufacturing

31

Sales

33

Installation and Maintenance Services35

Sustainability Initiatives in the Value Chain

37

Environment

37

Human Rights

41

Supply Chain Management

43

Safety44

Quality

45

Continuous Improvement of Business Operations

46

Human Resources

47

Corporate Governance

49

Messages from Outside Directors

55

Risk Management

57

Information Security

59

Compliance

60

Engagement with Capital Markets

61

Evaluation from Third-party Institutions

61

Participation in Global Initiatives

62

Toward Further Growth
Medium- to Long-term Outlook

63

Aiming to Be a Company Filled with Dreams and Vitality

65

Data Section
Financial Review

67

Consolidated Eleven-year Summary

71

Sustainability Data

73

Consolidated Subsidiaries

79

Stock Information

80

TOKYO ELECTRON Integrated Report 2022

2

Chapter 1

About Tokyo Electron

CEO’s Message
Further Enhancing Corporate Value

New Vision

A company filled with dreams and vitality that contributes totechnological innovation in semiconductors

Toshiki Kawai
Representative Director,
President & CEO

Current Business Conditions
I would like to express my sincere gratitude to all stakeholders for your continued support and patronage.
In recent years, industry, society and the lives of the
public have been significantly affected by a series ofchallenges. These include the spread of COVID-19; natural
disasters caused by climate change; geopolitical risks—typified by trade frictions and international conflicts—
and the human rights issues they engender.
On the other hand, in order to build a strong andresilient society in which economic activities do not stop
under such circumstances, various efforts are underway,
including the implementation of ICT (information andcommunication technology) and decarbonization topreserve the global environment.
Meanwhile, the transition to a data-driven society is
progressing at an unprecedented speed, and digitaltechnologies are now used furthermore: IoT, AI and 5G
are becoming more widespread, industries are growing
smarter, autonomous driving is evolving, and the muchhyped metaverse is seeing real-world applications.
For semiconductors, which are supporting the core ofthis shift, expectations for technological innovations such

3 TOKYO ELECTRON Integrated Report 2022

as larger capacity, higher speed, higher reliability andlower power consumption are limitless.
The semiconductor market exceeded US$500 billion
for the first time in 2021 and is expected to exceed US$1
trillion by 2030, more than double the current market.
The semiconductor production equipment market inwhich we operate was worth approximately US$90
billion in 2021; this represented a year-on-year increaseof 40%, and we expect the market to grow even further.
We formulated our Medium-term Management Plan
in May 2019, and have been working to achieve a financial
model with net sales of 2 trillion yen, an operating marginof 30% or more and ROE of 30% or more by fiscal 2024.
Against that background, the smooth progress of business in our focal fields mean that we have managed tooutperform the growth of the market. For fiscal 2022, weachieved net sales of 2,003.8 billion yen, an operating
margin of 29.9% and ROE of 37.2%. These are the best
results in the history of our company, and mean we haverealized our target financial model two years ahead ofschedule.
A number of factors contributed to these outstanding
results. Despite fluctuating markets, over the past five
years we have invested heavily in growth, including
investments worth approximately 600 billion yen in
research and development. As a result, we have been able
to continually create high-value-added products andservices. Also, we have cultivated abundant technologicalcapabilities as an industry leader and earned the absolute
trust of our customers based on our reliable technicalservices. Then, we have challenging spirit of our employees, who are capable of flexibly and rapidly adapting tochanges in the environment.
We would not have been able to achieve our best-ever results without the continued support of all our stakeholders, and I would like to take this opportunity to
express my sincerest gratitude.

Tokyo Electron celebrates its 60th fiscal year in 2022. In
pursuit of further growth, we have formulated a new
Vision to become “A company filled with dreams andvitality that contributes to technological innovation insemiconductors.” This Vision incorporates three perspectives, outlined below:• To pursue technological innovation in semiconductorsthat supports the sustainable development of the world• To aim for medium- to long-term profit expansion andcontinuous corporate value enhancement by utilizing
our expertise to continuously create high value-added
leading-edge equipment and technical services• To recognize that “Our corporate growth is enabled bypeople, and our employees both create and fulfill company values,” and to realize the Vision through engagement with our stakeholders
This new Vision is based on the idea of CSV (Creating
Shared Value). The concept behind CSV is that, by using
their expertise to resolve social issues, companies canimprove corporate value and realize sustainable growththrough the creation of social and economic value. We
are a semiconductor production equipment manufacturer and so, for us, CSV means contributing to the technological innovation in semiconductors, which are indispensable for the development of a dream-inspiring
society. We have termed this TSV (TEL’s Shared Value).
Through business activities based on TSV, we intend tocontribute both to achieving SDGs—which are goals
shared by the world—and to realizing a more abundant
future.
We have therefore set ourselves the even loftier goalsof further growth and world-class profits, and formulated
a new Medium-term Management Plan to achieve them.
By fiscal 2027, we intend to establish a strong financial
footing with net sales of 3 trillion yen or more, an operating margin of 35% or more and ROE of 30% or more. We
consider profit to be an important measure of value inour products and services; to this end, we seek to leverage our unique capabilities to create unprecedented
technologies with high added value. We will also redouble
our efforts to achieve key indicators for continuous
corporate value enhancement including ESG.
Achieving the world-class operating margin and ROE
detailed above requires our company to shift toward amore aggressive style of management. At the same time,
we will continue to focus on safety, quality, compliance,
employee engagement, risk management and security.
Our efforts on these areas may appear at first glance tobe defensive in nature; however, we believe that improving them will help our company become stronger. Goingforward, we will continue to engage in a “double-offensive” style of management, in which defensive measures
are turned into strengths, with the aim of further corporate value enhancement.

New Vision
New Medium-term Management Plan (by Fiscal 2027)
Net Sales≥¥3 trillion

Operating Margin

ROE

≥35%

≥30%

TSV: TEL’s Shared ValueContribute to technological innovation in semiconductors

TOKYO ELECTRON Integrated Report 2022

4

Chapter 1

About Tokyo Electron

Initiatives for a Double-offensive Management StyleBusiness Activities Rooted in Material Issues

Introduction of a Corporate Officer System

Advancing E-COMPASS

We have identified the following four material issues forachieving our new Medium-term Management Plan, andwe intend to make improvements in each of them.

Tokyo Electron is a leading company in the semiconductor production equipment industry, which is characterized by rapid technological innovations and dynamic
market changes. Toward our further growth, it is vitalthat we increasingly accelerate and optimize our decision-making. For this reason, we have introduced aCorporate Officer system, and established the Corporate
Officers Meeting as the highest decision-making body on
the executive side.
Corporate officers adopt the same perspective as theCEO, and hold responsibility for executing business acrossthe entire Group. Corporate Officers Meetings, whichhave been properly delegated authority by the Board of
Directors, will promote rapid decision making and flexible
execution of our business. So that the Board of Directors
can properly supervise these activities, corporate officers
will attend Board of Directors meetings and provide
explanations regarding the business they have executed.
In addition, corporate officers will apply the suggestionsof the Board to business they execute in an appropriate
and speedy manner.
The semiconductor industry will continue to grow,and we expect to expand the scale of our business from77 sites in 18 countries and regions currently to 100 sites
or more in the near future. The adoption of the Corporate
Officer system will enable us to promote a more aggressive style of management.
(For further details, refer to Corporate Governance on p. 49)

In June 2021, Tokyo Electron launched an environment-focused initiative entitled E-COMPASS (Environmental Co-creation by Material, Process and Subcomponent Solutions).
We will work together with our customers and partner companies to promote technological innovation andreduce the environmental impact of semiconductors
throughout the entire supply chain from the following
three main perspectives.

• Product CompetitivenessWe are a manufacturer, and we can drive company
growth through continuously creating next-generation
products with high added value, which will be neededby our customers in the future.
• Customer ResponsivenessAs the sole strategic partner, we will pursue technological innovation in semiconductors via strong relationshipbased on our customers’ trust.
• Higher Productivity
The scale of our business is expanding rapidly; we will
pursue operational efficiency in all our business activities, including research and development, procurement
and manufacturing, sales as well as installation andmaintenance services.
• Management Foundation
Based on a strong, profit-focused financial base, we willseek to strengthen the management foundation required for the above three material issues; more specifically, this includes governance, risk management, employee engagement, work-life balance and so on.

Four Material Issues

The Hierarchy of the Corporate Officers Meeting

Continuously create high value-added
next-generation products

Shareholders’ Meeting
Management& Supervision

Strong relationship based on trust
Sole strategic partner

Product
Competitiveness

Customer
ResponsivenessPursuit ofoperational efficiency

HigherProductivity

Management Foundation

5 TOKYO ELECTRON Integrated Report 2022

Business
Execution• Pursuing higher performance and lower consumption insemiconductors• Achieving both the process performance and environmental performance of equipment• Reducing CO2 emissions in all business activities
In addition to our medium-term environmental goals
for 2030, we set a long-term environmental goal of
reducing greenhouse gas emissions to net zero by 2050.
We are promoting various initiatives so that we canachieve net zero in Scope 1 and Scope 2 emissions—which are generated by our company—by 2040, and net
zero in Scope 3 emission—which are not generated from
our Group—by 2050. As a leader in environmental management, we will contribute to the preservation of the
global environment through advancing E-COMPASS.
(For further details, refer to E-COMPASS on p. 41)

Human Resources Initiatives
We believe that “Our Corporate growth is enabled bypeople, and our employees both create and fulfill
company values.” Accordingly, we intend to promote
employee motivation through the five management
perspectives below.

Based on the aforementioned, we are carrying out thefollowing initiatives:• Formulating a new Vision and promoting TSV (TEL’s
Shared Value)• Setting globally competitive financial targets, based on a
new Medium-term Management Plan
• Making plans to invest more than 1 trillion yen in researchand development over the next five years• Executing ESG initiatives aimed at continuous corporate
value enhancement• Implementing a shared, global human resources systemand performance-linked compensation
 reating opportunities for active dialogue between•Cmanagement and employees through employee meetings and workplace visits
We intend to carry out these initiatives in line withTEL Values, which delineate Tokyo Electron’s values, themindset that each employee must possess and the codesof conduct.

To Be a Company that Is Loved and Trusted by
All Stakeholders
Utilizing our expertise as an equipment manufacturer andour diverse management resources, we will provide
society with high-value-added technologies that theworld has never seen and only we can accomplish. Goingforward, we will continue to take on new challenges andevolve with the aim of becoming No. 1 in the world, andof being loved and highly trusted by all our stakeholders.
We look forward to your continued support and patronage.

Board of Directors
Representative Director,
President & CEO
Corporate Officers Meeting

Business Execution Organization

1. Awareness that our company and work contributes
to society
2. Dreams and expectations of the Company’s future
3. Opportunities to take on challenges
4. Fair evaluations that recognize employee efforts andglobally competitive rewards
5. Workplace with open atmosphere andpositive communication

Toshiki Kawai
Representative Director,
President & CEO

TOKYO ELECTRON Integrated Report 2022

6

Chapter 1

About Tokyo Electron

Corporate Principles System
Tokyo Electron has repeatedly revolutionized technology in a rapidlychanging industry, continuing to grow together with the times. In
2013 we refined our Management Policies, which was establishedat the time of our founding as our starting point, and also newly
defined the purpose of our existence and our mission in society as
our Corporate Philosophy.
In 2022, we set forth a new Vision toward further future growth
and re-defined our Corporate Principles system, which consists of a
Mission, Vision and Values, from a medium- to long-term perspective.

VisionMission(Corporate Philosophy/
Management Policies)

基本理念

VisionThe Vision describes Tokyo
Electron’s medium- to longterm business aspirations andthe direction of its near future.
It is a summary of top priorities to be addressed to realize
the Corporate Philosophy.

A company filled with dreams and vitality that
contributes to technological innovationin semiconductors

経営理念
We aim for medium- to long-term profit expansion and continuous corporate valueenhancement by utilizing our expertise to continuously create high value-added leadingedge equipment and technical services.

ValuesOur corporate growth is enabled by people, and our employees both create and fulfill
company values. We work to realize this vision through engagement with our stakeholders.

(TEL Values)

基本理念は、東京エレクトロンの存在意義 (Purpose)、

経営理念は、基本理念を実現するために、

社会的使命を定義したものです。

東京エレクトロンが大切にする
経営の規範を8つの項目で明示したものです。

企業活動の拠り所となる最も基本的な考え方です。

TEL Values

Corporate Philosophy
The Corporate Philosophy defines
the purpose of Tokyo Electron’s
existence and its mission in society.
It represents TEL’s basic way of
thinking that forms the foundation
for its corporate activities.

We strive to contribute to the developmentof a dream-inspiring society throughour leading-edge
technologies and reliable
最先端の技術と確かなサービスで、
service andsupport.
夢のある社会の発展に貢献します

TEL Values clearly defines
Tokyo Electron’s values as wellas the mindset and code of■ 利益についてconduct of each employee.

社会や産業の発展に貢献すべく、利益の追求を重視し企業価値の向上を目指します。

■ 成長について技術革新に常に挑戦し、事業拡大と市場創出により継続的な成長を図ります。

Management Policies
The Management Policies highlightthe management values thatTokyo Electron regards as essential
to achieving the objectives definedin its Corporate Philosophy. They
express the logic that underscores
our eight general rules ofmanagement.

7 TOKYO ELECTRON Integrated Report 2022

Tokyo Electron pursues technological innovation in semiconductors that supports thesustainable development of the world.

Ј Profit is Essential

Ј Scope of Business

The TEL Group aims to contribute to thedevelopment of society and industry and to
the enhancement of corporate value while
continually pursuing profit.

The TEL Group leads markets by providing
high-quality products in leading-edge
technology fields with a focus on electronics.

Ј Growth Philosophy

Ј Quality and Service

We will tirelessly take on the challenges oftechnological innovation to achieve
continuous growth through businessexpansion and market creation.

The TEL Group strives to understand the trueneeds to achieve customer satisfaction andsecure customer trust while continuously
improving quality and service.

Ј Employees

Ј Organizations

The TEL Group’s employees both create andfulfill company values, performing theirwork with creativity, a sense of
responsibility, and a commitment toteamwork.

The TEL Group builds optimal organizations
that maximize corporate value in which all
employees can realize their full potential.

Ј Safety, Health, and the Environment

Ј Social Responsibility

The TEL Group gives the highest
consideration to the safety and health of
every person connected with our businessactivities as well as to the global
environment.

Feeling a strong sense of corporate social
responsibility, we strive to gain the esteem ofsociety and to be a company where our
employees are proud to work.

Pride

Challenge

We take pride in providing high-value
products andservices.
■ 事業分野について

We accept the challenge of going beyond
what others are doing in pursuing our goalof becoming number one globally.

エレクトロニクスを中心とする
We offer our customers
cutting-edge
technological最先端技術分野において、products, along with the highest
We view changes as opportunities andlevel of quality高品質な製品を提供し市場をリードします。
and technical service, in the
respond to them flexibly and positively.
pursuit of total customer satisfaction.
We are tolerant of failure and consider it
We consider
to be an important
important to learn from the process and results.
■profit
品質とサービスについて
measure of value
in our products and services.
顧客の満足と信頼を得るために真のニーズを理解し、Ownership 品質とサービスの向上に努めます。

We will keep ownership in mind as we
think thingsand engage in■ through,組織についてthorough implementationin order to
社員は価値創出の源泉であり、個々の能力を最大限に発揮し、achieve
ourgoals.
創造性と責任感と強いチームワークで企業価値を最大化する最適な組織を■ 社員について

an awareness of problems
情熱をもって業務に取り組みます。 We always have築きます。

and tackle challenges with enthusiasm and asense of responsibility.
■ 安全と健康と環境について■ 企業の社会的責任について
We make decisions quickly and do what we
事業に関わるすべての人々の安全と健康、企業としての社会的責任を自覚し、
consider to be the best course of action.

Teamwork
We respect each other’s individuality andwe place a high priority on teamwork.
We create a workplace with an open
atmosphere and positive communication.
We establish relationships of trust with ourbusiness partners in order to facilitate
mutual growth.

および地球環境への配慮を第一に考えて社会から高く評価され社員が行動します。

誇りを持てる企業であるよう心がけます。

Awareness

We must have awareness and accept
responsibility for our behavior as
respectful members of society.
We strictly comply with laws and regulations
and the rules of society.
We give top priority to safety, health and theglobal environment.
We strive to become a company that local
communities hold in high esteem.

We have established the TEL Values,
and we will continue todevelop them accordingly in the future.

TOKYO ELECTRON Integrated Report 20228About Tokyo Electron

Chapter 1

Company Overview
Tokyo Electron operates worldwide as a leading company in semiconductor production equipment industry. By providing the Best
Products and Best Technical Service, we are aiming for medium- to long-term profit expansion and continuous corporate valueenhancement. We are also practicing our Corporate Philosophy by contributing to the development of a sustainable society throughour business.

Sales by Region (Consolidated)
Southeast Asia, and Others

88.4 (4.4%)

230.3

Tokyo Electron Korea
TEL Manufacturing and Engineeringof America

Tokyo Electron (Shanghai)Tokyo Electron (Shanghai) Logistic CenterTokyo Electron (Kunshan)

TEL Technology Center,
AmericaTokyo Electron Israel

TEL Venture CapitalTokyo Electron India

7 companies at 25 sites

20 companies at 52 sites in 17countries and regions

Worldwide total:

27companies* at 77sites in 18 countries and regions (consolidated)(13.4%)

1963

Single Chip
Microprocessor

Tokyo Electron
KyushuThermal Processing
SystemTokyo Electron FE
Tokyo Electron BP
Tokyo Electron Agency

TELINDY PLUS TM

1978

Tokyo Electron
Laboratories, Inc.
renamed Tokyo
Electron Ltd.

1980

Listed on the Second
Section of the Tokyo
Stock Exchange

1964

Tokyo Electron
Laboratories acquires
importing and sellingrights for diffusion
furnace manufactured by
Thermco Products Corp.
(U.S.) and begins sales

1968

TEL-Thermco
Engineering Co., Ltd.
began domestic
production ofdiffusion furnaces

9 TOKYO ELECTRON Integrated Report 2022

Listed on the First
Section of the Tokyo
Stock Exchange

Personal
Computer

Mobile Phone

Accelerating
globalization

1990s

Enhanced the Groupstructure in Japan by, forexample, establishing
service andmanufacturing
companies, and set up
overseas subsidiaries
throughout the world to
globalize operations

Tokyo Electron (TEL)
marks a major moveinto development andmarketing of FPD
production equipment

Started direct sales
and support
systems overseas

Export of semiconductor
production
equipment begins

1999

Category of industry on
the Tokyo Stock
Exchange First Sectionchanged from
“Wholesale Trade” to“Electric Appliances”

Atomic Layer
Deposition System

Trias +TM

NT333 TM
Silicon nitride film

Etching

Cleaning

Coater/Developer

Plasma Etch System Plasma Etch System

CLEAN TRACKTM LITHIUS ProTM Z

TactrasTM

Single Wafer
Cleaning System

EpisodeTM ULCELLESTATM-

Completed
Transistor before
Wiring

Photoresist

Wafer

Oxide/Nitride film deposition

2020s~
DigitalConsumerElectronics

Photoresist coating

Exposure

Development

Etching

Ashing/Cleaning

Isolation Formation/Gate Formation
Interconnect formation

Big Data

Gate ElectrodeTesting

Packaging/Inspection

Aspiration toward innovationand new growth

2006“TEL Values” formulated as codeof conduct

Single Wafer Deposition
System2021

Began publishingintegrated reports

Trias

TM

TOKYO ELECTRONINTEGRATEDREPORT 2021

2007

Cover Image

Established “TEL UNIVERSITY” tostrengthen human resource development“Digital × Green”

Intermetal dielectric film
Metal film

Plasma Etch System

Wafer Prober

Wafer Bonder/Debonder

TactrasTM / EpisodeTM UL

PrecioTM XL

Synapse TM V/
Synapse TM Z Plus

Wafer /Dicing Frame
Prober

WDF TM 12DP+

Completed
Semiconductor
Packaging

Metal film

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

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

PR59-313

2022

Listed on thePrime Marketof the Tokyo
Stock Exchange

1990

1994

1986

■Assembly and Test Process (Back-end)

Tokyo Electron Ltd.

1984

Single Wafer
Deposition System

Silicon dioxide film

2000s~

Shifting to a fullscale manufacturer■Wafer Process (Front-end)

Lithography(Photoresist coating, Development)

Tokyo Electron Miyagi

TOKYO ELECTRON INTEGRATED REPORT 2021

Tokyo Electron
Laboratories, Inc. isestablished with capitalfrom Tokyo Broadcasting
System, Inc.

(27.9%）

Tokyo Electron (World Headquarters)

1980s~

Founded as technical specialized
trading company

4,365(19.0%)

361.5 (18.0%)(fiscal year ended
March 31, 2022)

Asia

381.1

Repetition

Mainframe
ComputerSouth Korea

Taiwan* Group companies in the process of being wound up are not shown on the map.

Transition of
Typical Applicationsof Semiconductors

15,634people(fiscal year ended
March 31, 2022)

268.0

Deposition

1960s~(12.8%)

billion yen

Tokyo Electron Singapore
Tokyo Electron
Technology Solutions(55.4%)

2,002

Semiconductor Manufacturing Process and Our Main ProductsTokyo Electron (Malaysia)

History

8,661(3.9%)* Fractions smaller than 100 million yen are truncated.

Tokyo Electron U.S. Holdings
Tokyo Electron America

Tokyo Electron Taiwan

Overseas:606

2,003.8

North America

TEL Magnetic Solutions

Japan:

566.2

North America(11.5%)TEL Solar Services

Japan

Japan

■Branch, Office (including Field Service), Sales Office

Tokyo Electron Europe

Europe107.9 (5.4%)

Number of Sites (As of March 31, 2022)(Unit: People)

China(28.3%)

Europe■Head office

Number of Employees by Region (Consolidated)(Unit: Billions of yen)

2015

Formulated the new Vision
and Medium-termManagement Plan

Re-emergence as the New TEL(Vision, Medium-term Management
Plan formulated and new Corporate
Logo created)“Technology Enabling Life”
formulated as corporate
message

Establishment of Tokyo Electron
Corporate Governance Guidelines

2019

Formulation of the Medium-termManagement Plan to further enhance
corporate value

Contact Formation

Interconnect
Formation

Wafer Probe Testing

Completed Integrated Circuit

Wafer Bonding/
DebondingInspection

Packaging/Assembly

Flat Panel Display (FPD) Production Equipment

FPD Coater/Developer
ExcelinerTM

FPD Plasma Etch/Ash System
ImpressioTM

FPD Plasma Etch/Ash System
BetelexTM

Inkjet Printing System for
manufacturing OLED display
EliusTMTOKYO ELECTRON Integrated Report 202210About Tokyo Electron

Chapter 1

Highlights of Key Indicators forContinuous Corporate Value Enhancement
At Tokyo Electron, policy decisions and various judgments are made in our business activities by clarifying management indicators,
which are important for medium- to long-term profit expansion and continuous corporate value enhancement, as well as
conducting monitoring and analysis.

Net Sales and Gross Profit Margin
Net sales (Billions of yen)

42.0

1,130.7

2018.3Operating Income and Operating Margin

Gross profit margin (%)

41.2
1,278.2

2019.340.1

40.4

Operating income (Billions of yen)

2,003.8
45.5

24.9

24.3
21.0

1,127.2

281.1

2021.3

R&D Expenses

Patents Owned
158.2

599.2

2022.32018.3(Billions of yen)

136.6

29.9

1,399.1

2020.3Operating margin (%)

113.9

22.9

16,767

17,473

18,1372018.32019.32020.3

18,692

19,572(Patents)

120.2

97.1

320.6

310.5
237.2

2019.32020.32021.32022.32018.32019.32020.32021.32022.32021.32022.3

Net sales reached a record high due to the rapid expansion of thesemiconductor production equipment market and an increase in market share.
Gross profit margin also reached a record high due to sales contributions fromnewly acquired processes as well as an increase in net sales

Net sales increased significantly as a result of steady response to the sudden
increased demand for semiconductor production equipment. The fixed cost
ratio declined and both operating income and operating margin reachedrecord highs

A record 158.2 billion yen was invested in R&D in fiscal 2022 to maintainand improve world-leading technological innovation. The investment
plan of approximately 600 billion yen over 5 years starting in fiscal 2018
was executed

No.1 in the semiconductor equipment industry with 19,572 patents owned
as of March 31, 2022. Our worldwide advantage in the area of intellectual
property has been sustained, contributing to maintaining and increasing
product competitiveness

Net Income Attributable to Owners of Parent and ROE1

Free Cash Flow2

Percentage of Respondents who Selected “Very Satisfied”
or “Satisfied” in the Customer Satisfaction Survey3
(%)
100.0
96.7

Workplace Incidents per 200,000 Work Hours (TCIR4)

Net income attributable to owners of parent (Billions of yen)
ROE (%)

29.0(Billions of yen)

93.3

199.5

26.5

204.3

21.8

139.7

0.27

149.5
59.4

242.9

185.2

2019.32020.32021.32022.32018.32019.32020.32021.32022.32018.3

Net income attributable to owners of parent reached a record high in linewith a significant increase in operating income. ROE also reached a record
high as a result of the significant increase in net income attributable toowners of parent in relation to net assets

Net Income per Share(Yen)

2019.32020.32022.32018.32019.32020.32021.32022.3The percentage of respondents who gave evaluations of “Very Satisfied” or“Satisfied” reached 100% in fiscal 2022. We are building a solid relationshipof mutual trust with customers by further enhancing customer satisfaction,
which we have valued highly since our founding

Achieved 0.30 for fiscal 2022. With our slogan “Safety First” as amanufacturer, we will continue to promote thorough safety awareness andcontinuous improvement activities while maintaining world-class standards

Cash Dividends per Share

Installation of Renewable Energy at Plants and Offices

Retention After Three Years of Joining the Company5(Japan)
94.7
94.1
93.8
93.4
93.0

(Yen)

1,403

2018.3

(%)

60

(%)

781

758

2022.32021.3

Free cash flow increased significantly from the previous fiscal year due to asignificant increase in net sales, despite the increase in procurement volume
and inventory to respond quickly to market growth6242021.32020.3

4 TCIR: Total Case Incident Rate

1,562.20
1,170.57

2019.33 For each question, average score is calculated for all customers who responded

2,807.84

1,513.58

0.23

82.6

2 Free cash flow = Cash flows from operating activities + Cash flows from investing
activities (excluding changes in time deposits and short-term investments)

1,245.48

0.30

0.20

1 ROE = Net income attributable to owners of parent/Average total equity × 100

2018.3

0.38

84.4

30.1
248.2

2018.3

217.7

437.0
37.2

588

2019.32020.32021.32022.32

2

2

2

2018.32019.32020.32021.32022.32018.32019.32020.32021.32022.3

5 Average in recent five years

Net income per share also increased due to the increase in net income
attributable to owners of parent

11 TOKYO ELECTRON Integrated Report 2022

A dividend of 50% of net income attributable to owners of parent was
distributed in accordance with the shareholder return policy. Cash dividends
per share reached a record highCompleted 60% of installations in fiscal 2022. Initiatives are being promoted
at a company-wide level to achieve a 70% reduction in CO2 emissions byfiscal 2031 (compared to fiscal 2019) and to achieve the further goal of net
zero emissions

Based on the recognition that employees both create and fulfill company
values, a high retention rate of 94.7% was maintained in fiscal 2022 throughcontinuous initiatives to improve employee engagement

TOKYO ELECTRON Integrated Report 2022

12

Medium- to Long-term Value Creation Story

Chapter 2Material Issues
Main Initiatives

Identifying Material Issues
We have come to understand social issues and businessenvironments, considered risks and opportunities, examined theopinions and requests of all stakeholders and identified ourmaterial issues with the approval of the CEO as well as directors
and executive officers related to sustainability.
We will work on “Product Competitiveness” that drives our
growth as a manufacturer and continuously creates nextgeneration products with high added value that will be needed bycustomers in the future; “Customer Responsiveness” for pursuing
technological innovation in semiconductors based on the absolute
trust of our customers as their sole strategic partner; and “Higher
Productivity” that pursues operational efficiency in all businessactivities—including research and development, procurement
and manufacturing, sales as well as installation and maintenanceservices—amid rapid expansion in business scale. At the sametime, with a strong financial foundation based on profits, we will
enhance our “Management Foundation” including governance,compliance, risk management and employee engagement in orderto support these.

Continuously create high value-added
next-generation products

Strong relationship based on trust
Sole strategic partner

Product
Competitiveness

Customer
Responsiveness• Utilize abundant technological capabilities cultivated as an industry leader andcontinuously create high-value-added, next-generation products based on
innovative technology on a timely basis
Product
CompetitivenessPursuit ofoperational efficiency• Help customers manufacture leading-edge semiconductor devices and displaysby maintaining an accurate and prompt grasp of customer needs and providing
innovative technologies for future generations

Management Foundation

Customer
Responsiveness

Issues Awareness⚫Abnormal weather conditions, natural
disasters, human rights issues, conflicts
between nations, stagnation of supply
chains, cyberattacks and so forth

Business Environment

Stakeholder Engagement2

Identifying Material Issues

Social Themes of Risks andOpportunities⚫Response to risks and creationof business opportunities in theenvironment, human rights, supply chain
management, governance, compliance,
evolution of technology, information security

Shareholders/Investors⚫Realization of medium- to long-term growthand enhancement in corporate value

Customers⚫The provision of Best Products and BestTechnical Service

Suppliers⚫Further improving added valueof products and services throughcollaboration with our company⚫Identify material issues based on
their importance to society and theirimportance to business1⚫Determine annual goals for eachmaterial issue and clarify SDGs4 toaddress⚫Discussion and approval by CEO as
well as directors and executive officers
related to sustainability

Employees⚫Creation of a workplace environment
replete with dreams and vitality thatenables employees to demonstrate achallenge spirit

Local Communities⚫Promotion of regional revitalization andenvironmental preservation as well as
paying taxes

Management
Foundation
Identified
Material Issues    • Propose optimal solutions
and provide high-valueadded services• Help customers
create innovation andvalue through safety,
consciousness of theenvironment and so forth    • Pursue productivity
improvement andcontinually improve
operational efficiency• Contribute to thedevelopment of the industry
and society and to economic
growth by promoting
sustainable productionconsumption mode  • Build a highly effective corporate governance system to ensure that operational
decision-making and supervisory functions are exercised sufficiently

  

  

  

• Further strengthen compliance and risk management• Preserve the global environment through contributing to semiconductor
technological innovation as well as through initiatives in products, at plants andoffices and in the supply chain• Build a workplace environment replete with dreams and vitality that respects
employee diversity and enables them to realize their full potential

Importance to businessenvironmentally friendly
products and services

  Governments/Associations⚫Provision of solutions that help solve anddevelop industrial and societal issues  • Build a strong and sound management foundation for underpinning continued
growth as a company• Practice respect for human rights based on high ethical standards

1 Refer to “Identifying Material Issues” in the “Tokyo Electron Sustainability Report 2022” for information about the material issues identification process and refer to“Annual Sustainability Goals and Results” for information about annual goals www.tel.com/sustainability/report/
2 Refer to Stakeholder Engagement on p. 25
3 WFE: Wafer Fab Equipment. The semiconductor production process is divided into front-end production, in which circuits are formed on wafers and inspected, and backend production, in which wafers are cut into chips, assembled and inspected again. WFE refers to the production equipment used in front-end production and in wafer-levelpackaging production.
4 SDGs: Sustainable Development Goals

13 TOKYO ELECTRON Integrated Report 2022

• Promote standardization, efficiency and automation throughout the entire Group by
integrating business systems, unifying databases and so forth• Optimize and level production operations by formulating detailed production plans
based on analysis of technology and market trends and customer investment plans
as well as promoting the stable procurement of parts and materials

Identifying Material Issues

Importance to society⚫Rapid transition to a data-driven
society, leading to further growth in
the semiconductor market that is thefoundation of this transition⚫Further expansion of wafer fab
equipment (WFE3) market⚫Initiatives for the preservation of the
global environment⚫Further strengthening of corporate
governance• Propose optimal solutions contributing to value creation for customers as asemiconductor production equipment manufacturer with a diverse product lineup• Improve business operations, implement quality-first management and pursue
operational efficiency continually
HigherProductivity

Social Issues• Further enhance customer satisfaction, a key management theme that has beentackled since foundation, to become the sole strategic partner for customers• Help customers with the stable long-term operation of various generations ofequipment by providing high-value-added services making full use of leading-edge
AI, digital technologies and knowledge management tools

Material Issues Identification Process1  • Promote leading-edge research and development on a global level by jointly creating • Create innovativetechnologies bytechnology roadmaps spanning multiple generations with customers to respondpromoting innovation
to the requirements of technological innovation as well as collaboration with the• Help develop a sustainable
world’s leading consortiums and academia
society by providing• Strengthen development capabilities and product competitiveness by promoting
digital transformation, which utilizes data and AI

HigherProductivity

SDGs Initiatives• Build a solid managementfoundation that achieves
sustainable growth• Promote respect humanrights, environmentconscious actions and value
creation in the supply chain

Continuing our support of the SDGs, which are globally sharedgoals to be achieved by 2030, we have clarified appropriate SDGs
initiatives through our business for each material issue and are
conducting these initiatives throughout the entire Group.
In fiscal 2022, we reconfirmed the 17 goals and 169 targets5.
5 Refer to “169 Targets of the SDGs” in the “Tokyo Electron Sustainability Report2022” for details www.tel.com/sustainability/report/

TOKYO ELECTRON Integrated Report 2022

14

Chapter 2

Medium- to Long-term Value Creation Story

Medium-term Management Plan
Previous Medium-term Management Plan
Review of the Previous Medium-term Management Plan
We formulated our Medium-term Management Plan in May of2019 and have been engaging in efforts to achieve a financial
model with net sales of 2 trillion yen, an operating margin of 30%
or more, and ROE of 30% or more by fiscal 2024. As the wafer fab
equipment (WFE) market has expanded significantly, we
outperformed the market growth by making steady progress inour business development in our focus areas. With net sales of
2,003.8 billion yen, an operating margin of 29.9%, and ROE of
37.2% for fiscal 2022, our best-ever performance, we reached ourtargeted financial model two years ahead of schedule. The main
reasons for this are as follows.
1. Continue to Invest in Growth
Even when net sales declined where the WFE market wasundergoing adjustment, we continued to increase ourinvestment without loosening the reins and invested
approximately 600 billion yen in R&D over the past five years
to strive to maintain and improve our industry-leading
technological innovations. As a result, progress was made in
developing new functions and products with high-valueadded, leading-edge technology and bringing them to market,
leading to the acquisition of new business. In addition, ourcontinuous capital investment and systematic production
capacity preparations enabled us to increase our market shareof all the semiconductor production equipment we handle
in 2021.
2. Execution of Agile Business Strategy
Our basic strategy is the continuous provision of high-valueadded Best Products and Best Technical Service. We were
impacted by the travel restrictions caused by the spread of
COVID-19 from the beginning of 2020, but despite thesecircumstances, we were able to conduct sales activities,
equipment start-up, and provide services without delay
through close communication with customers and ouroverseas companies. In addition, we strengthened our
response capability at local sites by increasing the number ofJapanese employees stationed abroad and striving to improve
the skills of local engineers. We were able to strengthen therelationship of trust with our customers and contribute to theimprovement of business performance by fully demonstrating
the challenging spirit of our employees, who are capable offlexibly and rapidly adapting to changes in the environment.

New Medium-term Management Plan
3. C
 lose Communication and Collaboration with Partner
Companies
While the WFE market increase approximately 40% year-on-year
in 2021, there were parts and materials procurement shortages
worldwide. Under these circumstances, we provided information
to our partner companies on a continuous and regular basis tobuild a system of collaboration and facilitate the smoothprocurement of parts and materials, increasing production
volume and resulting in our business performance greatly
exceeding market growth.
Market Capitalization
Against a backdrop of the aforementioned improvement ofbusiness performance, our market capitalization has increased
more than 10-fold over the past decade.
In addition to proactive growth investment in recent years, suchas in R&D and production capacity expansion, our market
capitalization has increased significantly compared to total net
assets as a result of the stock market’s evaluation of value that is
not reflected on balance sheets, such as the securing of talented
human resources and collaboration with customers and suppliers.
We will continue to strive to enhance both shareholder value
and corporate value, and continue to proactively invest in growth.
Trends in Market Capitalization and Net Assets
Market capitalization

Highest market capitalization

Fiscal 2022
ActualNet Sales¥1,500.0
billion¥1,700.0
billion¥2,000.0
billion¥2,003.8
billionOperatingMargin

26.5%

28%

>30%

29.9%

ROE

>30%

15 TOKYO ELECTRON Integrated Report 2022

Financial Targets (by Fiscal 2027)
Net Sales¥3 trillion or more

Operating Margin

35% or more

ROE

30% or more

We will promote the following initiatives based on our material
issues of “Product Competitiveness,” “Customer Responsiveness,”“Higher Productivity” and “Management Foundation” to achieve
the new Medium-term Management Plan.

• Continuing proactive investments to enable maximum
capture of future growth opportunities, andimplementing research and development investments ofat least 1 trillion yen over five years¥10,756.3B(January 4, 2022)

10,0008,000• Enhancing the field solutions business by utilizing ourindustry-leading installed base

6,000

¥9,943.6B(March 31, 2022)¥855.2B(March 31, 2012)¥598.6B(March 31, 2012)¥1,347.0B(March 31, 2022)

Progress on the Previous Medium-term Management Plan
Financial Model(by Fiscal 2024)

Financial Targets• Providing leading-edge technological products with highadded value and superior technological services

12,0002,000

Financial Targets and Principal Initiatives
We have set financial targets for net sales at 3 trillion yen or morein scale, an operating margin of 35% or more, and ROE of 30% ormore by fiscal 2027. We are also working diligently toward sturdier
financial structures and aiming to create world-class profit.

Net assets(Billions of yen)

4,000

We will be reaching our milestone 60th fiscal year in 2022 andhave formulated our new Vision and new Medium-termManagement Plan as we strive for further growth. Under thisplan, we will continue to work toward the Best Products and BestTechnical Service, and will strive to achieve short-term andmedium- to long-term profit expansion and continuous
corporate value enhancement.

02012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

• Increasing productivity and added value using data and AI• Advancing E-COMPASS1 in order to establish a sustainablesupply chain in the industry• Revising environmental long-term goals for 2050,
declaring achievement of net zero (reducing greenhousegas emissions to virtually zero) and developing activities
to achieve goals

Corporate GovernanceIn relation to the aforementioned execution of principal
initiatives, it is important to ensure the development of highly
effective corporate governance as a management foundation. As
part of that, we introduced a Corporate Officer system in June of2022. Corporate officers, including the CEO, exchange opinions
and engage in discussions from the same perspective as the CEO
as well as make important decisions promptly at the Corporate
Officers Meeting, which is positioned as the highest decisionmaking body on the executive side. In addition, corporate officers
promptly share important decisions with each responsible
department and realize flexible and dynamic executive
management that is based on even stronger cooperation.
By enhancing executive side systems and appropriatelytransferring authority from the Board of Directors to the
executive management side under this system, we arestrengthening the supervisory functions of the Board of
Directors and establishing a system for holding in-depth
discussions on more important medium- to long-term matterssuch as management issues and growth strategies.
Capital Policy and Shareholder Return Policy
View Regarding Capital Efficiency
Our capital policy is based on securing the funds necessary forinvestment in growth, continuing to make proactive efforts toreturn profits to shareholders, and striving for appropriate balance
sheet management from a medium- to long-term growth
perspective. Specifically, we will target sustainable growth byfurther improving our operating income to sales and capitalefficiency and making efforts to expand cash flow, and shallpursue a high level of capital efficiency, including improving ROE.
Shareholder Return Policy*
Our dividend policy is to link dividend payments to businessperformance on an ongoing basis and a payout ratio is around
50% based on consolidated net income attributable to owners ofparent. However, the amount of annual dividend per share shallnot be less than 150 yen. We will flexibly consider share buybacks.
* We will review our dividend policy if we do not generate net income for two
consecutive fiscal years.

• Clarifying key indicators for continuous corporate valueenhancement2
1 Refer to E-COMPASS on p. 41
2 Refer to Key Indicators for Continuous Corporate Value Enhancement on p. 17

37.2%

TOKYO ELECTRON Integrated Report 2022

16

Medium- to Long-term Value Creation Story

Chapter 2

Key Indicators for Continuous Corporate Value Enhancement
We have clarified key indicators related to the continuous enhancement of corporate value in the new Medium-term Management Plan
and are taking actions in collaboration with the persons responsible for each indicator in order to achieve them.
Target Area

FinanceResearch and Development

Plants and Offices

Environment

Logistics

Products

Engagement

Objective

Objective

Fiscal 2027

• Operating Margin: 35% or more

Fiscal 2027

• ROE: 30% or more

Fiscal 2027

• Continuously create high value-added next-generation products byimplementing R&D expense of at least 1 trillion yen over 5 years

Fiscal 2027

• Reduce total CO2 emissions by 70% (compared to fiscal 2019)

Fiscal 2031

• A rate of 100% renewable energy usage

Fiscal 2031

• Reduce energy consumption (per-unit basis) by 1% from the previous fiscal
year at each plant and officeEvery fiscal year

• Maintain water consumption (per-unit basis) at each plant and office at
individual base year levels

Every fiscal year

• Reduce CO2 emissions of total logistics (own delivery) by 10% by further
promoting modal shift and joint delivery

Fiscal 2027

• Reduce the amount of use of wooden packaging materials by 50%(packaging for semiconductor production equipment)

Fiscal 2024

• Reduce per-wafer emissions of CO2 by 30% (compared to fiscal 2019)

Fiscal 2031

• Engagement survey score: Achieve further improvement (compared to theprior survey) or outperform the benchmark

Every survey

Every fiscal year

Corporate GovernanceRisk Management• We are building and further improving a highly effective risk management
system that supports a strong management foundation.
• We are enhancing risk management and compliance based on theslogan “Safety, Quality and Compliance. Our top priority. It’s our pride.”
Together with establishing a dedicated Compliance Department at ourheadquarters and appointing a Chief Compliance Officer and Regional
Compliance Controllers, we are also conducting assessments by external
agencies and undertaking education.
•W e are conducting supervision and monitoring through reports to the
Corporate Officers Meeting—the highest decision-making body on theexecutive side—and the Board of Directors (twice annually).
• T o conduct appropriate measures with certainty across the entire Group,
we are identifying risks (13 risks in fiscal 2023) expected in the executionof business centered on the Risk Management Committee and deploying
them in the activities of each company.
•W e are continuously conducting activities to foster awareness about
safety, compliance and risk management, and reflecting the awarenessof all executives and employees as well as their autonomous and specificinitiatives in our human resource evaluation.

* Excluding retirement at the mandatory retirement age and so on.

Employees

Careers• We have created an environment where every employee can create value
for the Company’s growth and for society with the support of supervisors
and others by challenging themselves to do what they want while imagining Fiscal 2027
their own futures (career paths) and growing.
(For details, refer to “Employees Both Create and Fulfill Company Values” on p. 47)

Work-life Balance• Annual paid leave utilization rate
Japan: (1) 80% / (2) 90%,
Overseas: Equal to or better than the previous fiscal year’s results

Japan: ( 1) Fiscal 2027 /(2) Fiscal 2031

• Ratio of female managers Japan: 5%; Global: 8%

Fiscal 2027

Diversity andInclusion

Overseas: Every fiscal year

Target Year

• We are working at all times to establish an optimally effective Boardof Directors and an aggressive management execution system, and bycontinuously addressing issues based on evaluations of the effectivenessof the Board of Directors and input from institutional investors and otherstakeholders, we will achieve solid corporate governance for enhancing
corporate value over the medium to long term and sustainable growth.
1. Seeking a Board of Directors with high effectiveness• Audit & Supervisory Board System:
Ratio of outside directors: One-third (including two female)Free and open discussions including corporate auditors• Off-site meetings: For discussions on medium- to long-term strategies,
issues, etc. (twice annually)• CEO reports: Reports to the Board of Directors on the status of
Every fiscal year
execution of key duties by the CEO (every Board of Directors)• CEO mission: Information is shared concerning the CEO’s mission forachieving the new Medium-term Management Plan
• Representative director assessment closed sessions: Sessions including
directors and Audit & Supervisory Board members but excluding therepresentative director (once annually)
2. Operating rhythm supporting the execution of business• Corporate Officers Meeting: The highest decision-making body on theexecutive side (once monthly)• CSS (Corporate Senior Staff): Global, across-the-board coordination ofcompany-wide business execution (four times annually)• Quarterly review meeting: Monitoring the progress of the new
Medium-term Management Plan (four times annually)

Target Year

• Net Sales: ¥3 trillion or more

• Employee retention rates*
Japan: 99%; overseas: Higher than the industry average

Target Area

Every fiscal year

Characteristics of Semiconductor Production Equipment BusinessAs technological innovations in semiconductors drive the growth of the production equipment market, it is essential to provide leadingedge technologies as well as services that support them. We will promote initiatives in our new Medium-term Management Plan basedon the following requirements for semiconductor production equipment manufacturers.

• Supply chain sustainability assessment implementation rate
Material suppliers: Covering at least 85% of our procurement spend
Logistics suppliers: 100% of customs-related operators
Supply Chain Management

Every fiscal year

Staffing suppliers: 100% of employment agencies and contracting
companies (internal contractors)• Supply chain BCP assessment implementation rate
Material suppliers: Covering at least 85% of our procurement spend

Technological innovations in semiconductors driving the growth of the production equipment market• TCIR No more than 0.10 (Globally No. 1 in the industry)*

Safety* TCIR: Total Case Incident Rate. The number of workplace incidents per 200,000 work
hours.

Requirements of semiconductor production equipment manufacturers

Every fiscal year

Fiscal 2027

R&D from a
medium- to long-term
perspective andsolid management andfinancial foundations to
support it

Development ofhighest-performanceequipment that realizes
technological innovations

Solid relationship ofmutual trustwith customers

17 TOKYO ELECTRON Integrated Report 2022

Specialized expertise in avariety of fields,
including electronics,
mechanics,
process and software

Building ofsustainable supply chains

Provision ofhigh-value-added
technical services

Initiatives to reduce
environmental impact

TOKYO ELECTRON Integrated Report 2022

18

Chapter 2

Medium- to Long-term Value Creation Story

Our Strengths and the Driving Forces behind Our Company
We have identified “abundant technological capabilities
cultivated as an industry leader,” “absolute trust from customers
based on our reliable technical services” and “challenging spirit of
our employees, who are capable of flexibly and rapidly adapting
to changes in the environment” as the driving forces behindfurther growth. By applying the strengths created by thesedriving forces to our business activities, we will strive to expand
profits over the medium to long term and continuously enhance
corporate value.

Strengths
Onlyone

Outlook of Semiconductor Production Equipment Business
As the trend towards a data-driven society progresses rapidly,
the importance of the semiconductors that form the foundationof this society is increasing even further. The semiconductor
market exceeded US$500 billion for the first time in 2021 and is

expected to exceed US$1 trillion by 2030, growth that will morethan double the current market. Accordingly, the WFE market
was approximately US$90 billion in 2021 and is expected to groweven further in the future.

Semiconductor Market

WFE Market(US$ trillion)
1.4

The world’s only manufacturer withproducts for the four key successive
processes necessary for semiconductor
scaling: deposition, coater/developer, etchand cleaning(US$ billion)>US$1 trillion

140

1.2
120
Deposition Coater/Developer

Etch

Cleaning
1.0

100％

100

100% share in EUV1 lithography coater/developer, which are necessary forsemiconductor evolution

0.8

1 EUV: Extreme Ultraviolet. Ultraviolet radiation(ultraviolet rays) in the wavelength range of 1 nm
to 100 nm.

Coater/Developer

80

EUV lithography
0.6

No.1/
No.2

Our product lines are all strongly positioned intheir respective segments, all of which having
achieved first or second place in market share2
2 Our estimate (2021)
3 Our product lines in respective segments:
Diffusion furnace includes furnace, batch
deposition includes ALD (Atomic Layer
Deposition), metal deposition includes single
wafer deposition, and cleaning includes single
wafer cleaning and batch cleaning.

No.1

No.1

No.2

No.1

No.2

No.1

No.2

US$555.9 billion(2021)

No.1

60

0.4

Diffusion
Furnace3

Batchdeposition3

Metaldeposition3

Coater/Developer

Plasma etch Gas chemical
etch

Cleaning3

Prober

40

0.2

20

0

1990
Industry-leading installed base (cumulative)

No.1

Building a business model for field solutions
where equipment sold becomes a new
business opportunity and creates value

No. 1

90

approximately 82,000 units4
Increase of approximately 6,000 units
each annually

4 As of March 31, 2022

The Driving Forces behind Our Company
Abundant technological capabilities cultivated as an industry leader• Innovative and varied technologies created through joint development with customers and collaboration with world-leading consortiums• Proactive R&D investment aimed at creating leading-edge technologies based on strong management and financial foundations• Product development through digital transformation which utilizes data and AI

2000

2010

2020

2030

Source: 1990-2021 (WSTS), 2022-2030 (IBS, May 2022)

0

1990

2000

2010

2020

2030

Source: TechInsights Manufacturing Analysis Inc. (VLSI) (1990~2021)

Semiconductor Device Technology Evolution andBusiness Opportunities
Further growth in the semiconductor and WFE markets will besupported by technological innovation in semiconductor
devices. In logic/foundry, NAND and DRAM applications,increased demand for further scaling, lower manufacturing costs

through higher multi-layering, lower power consumption andhigher speeds is expected.
We will utilize our broad product lineup to contribute to the
manufacturing of devices with a highly competitive advantage.

Semiconductor Devices and Our Product Lineup
Logic
NAND

DRAM

3D System
Integration

Absolute trust from customers based on our reliable technical services• Co-creation of technology roadmaps with customers and quick launch of next-generation products with overwhelming added value• Dedicated to improving customer satisfaction level and building of relationship of mutual trust with the aim to be the sole strategic partner for customers• T imely provision of high-value-added technical services based on a long track record in response to the increasingly advanced and diverse technological needs of customers

Wafer Bonder/
DebonderFurnace

Challenging spirit of our employees, who are capable of flexibly and rapidly adapting to changes in the environment• Focus on strengthening human resource development and promoting management that places an emphasis on employee motivation• Implementation of “TEL Values,” which summarize values and the codes of conduct for all employees• Understanding of issues and implementation of policies based on a regular global engagement survey

19 TOKYO ELECTRON Integrated Report 2022

Wafer prober

ALD
Single wafer
deposition

Batch cleaning
Coater/Developer

Plasmaetch

Gas chemical
etchSingle wafer cleaning

TOKYO ELECTRON Integrated Report 2022

20

Chapter 2

Medium- to Long-term Value Creation Story

Logic/Foundry
Increasing patterning complexity requires co-optimization
between unit processes. It is expected that high-NA EUV1
lithography technology will be applied to mass production toachieve further scaling going forward. In addition to scaling
through high-NA EUV, various new technologies and structures
will be introduced. Transistor structures are also expected toshift to new 3D structures (FinFET2, GAA3, CFET4). Our front-end
process equipment and wafer bonding equipment willcontribute to the realization of this kind of technologicalinnovation.

NAND
3D NAND multi-layering is progressing even further, and layercounts will increase to 300 and 500 in the future. Accordingly,
this will require etch that enables processing of deep holes andtrenches with a high aspect ratio5, high productivity sacrificial
film removal and atomic level deposition on 3D structure. In
addition, process integration is required to control the increase inchip manufacturing costs that are associated with this increasein layer counts. We are striving to further improve theperformance of our etch and ALD deposition systems to meetthese technological requirements.

1 High-NA EUV: Refers to next-generation EUV, an exposure technology thatshortens the resolvable line width by increasing the numerical aperture (NA)
2 FinFET: Fin Field Effect Transistor, a process technology with a three-dimensional
structure in the shape of a fin
3 GAA: Gate All Around, a next-generation technology for FinFET
4 CFET: Complementary Field Effect Transistor, transistor with a new structure

5 Aspect ratio: Depth to width ratio of the pattern formed on the wafer

Logic

FinFET

GAA

CFET

DRAM
Technologies such as those that suppress delays caused byinterconnects and those that further advance 2D scaling are in
demand. While many of our deposition, etch and cleaningsystems are used for this technology in DRAM, we will continue
to provide new products and solutions to achieve even further
scaling. 2D scaling is progressing and the further shift to 3D
DRAM that uses a 3D structure is expected. In 3D DRAM, as withthe shift from 2D to 3D NAND, vertical multi-layering will drive
scaling in place of 2D lithographic scaling. This is particularly
expected to increase the importance of the deposition andetch processes.

DRAM

21 TOKYO ELECTRON Integrated Report 2022

3D DRAM

NAND (1tier)

NAND (2tier)

3D System Integration
3D system integration is advancing to improve the performanceof semiconductor devices, using wafer bonding technology. The
wafer bonding technology application is now under production
for CMOS image sensors, and its developments in 3D NAND,
where memory cells and drive circuits are bonded together, andalso in Logic backside power delivery network, are accelerating. In
addition, the industry is moving to chip disaggregation, called Chiplet,
and then bond those together, expecting the device speed increase,and lowering power consumption and cost as one of advanced
assembly technologies. We contribute to evolve the leading-edge
device and the system level performance by providing wafer
bonding and laser trimming equipment based on the technology
and experience we have cultivated in front-end processes.
Logic

Development for Several Generations through Collaboration
with Customers
With the increasing technical difficultly of scaling, in addition to
the evaluation of the Nth mass production generation,
development from N+1 to N+4 is also progressing simultaneously
for leading-edge memory, logic and foundry. In order to continue
this kind of development and evaluation with semiconductor
manufacturers, high technology development capabilities,
resources in engineering and a strong financial base are required.
We work with our customers, who are semiconductor
manufacturers, in their respective roles to co-create long-term
technology roadmaps and develop and evaluate technologies up
to four generations ahead. We are able to quickly demonstrate
both equipment and process performance by conducting
evaluations using wafers that are actually used in the
manufacturing processes of our customers. Through initiatives
like this, we steadily create high-value-added products and strive
to capture new business opportunities.

Further Strengthening of Development Structure
We are further strengthening our development structure in orderto advance the development and evaluation of leading-edge
semiconductor devices up to four generations ahead.
We have already established the TEL Digital Design Squareand the Miyagi Technology Innovation Center, and we plan toopen new development buildings at sites in Yamanashi,

Development and Evaluation up to Four Generations Ahead
Demo Evaluation (TEL)

N+1

Demo Evaluation (Customer)
Mass Production

N+2

N+3

N+4

Kumamoto and Miyagi between 2023 and 2025. The Yamanashisite will be responsible for film deposition, gas chemical etch andcorporate development, the Kumamoto site for coater/developer and cleaning system development, and the Miyagi site
for etch system development.

TEL Digital Design Square(Opened in November 2020)

Miyagi Technology Innovation Center(Began operation in October 2021)

Kumamoto New Development Building(Completion scheduled for fall 2024)

Miyagi New Development Building(Completion scheduled for spring 2025)

Yamanashi New Development Building(Completion scheduled for spring 2023)

3D NANDTOKYO ELECTRON Integrated Report 2022

22

Medium- to Long-term Value Creation Story

Chapter 2

Value Creation Model
We will make the most of the capital we own and continue to provide new value that contributes to the resolution of issues
and development of industry and society through the development of a value chain in our business activities in research anddevelopment, procurement and manufacturing, sales and installation and maintenance services.

INPUT (investment capital) Fiscal 2022
Financial capital

Financial capital

Net assets

Net sales

1,347.0 billion yen
Equity ratio 70.5%
Total assets 1,894.4 billion yen
9

Manufacturing sites total(6 in Japan and 3 overseas)

Abundant technological capabilities cultivated as an industry leader

Manufacturing-related capital investment,such as new plant buildings andmanufacturing equipment

Absolute trust from customers based on our reliable technical services
Challenging spirit of our employees, who are capable of flexibly and rapidly
adapting to changes in the environment

Increasing of production capacity and leveling

Manufactured capital
Cumulative number of equipment installations Approximately(annual shipment volume of approximately 6,000 units)
Safety-first operation (TCIR)

Intellectual capitalIntellectual capital

Installation and
Maintenance Services

158.2 billion yen

Manufactured capital• Contributing to improved productivity incustomer product manufacturing (utilization
rate and yield)• Contributing to the growth of thesemiconductor and FPD markets

Observing equipment delivery and installation schedules

12

Broad-ranging knowledge and technologicalcapabilities in semiconductor and flat panel
display (FPD) manufacturing processes

82,000 units

0.30

Optimized and efficient production system

R&D investmentbuilding a solid financial foundation

High-quality and high-reliability products incorporating leading-edge technologies

Many years of know-how and provenperformance in manufacturing operations

R&D sites
total(6 in Japan and 6 overseas)

Financial capital• Returning generated profit to stakeholders• Continuing proactive investment for growth by

2,003.8 billion yen
Operating margin
29.9%
Net income
437.0 billion yen
ROE
37.2%
Total annual dividend 219.3 billion yen (payout ratio: 50%)

Support the stable operation ofequipment and provide prompt
and accurate high-valueadded service

Research andDevelopment
Continuously strengthening
research and development tocreate innovative and unique
technologies in a timely mannerIntellectual capital• Contributing to the further development of

Innovative, high-value-added unique technologies

1

2

Product lineup with No. or No.
semiconductor production equipment market
share and proposals that leverage thisNumber of patents owned

19,572industry and society through semiconductor
and FPD technological innovation• Contributing to the building of fair and soundmarkets that respect intellectual property

Highly efficient and high-quality service

Customer requests and technology trends
Human capital

Equipment-related data accumulated
through AI and knowledge management

Retention rate** Calculated using data on turnover rate

Systems and know-how for promoting digitaltransformation

96%

Improvement in desire for growth and demonstration of the challenge spirit inemployees, who both create and fulfill company values

Human capital

Sales

Number of employees

Propose optimal solutions
as the sole strategic partner

15,634
Proportion of engineers 67.1%

Procurement andManufacturing

Building of relationships of trust with stakeholders by employees with a high levelof engagement

Efficiently manufacturinghigh-quality products
backed by a sustainablesupply chain

Ratio of female managers

Social and relationship capital

Human resource development throughTEL UNIVERSITY

Percentage of respondents who selected “Very Satisfied” or“Satisfied” in the customer satisfaction survey** For each question, average score is calculated for all customers who responded

Rate of improvement after supply chain sustainability assessment

Social and relationship capital

100%
31.5%

(compared to fiscal 2021)

Relationship of mutual trust with customers
built through many years of performancerecords
Solid cooperative working relationships with
suppliers

Number of TEL FOR GOOD programs

OUTPUT

Foundation for business activities in local
communities

Natural capital

100,265kL
Water consumption 1,417,000m

Energy consumption

3• Improving value provided to stakeholders

155

Social and relationship capital• Contributing to the value creation andcontinuous growth of customers• Maintaining soundness and strengthening

competitiveness throughout the entire supply
chain• Contributing to the revitalization of andsustainable development in local communities

Creating employment opportunities in and paying taxes to local municipalities andnations where we carry out business activities

Natural capital

10.7% reduction (compared to fiscal 2019)
Renewable energy consumption 230,218MWh
Energy consumption at plants andoffices per net sales
26% reduction (compared to fiscal 2021)
Waste material recycling rate
98.1%
Per-wafer CO2 emissions

Semiconductor Production Equipment/
FPD Production Equipment
Field Solutions

dreams and vitality that enables employees torealize their full potential

5.5%

Personnel able to perform globally

23 TOKYO ELECTRON Integrated Report 2022

Human capital• Creating a workplace environment replete with

Natural capital• Contributing to the preservation of the global

Realization of Vision and Practice of Corporate Philosophy

The driving forces behind our company

Manufactured capital

IMPACT(impact on industry and society)

OUTCOME (created value) Fiscal 2022

environment through environmentally friendly
products and business activities as well as
collaboration with suppliers• Contributing to customer manufacturing ofsemiconductors and FPDs that have a low
environmental impact as well as customer
business activities

TOKYO ELECTRON Integrated Report 2022

24

Chapter 2

Medium- to Long-term Value Creation Story

Stakeholder Engagement

Relationship with Stakeholders

Actively providing opportunities for engagement with our stakeholders and promoting mutual communication allows us toaccurately comprehend their requirements and reflect them in our business activities. We strive to build a solid relationship ofmutual trust with all the stakeholders surrounding our company and respond to each of their expectations, so that we can fulfill ourroles and responsibilities in society.

• Customers purchase the semiconductor and FPD production
equipment our company provides and also utilize services
necessary for maintaining that equipment• We not only provide products and services but also createtechnology roadmaps spanning multiple generations andcarry out joint technology development with customers
toward developing next-generation devices and processes

Relationship with Stakeholders• Employees help enhance corporate value by utilizing theirindividual abilities and know-how, and by improving theirskills through training

Value Provided to Stakeholders• Best Products with world-leading performance thatincorporate leading-edge technologies• We promote the improvement of employee engagement
under management that emphasizes employee motivation
Value Provided to Stakeholders• A workplace environment replete with dreams and vitalitythat enables employees to demonstrate a challenge spirit• High-value-added Best Technical Service

Employees

Customers• Environment-friendly products and services with a focus onsafety and quality• Solutions that satisfy a variety of application needs• Opportunities for career development and skill improvement• Fair performance review and remunerationcommensurate with results• Employee meeting• Global engagement survey• Technology conference• Individual workshops• Joint development• Customer Satisfaction Survey

Relationship with Stakeholders

Relationship with Stakeholders• Shareholders and investors support our company’sbusiness expansion from a financial aspect andparticipate in company management by exercising
their voting rights, etc.

• Suppliers supply the parts, materials and human resources necessary
for our company’s equipment manufacturing, and also perform
customs clearance and logistics operations• We improve and enhance the quality of our products and services
collaboratively with our suppliers and build a sustainable supply chainthat takes into account labor, the environment, health and safety
and ethics

Suppliers• Earnings release
conference, Medium-termManagement Plan
briefing, IR Day• Production update briefing• TEL Partners Day

Value Provided to Stakeholders• Maintaining soundness and strengthening competitivenessthroughout the entire supply chain• Sustainability Assessment(including E-COMPASS)• IR conference, IR road show*,
individual IR interview• STQA* audit* STQA: Supplier Total Quality Assessment• Shareholders’ Meeting• Further improving added value of products and services throughcollaboration with our company* IR road show: IR activities presented directly toshareholders and investors

Shareholders/
Investors• We share our management vision and growth scenario
with shareholders and investors, and incorporate thefeedback received from them through constructive
dialogue into management decision-making in aneffort to enhance our corporate value
Value Provided to Stakeholders• Return of profit generated from business activities• Realization of medium- to long-term growth andenhancement in corporate value• Providing business opportunities in the semiconductor and flat panel
display (FPD) production equipment market

Relationship with Stakeholders
Relationship with Stakeholders• We advance together with the local communities where
we carry out business activities. We create employment
opportunities, develop local industries and advanceenvironmental preservation initiatives as well as pay taxes
in line with the profit generated by our business activities
Value Provided to Stakeholders• TEL FOR GOOD
(Social Contribution
Activities)• Tours of plants andoffices• Environmental
debriefing• Cooperation with government
and administrative agencies• Collaboration with global
initiatives

Governments/
Associations• Industry group activities

Value Provided to Stakeholders• Provision of human resources development andemployment opportunities• Solutions that help solve and develop industrial andsocietal issues• Promotion of environmental preservation in communities• Products, services and business models that are consciousof the environment, human rights and other factors• Financial contributions through tax payments

25 TOKYO ELECTRON Integrated Report 2022

Local
Communities• In the markets where we carry out our business activities,
we work to accurately comprehend societal needs
by collaborating with highly relevant internationalorganizations, industry associations, initiatives and NGOs,
contributing to the resolution of issues faced by the industry
and society, as well as to further development• Business activities that comply with laws, regulations,industry codes of conduct and other rules
TOKYO ELECTRON Integrated Report 2022

26

Chapter 3

Value Creation by the Value Chain
Procurement
ResearchandandDevelopment Manufacturing

Initiatives in the Value Chain

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Tokyo Electron is building a superior business model that takes advantage of its characteristics and is continuing to create new value
through sustainability initiatives and the development of value chains in its business activities.

Research andDevelopment

Procurement andManufacturing

P. 29

Installation and
Maintenance Services

Sales

P. 31

P. 33

P. 35

Overview

Overview

Overview

Overview

 Development of unique technologies for Establishment of stable production capabilities

 Be the sole strategic partner for customers

 Deploying the Best Technical Service with highcreating high-value-added, next-generation
products that contribute to technologicalinnovation in semiconductors

by building a sustainable supply chain Efficient manufacturing of high-quality,

high-reliability, safe andenvironment-friendly products

 Continuous development that looks into the

future based on the prompt comprehension ofmarket and technological trends, as well as
customer needs

by providing the Best Products and BestTechnical Service

added value in a prompt and appropriate manner Proposals on optimal solutions that contributeto the creation of value for our customers

 Strengthening of our global support structure

to provide advanced field solutions that solve
customers’ issues

 Creation of value through partnerships with

suppliers

Differentiation Points

Differentiation Points

Differentiation Points

Differentiation Points

 Promotion and optimization of development

 Stable procurement and production leveling Accurate comprehension and prompt provision Field engineers who are highly specialized andthrough close collaboration among the
Corporate Innovation Division, businessdivisions and development sites in Japanand overseas

through collaboration based on relationships
of mutual trust with suppliers World-class manufacturing operations throughthe use of our manufacturing know-how,knowledge and the equipment data we haveaccumulated over many years

 Development of leading-edge technologies

through various types of collaboration withconsortiums, academia and suppliers in Japanand overseas

 Initiatives to preserve the global environment

throughout the supply chain Pursuit of development efficiency and new

Value Created Innovative, high-value-added and unique High-quality and high-reliability products

technologies and solutions that cover multiple
semiconductor manufacturing processes

incorporating leading-edge technologies

 Shortening of production lead times by Improvement in equipment productivity, such

optimizing the production plan and increasing
the efficiency of manufacturing operations,etc.

as higher throughput*, a higher utilization rateand smaller space requirements

 Equipment technology that increases

environmental performance Ability to suggest solutions by taking advantage

of a wide range of product lineup and to satisfy
a broader range of customer needs with usedequipment and re-engineered equipment

 Continuous initiatives to improvethrough support services that extend the life
cycles of equipment, etc.

 Providing highly efficient and high-quality

services through the use of AI and digitaltechnologies, the promotion of knowledge
management, etc.

Value Created

Value Created High-value-added products incorporating Comprehensive services that include everythingfrom equipment delivery to maintenanceinnovative technologies by simultaneous
parallel evaluation of four technology nodes

 Products that address a variety of applications,as well as used equipment andre-engineered equipment

 Contribution toward the long-term steady

operation of equipment across many generations

 High-quality technical services that contribute Responsiveness to customers through close Safety-first operation

possess broad knowledge

 Initiatives to reduce environmental impact

customer satisfaction

value creation by promoting digitaltransformation (DX)

Value Createdof technologies and solutions, etc. needed byour customers through the development of
global operations

to improving customers’ productivity

collaboration throughout the entire Group* Throughput: Ability to process wafers over a unit of time

Sustainability Initiatives in the Value Chain
� Environment P. 37
� Continuous Improvement of Business Operations
� Compliance P. 60

27 TOKYO ELECTRON Integrated Report 2022

P. 46

� Human Rights P. 41
� Human Resources P. 47
� Engagement with Capital Markets

P. 61

� Supply Chain Management P. 43
� Corporate Governance P. 49
� Evaluation from Third-party Institutions

P. 61

� Safety P. 44
� Risk Management P. 57
� Participation in Global Initiatives

� Quality P. 45
� Information Security

P. 59

P. 62

TOKYO ELECTRON Integrated Report 2022

28

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Initiatives in the Value Chain

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Research and Development
Main Research and Development Initiatives
Tokyo Electron will continue to create highly unique technologies through balanced basic and applied
R&D as well as through utilizing in-house and outside knowledge, while always remaining conscious of
the most current customer needs.
various types of basic and elemental R&D toward the next
growth phase. Additionally, we are strengthening our R&D
capabilities and continuing to develop technologies that will help
customers create value through collaboration between our
major domestic development sites and R&D sites worldwide as
well as through alliances with outside consortiums, research
institutes, academia and suppliers.

We are creating innovative and unique technologies for
manufacturing leading-edge semiconductors and flat panel
displays (FPDs) by ascertaining technological and market trends
as well as customer needs early on by leveraging global
marketing activity networks and sharing that information
throughout all relevant departments. Through development
portfolio management, we are formulating short-term as well as
medium- to long-term development strategies and progressing

Key Themes for Medium- to Long-term Value Creation
 Timely development of high-value-added technologies and products through promotion of Shift Left*
 Creating innovative and unique technologies for manufacturing leading-edge semiconductors and FPDs
 Increasing investment in human resources and development* Shift Left: To improve efficiency by investing resources such as technology, personnel and money into the early processes of product development. Refer to “Shift Left” in the “Tokyo
Electron Sustainability Report 2022” for details www.tel.com/sustainability/report/

Management Resources to Be Invested
R&D investment
Over five years, beginningin fiscal 2023
More than1

Human resources possessing
knowledge in a variety of
specialized fields related to

R&D sites

12

semiconductor and FPD
production equipment(6 in Japan and 6 overseas)

trillion yen

Primary Management Indicators
R&D expenses

Number of
new product releases

Global patentapplication rate** The percentage of invention applications that resulted in applications filed in multiple countries

Sustainability Initiatives
� Initiatives related to product environment P. 38 Medium- and Long-term Environmental Goals
� Future-oriented development of environmental technologies through partnerships with suppliers P. 41

E-COMPASS

� Structure to promote innovative development that takes advantage of global diversity P. 48 Diversity and Inclusion
� Development efficiency improvement through the promotion of DX P. 30 Promotion of Digital Transformation (DX)

Risk Management Initiatives
Main Risks
Research andDevelopment

Declining productcompetitivenessIntellectual
Property
RightsDeclining productcompetitivenessRestrictions on the production
and sale of products andoccurrence of liability for damage

Human
Resources

Diminished productdevelopment capability or
customer support quality

29 TOKYO ELECTRON Integrated Report 2022

Initiatives
� Establish the Corporate Innovation Division and build a Group-wide development framework that integrates innovativetechnology development with the technologies of each development division� Provide highly competitive next-generation products ahead of competitors by collaborating with research institutions

and sharing a technology roadmap spanning multiple generations with leading-edge customers� Advance the intellectual property strategy, business strategy and R&D strategy in an integrated manner to build an

appropriate intellectual property portfolio� Make continuous improvements to work environments and promote diverse work styles as well as health andproductivity management (e.g., sharing our visions by management, establishing training plans for human resource whowill lead the future, visualizing career paths for employees and offering attractive remuneration and benefits)

Strengthening Research and Development Capabilities
For our medium- to long-term growth, it is extremely
important to continuously create the high-value-added nextgeneration products that are necessary for technologicalinnovation in semiconductors.
Development sites in Japan and overseas, business divisions
and the Corporate Innovation Division maintain their respective
individuality, collaborating in necessary areas while promoting
technological development and integration. We have a multistructured development system that promotes advancement
and evolution in the process from basic element development tomass-produced products.
Each development site and business division is engaged in thedevelopment of semiconductor and FPD production equipmentwith innovative technologies and an eye on future generations.
They also promote R&D related to peripheral technologies forthese production equipment.
The Corporate Innovation Division strives for the creation offurther high-value addition by working closely with eachdevelopment site to develop cross-function initiatives in eachproduct area as well as promoting and optimizing R&D while
maintaining a bird’s eye view on the entire development
structure. In addition, the division is also engaged in a search forpotential growth areas, as well as in R&D of fundamental
technologies toward creating value in the future.

Collaboration with Consortiums and Academia
We have focused on collaborative efforts with domestic andinternational consortiums and academic institutions (universities)
to enhance our research and development capabilities and tocreate leading-edge technologies for a very long time.
Today, we continue our engagement in a wide range of areasfrom applications to product development. In the area of EUV andhigh-NA EUV1 lithography processes, this is achieved throughcollaboration with imec located in Belgium. Furthermore, we
participate in a global research hub for hardware development of
next-generation AI in the U.S. state of New York, and have formeda partnership with BRIDG, which is a non-profit public-private
partnership located in the U.S. state of Florida, as well. At our
research center in TEL Technology Center, America, advanced
research and development in the areas of front-end, back-end2,
and advanced packaging process areas are being carried out daily.
Additionally, we collaborate with the National Institute ofAdvanced Industrial Science and Technology (AIST), one of Japan’slargest public research institutions. There we leverage AIST’s worldclass research environment and personnel to enhance our own
development by conducting MRAM3 and 2D material-related research.
We do this to address the needs in the field of semiconductor

technology development, which is becoming increasingly diverse.
1 EUV and high-NA EUV: Extreme Ultraviolet. Ultraviolet radiation (ultraviolet rays) in
the wavelength range of 1 to 100 nm. High-NA EUV refers to next-generation EUV,an exposure technology that shortens the resolvable line width by increasing thenumerical aperture (NA).
2 Front-end/Back-end: In semiconductor device production, the beginning sectionof the manufacturing process where the device element is formed is called thefront-end (FEOL), and the latter section is called the back-end (BEOL) where thewiring is traditionally accomplished.
3 MRAM: Magneto-resistive Random Access Memory(As of March 31, 2022)
Tokyo Electron Development Sites
Consortiums

TEL Magnetic
Solutions
ImecTokyo Electron Technology Solutions4Tokyo Electron Kyushu5
Tokyo Electron Miyagi

TEL
Technology
Center Korea

CEA-Leti

TEL Technology
Center, America
SUNY Poly/
NY CREATESBRIDGNational Institute of Advanced
Industrial Science and Technology

IME

TEL Manufacturingand Engineering ofAmerica6

TEL Technology Center, Taiwan

4 Tohoku Office, Hosaka Office, Fujii Office
5 Koshi Office, Ozu Office
6 Chaska Office, Chelmsford Office

Promotion of Digital Transformation (DX)We have positioned DX as an important means for continuing
to provide new value to customers and are developing
company-wide initiatives to do so. In R&D, we have begun
operation of remote support services that apply AR1 technology
while also promoting initiatives to search for new materials andoptimize processes at overwhelming speeds by utilizing
materials informatics2.
Furthermore, in addition to the “Advanced Data Planning
Department” that supports DX activities in productcompetitiveness and customer responsiveness, we established the“Digital Transformation Promotion Department” in January 2022
which is responsible for planning and supporting DX activities in
productivity improvement and management foundation, further
strengthening DX promotion throughout the entire Group.
We plan to continue the utilization of things such as AI in solving

a variety of issues and developing functions, and to advance thedevelopment of production equipment that is equipped with
innovative functions such as analyzing its own operating
conditions and improving functions and operating efficiency.
1 AR: Augmented Reality
2 Materials Informatics: Approach to materials exploration using academic
papers, internal and external materials databases, machine learning and actual
experimental data.

Development Activities
Equipment
software

DigitaltransformationAI
applications

TOKYO ELECTRON Integrated Report 2022

30

Value Creation by the Value Chain

Chapter 3

Research
Procurement
andandDevelopment Manufacturing

Initiatives in the Value Chain

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Procurement and Manufacturing
Main Procurement and Manufacturing Initiatives
Along with striving to build a sustainable supply chain, we have established a system for manufacturinghigh-quality products more efficiently.
We are aiming for constant innovation in production based on
the themes of safety, high quality and high reliability, and are
putting together manufacturing operations that are ecofriendly. Besides working toward a vertical transfer from productdevelopment to mass production via further improvements toefficiency, we are also promoting the creation of manufacturingcore systems that can respond swiftly to market fluctuations, aswell as strengthening and leveling of production capacity.

To ensure stable and sustainable procurement, we carry out
sustainability and BCP* assessments throughout the supply
chain based on industry codes of conduct, as well as shareknowledge with our suppliers regarding safety, quality, theenvironment and compliance. We value fair and transparent
relationships with our suppliers and aim to grow alongside themand contribute to society on a global level through firm
relationships based on trust.
* BCP: Business Continuity Plan

Key Themes for Medium- to Long-term Value Creation
 Creating production capabilities and manufacturing core systems appropriate for the market size
 Optimizing management resource allocation to truncate the transition period from product development to mass production
 Streamlining manufacturing operations with consideration toward the operating margin and ROE

Manufacturing core systems
based on the latest digitaltechnology

Firm trust-based relationshipwith our suppliersPrimary Management Indicators
Direct and indirect
manufacturing costs

Production lead times

Procurement stockout
rate

Sustainability Initiatives
� Quality control in manufacturing P. 45 Quality
� Promoting sound supply chain management based on industry codes of conduct P. 43 Supply Chain Management
� I nitiatives for reducing CO2 emissions and introducing renewable energy at plants and offices
P. 38

Medium- and Long-term Environmental Goals

� Shortening of production lead times and leveling P. 46 Continuous Improvement of Business Operations

Risk Management Initiatives
Main Risks
Delays in the supply of products

SafetyOccurrence of safety-related
problems and liability for damages,
and a decline in credibility

Quality

Occurrence of costs forcountermeasures of a productdefect and a decline in credibility

Environmental
Issues

Initiatives
� Formulate business continuity plans, develop alternate production capabilities, promote the seismic reinforcement ofProcurement,
Productionand Supply

Costs such as for developing
new products or changing
specifications, and declining productcompetitiveness and diminishedpublic confidence in the Company

31 TOKYO ELECTRON Integrated Report 2022

We are rapidly developing various initiatives to respond todelays in the procurement of parts and materials needed for
production, price increases, and resulting supply chain
disruptions caused by recent global shortages of semiconductors
and electronic components.
The Corporate Production Division is working with eachmanufacturing site and promoting the optimization of
procurement and parts inventories throughout the Group by
regularly conducting supply chain BCP assessments, improving
commercial distribution management through the further
enhancement of supplier maps and other tools, strengthening
supplementary parts systems between manufacturing sites andexamining procurement processes. In addition, we are working
to adjust sales plans with production, procurement andinventory plans by sharing both short-term and medium-termorder forecasts between sales and manufacturing divisions, aswell as working to ensure stable procurement and bothproduction and start-up process leveling. Through these efforts,
we are striving to improve safety, quality and efficiency ofequipment production and start-up.
Based on the belief that smooth communication with
suppliers is important, we hold production update briefings, TEL
Partners Day and other events on a regular basis to create
opportunities to sharemarket trends, ourmanagement policy andbusiness policies, andsustainability initiatives
with our suppliers.

Past TEL Partners Day

World-class Manufacturing Operations

Management Resources to Be Invested
Many years of know-how(people and products)
in semiconductor/FPD
manufacturing

Sustainable Procurement Strategies

plants, level production, enhance the backup capabilities for information systems, use multiple sources of importantparts, and maintain appropriate inventory levels
� Share forecasts based on demand projections with suppliers and build a system for the stable supply of products� Based on the “Safety First” approach, place the highest priority on the safety and health of all people, implement

inherently safe design with an awareness of risk reduction at the product development stage, promote safety training,and establish an accident reporting system� Establish a quality assurance system and a world-class service system� Monitor the quality status of suppliers, conduct audits and provide support for improvement� Resolve technical issues from the product development and design stage� Investigate the cause of any defects and implement measures to prevent the same or similar defects from occurring� To achieve industry-leading medium- to long-term environmental goals that include the net zero target, implement

measures such as reducing greenhouse gas emissions from the use of our products, increasing the rate of renewable energy
usage at plants and offices, reducing overall power consumption, reviewing packaging materials, and promoting a modal shift.
� Provide technologies, etc., that contribute to higher performance and energy efficiency of semiconductor devices
through implementation of our E-COMPASS initiative

We are constantly striving to innovate in production andfurther improve profitability at manufacturing sites while
engaging in the strategic development of world-classmanufacturing operations through the use of our manufacturingknow-how, knowledge and the equipment data we haveaccumulated over many years.
In assembly, adjustment, inspections and other processes, we
are working to improve product quality by having implemented
in-process quality control consisting of thorough screening,
simulation verification and so on to prevent non-conforming
products from making it through to subsequent processes. We
are also proactively investing in things such as new plantbuildings and manufacturing facilities to increase production
capacity while promoting production leveling.
Furthermore, we are working to improve IT infrastructure bybuilding a manufacturing core system through beginning
operations of ERP1 and MES2 that utilize the latest digitaltechnologies, and the introduction of PLM3 and other measures.
Through the use of data aggregated through these efforts ineach business operation, we can quickly collect data needed forbusiness decisions, make production schedules more reasonable

and more efficient, visualize delivery dates for parts and more. In
addition, we are thoroughly implementing infection prevention
measures at all manufacturing sites as we deal with the impact
from COVID-19 infections and working to maximize operation
rates in production activities.
1 ERP: Enterprise Resource Planning. Refer to Continuous Improvement of Business
Operations on p. 46
2 MES: Manufacturing Execution System
3 PLM: Product Lifecycle Management

Manufacturing Core System Development

BOM4

PLM

BOP5

Design Digitalization

4 BOM: Bill of Materials
5 BOP: Bill of Process

Information Sharing
Closed-Loop
Management
Procurement Planning
Digitalization

ERP

MES

Manufacturing Digitalization

Initiatives to Reduce Environmental Impact
We are developing a variety of initiatives at our plants andoffices as well as in logistics and the supply chain withconsideration of the environment.
At plants and offices, we are working to further improveenergy consumption efficiency through a variety of measures
such as energy-saving clean room operation, setting office air
conditioning at appropriate temperatures, introducing devices
that offer superior energy-saving performance, and promoting
the introduction of renewable energy (electricity) globally toachieve our medium- and long-term environmental goals1.
In logistics, we are working to transition between methods oftransportation by promoting a modal shift2 in transportation in
Japan and overseas. We are also striving to reduce CO2 emissions
and reduce environmental impact by adopting packaging madewith reinforced cardboard.
In addition to these initiatives, we are actively working
toward the preservation of the global environment throughout
our entire supply chain in partnership with our suppliers throughthe development of E-COMPASS3 activities.
1 Refer to Medium- and Long-term Environmental Goals on p. 38
2 Modal shift: Transitioning from transportation by car and air to rail and ship, whichhave lower environmental impacts
3 Refer to E-COMPASS on p. 41

TOKYO ELECTRON Integrated Report 2022

32

Value Creation by the Value Chain

Chapter 3

Research
Procurement
andandDevelopment Manufacturing

Initiatives in the Value Chain

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Sales
Main Sales Initiatives
We propose optimal solutions that contribute to the creation of value for our customers in order to be
the sole strategic partner.
Since our company’s inception, improvement of customer
satisfaction has been a significant management theme. We willbuild strong, trust-based relationships with our customers byproviding the Best Products and Best Technical Service in order
to be their sole strategic partner.
We help customers manufacture leading-edge devices bygrasping the latest technological trends and customer needs in an
accurate and timely manner, as well as developing innovativetechnologies for future generations. In addition, by leveraging ourstrengths as a semiconductor production equipment manufacturer
with a diverse product lineup and the experience and high level ofquality we have cultivated over many years, we propose optimal
solutions that contribute to the creation of value for our customers.
Moreover, by focusing on sales of used equipment and reengineered equipment, we can meet a wider range of customer
needs and help maximize their return on investment.

Development of Global Operations
We established the Customer Collaboration Group and areworking to further strengthen our customer support capabilities
in order to be the sole strategic partner for our customers. The
Customer Collaboration Group is made up of two divisions: our
Account Sales Division, which targets major semiconductor
manufacturers, who have been our traditional customers, todevelop new technologies with an eye to the needs of nextgeneration leading-edge technologies in memory, logic, foundry,etc.; and our Global Sales Division, which responds to the needsof more than 100 customers in Japan and overseas who deal inproducts for the rapidly growing Chinese market as well as theindustrial IoT market.

These two divisions work closely with business units,development and manufacturing divisions, service divisions andoverseas subsidiaries to develop global operations throughout
our entire Group (=One-TEL) and promptly provide customers
with the technologies, services and solutions they require.
Account Sales Division

Development
andmanufacturing
divisionsCustomers
Global Sales Division

Key Themes for Medium- to Long-term Value Creation
 Improving our responsiveness to customers and customer satisfaction
 Increasing mutual profits by providing the Best Products and Best Technical Service
 Improving our position among our major customers

Management Resources to Be Invested
A global sales and service system
in which the Account Sales Division,
the Global Sales Division,business units and overseas
subsidiaries coordinate with
one another

Broad-ranging knowledge
and comprehensive
technologicalcapabilities born fromour diverse productlineupMutual trust with customers
build through many years of
performance records

Primary Management Indicators
Market share ofmajor customers
and products

Customersatisfaction

Operating margin

Proposing Customer Solutions Leveraging a Wide Range of
Product Lineup
To solve customers’ issues and contribute to the manufacture ofhighly competitive devices, we offer proposals that leverage ourwide range of product lineup, including equipment for key
processes such as deposition, coater/developer, etch andcleaning. We simultaneously strive to help optimize
manufacturing processes and enhance the productivity andquality of development and manufacturing processes by
providing optimal solutions that include remote support systems
and software for maximizing equipment utilization rate.
Furthermore, through continuous improvements toperformance of our mass production equipment, we areproactively working to meet customer demands for the
production of multiple generations of products.
We are also responding to satisfy the market’s diversifying
needs by providing products for the IoT market, which include
power devices, image sensors and communication devices, aswell as used equipment and re-engineered equipment.

Cleaning
Deposition

Etch

Coater/Developer

Sustainability Initiatives
� Initiatives for improvement of customer satisfaction P. 34 Initiatives for Improvement of Customer Satisfaction
� Ongoing efforts to ensure customer safety P. 44 Safety�R educing CO2 emissions from product usage by addressing Medium-term Environmental Goals
P. 38

Medium- and Long-term Environmental Goals

� Improvement of operational efficiency in sales activities P. 46 Continuous Improvement of Business Operations

Risk Management Initiatives
Main Risks
MarketFluctuations

Sales opportunity losses due toinability to supply customers
with products in a timely manner

Initiatives
� Periodically review market conditions and orders received at the Board of Directors and other important meetings, andappropriately adjust capital investments, personnel/inventory planning and other aspects of business� The Account Sales Division and the Global Sales Division strengthen the sales framework and customer base by grasping

investment trends of customers and responding to a wide range of customer needs� Carefully monitor the international situation as well as the diplomatic and security measures and industrial policy trends

Geopolitics

Restrictions on business activities

Information
Security

Diminished public confidence
in the Company or liability fordamagesin each country and region� Anticipate the impact of macroeconomic fluctuations and regulations related to product imports/exports or

technological development on the Company’s business and consider countermeasures in advance33 TOKYO ELECTRON Integrated Report 2022

� Launch a dedicated security organization and establish an information security system that conforms to international

standards by having security assessments conducted by external experts, etc.

Initiatives for Improvement of Customer Satisfaction
We are working to build a solid relationship of mutual trust withcustomers by further enhancing customer satisfaction, which wehave valued highly since our founding.
In the semiconductor production equipment industry, with
rapid technological innovation, we co-create future technology
roadmaps with our customers, semiconductor manufacturers, topromote the concurrent evaluation of technologies up to four
generations in the future and accelerate the technologicaldevelopment of Shift Left. This allows us to offer highly
competitive products that help improve the yield rate of devices
and maximize equipment utilization rate.
Further, at customer sites around the world, we arecontinuously implementing customer-oriented initiatives suchas having our engineers quickly get installed equipment
operating at maximum performance, proposing solutions to any
technical issues identified and providing feedback on nextgeneration equipment.
In addition to these activities, we conduct a unique customer
satisfaction survey every year and promote ongoing
improvements to our business practices.
In fiscal 2022 the results of our activities were highly
evaluated and we received best awards from many of ourcustomers. We will continue to provide the Best Products andBest Technical Service and further improve customer satisfactionin order to be the sole strategic partner for our customers.

� Establish globally standardized rules and regulations for information management and implement response guidelines

TOKYO ELECTRON Integrated Report 2022

34

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Initiatives in the Value Chain

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Installation and Maintenance Services
Main Installation and Maintenance Service Initiatives
We have established a global support system to provide the Best Technical Service with high added
value in a prompt and appropriate manner.
For installation and equipment maintenance, we take advantage
of a cumulative number of equipment installations ofapproximately 82,000 units to offer the Best Technical Service
with high added value. We make full use of leading-edge AI,
digital technology and knowledge management* tools, andpromote enhanced efficiency for our services to support thestable operation of various generations of equipment for a wide
variety of applications.
By refining the skills of the front-line engineers who interact
with customers, we work hard to accurately identify customer

needs and provide timely feedback to our development andmanufacturing operations. In addition, we are deploying aspects
such as support services that extend the life cycle of equipment
as part of our efforts to reduce environmental impact. We arealso promoting the further improvement of the quality of ourservices through the provision of advanced field solutions, suchas Total Support Center (TSC) and remote maintenance services.
* Knowledge management: Management approach to promote internal company
sharing of tacit knowledge held by individuals, in order to encourage innovationand to improve overall productivity

Key Themes for Medium- to Long-term Value Creation
 Contributing to solving customer issues through the provision of high-value-added service
 Maximizing service revenues through expanded sales of comprehensive contract-based services* Addressing new customer needs with equipment for power devices, re-engineered equipment and other measures* Comprehensive contract-based services: Comprehensive services primarily for post-warranty maintenance (maintenance work, performance maintenance, provision of spare parts etc.)

Management Resources to Be Invested
Service support infrastructure at

Service database and remotesupport system

77 sites located in
18 countries and regions

Approximatelythat utilizes AI,
knowledge management etc.

4,700

field engineers with highly
specialized andbroad knowledgeof the world

Primary Management Indicators
Net sales forfield solutions business

Man-hours for installationand maintenanceservices, etc.

Profitability offield solutions business

Sustainability Initiatives
� Improving the efficiency of start-up operations and maintenance services P. 46 Continuous Improvement of Business Operations
� Safety initiatives for installation and maintenance services P. 44 Safety
� Provision of high-quality services P. 45 Quality
� Effective utilization of diverse talent P. 47

Human Resources

Risk Management Initiatives
Main Risks
Quality

Occurrence of costs forcountermeasures of a productdefect and a decline in credibility

Human
Resources

Diminished productdevelopment capability or
customer support quality

Novel
Coronavirus(COVID-19)

Slows the Company’s businessactivities or the deterioration of
global economic conditions

35 TOKYO ELECTRON Integrated Report 2022

Initiatives
� Establish a quality assurance system and a world-class service system� Resolve technical issues from the product development and design stage� Investigate the cause of any defects and implement measures to prevent the same or similar defects from occurring� Monitor the quality status of suppliers, conduct audits and provide support for improvement

� Make continuous improvements to work environments and promote diverse work styles as well as health andproductivity management (e.g., sharing our visions by management, establishing training plans for human resource whowill lead the future, visualizing career paths for employees and offering attractive remuneration and benefits)� Establish an Emergency Task Force headed by the CEO� Restrict travel to high infection-risk countries and regions, maintain supply chains and thoroughly implement infection

prevention measures at plants and offices

Enhancing Front-line Engineers
We believe it is essential to accurately ascertain valuable
information related to matters such as customer needs andequipment operation status through installation andmaintenance services in markets where our equipment isdelivered, as well as to provide timey feedback with regard to
related operations to assist in equipment development,
improvements to functionality and service quality development.
In order to efficiently conduct these activities, we arepromoting a human resources development program whereengineers from overseas subsidiaries who are in contact withcustomers in the field acquire knowledge and skills by
undergoing training in Japan, thus further strengthening thefoundation of our front line. We are also working to promoteseamless communication by strengthening cooperation
between engineers at overseas subsidiaries, Japanese engineers
stationed overseas, development and manufacturing divisions
and business units.

Initiatives to Reduce Environmental Impact
As part of our efforts to reduce the environmental impact of ourservices, we are also deploying LEAP*, a support service that
extends the life cycle of our equipment.
Support for semiconductor manufacturing equipment, which
consists of tens of thousands of parts, typically ends seven toeight years after discontinuation of production. The main reason
for this is due to the discontinuation of parts or the difficulty inmaintaining safety and quality. This has led to the promotion of
replacement with newer equipment and the discarding of older
equipment. In response to customer needs and in consideration

Promotion of High-value-added Services
We have built a global support system, establishing Total Support
Centers (TSCs) in Japan, the United States, China and Europe.
Service CRM1 centrally manages customers’ equipment records(support/trouble history) as a database through knowledge
management. We strive to resolve the various issues ofcustomers and support the stable operation of equipment
through the use of TELeMetricsTM, a remote maintenance service,and smart glasses2 with our unique functions as well as bydeploying Service CRM at each TSC site.
In addition, in order to further promote the improved
productivity of our services, we ascertain each field engineer’s
actual work status through work orders to optimize personnel
assignment and increase efficiency.
Furthermore, we are placing more emphasis than ever ondeveloping advanced equipment diagnostic capabilities thatutilize equipment output data. Going forward, we plan to utilize
these functions to support comprehensive contract-based
services, particularly those with billing based on performance(Pay for Performance contracts).

We are making efforts to strengthen a management system
for service operations in each country and region so that we canrespond in a flexible and rapid manner to changes in the businessenvironment and promote efficient operations.

Customers
Providing the Best Products & Best Technical Service

Overseas subsidiaries
Engineers atoverseassubsidiaries

Customer feedback

Engineers
assignedoverseas

Seamlesscollaboration

Development andmanufacturing divisions

Professional
technical support

Business Unit

Product development in line with customer needsof SDGs, we began redesigning discontinued parts, and bystrengthening and restructuring our support system, including
repairs, we are now able to provide extended life cycle support
for equipment to more than 15 years after discontinuation.
Through these new support services, we are working to reduce
equipment disposal and contribute to the continuous use of
equipment over a long period of time. In addition, we also offer are-engineered equipment for 200mm wafers based on theprevious generation of equipment.
*LEAP: Lifecycle Extension and Availability Program

We will strive to provide high-value-added services throughthe continuous promotion of these initiatives.
1 Service CRM: Service Customer Relationship Management
2 Smart glasses: Glasses-style wearable devices that can display images and digital
information

Customers

Field engineer dispatched

Total Support Center

Dispatch

TELeMetricsTM

Technical support engineers

Equipment records
Service database
Response

Technical advice

TOKYO ELECTRON Integrated Report 2022

36

Value Creation by the Value Chain

Chapter 3

Research
Procurement
andandDevelopment Manufacturing

Sustainability Initiatives in the Value Chain

Environment

Conference Name

Medium- and Long-term Environmental Goals
In order to further strengthen our initiatives toward theenvironment in our products, plants and offices, we have set thefollowing medium- and long-term environmental goals.
Medium-term Environmental Goals (Fiscal 2031)

with this certification, we have identified environmental impact
assessments and useful environmental aspects and are
executing a standardized group format for environmental
management programs and internal audit checklists. In fiscal
2022, as part of environmental management across the entire
Group, we established a total of approximately 100
environmental goals for different levels and carried out these
improvement activities. Any issues identified through these
activities are reviewed by the Global Environment Council andreported to the Manufacturing Companies Presidents’ Council.
We were once again free from environmental incidents,
accidents, violations and legal proceedings in fiscal 2022.

ParticipantsMeeting
Frequency

Function

Global Environment Council

Appointed members by the executives at
headquarters and the Group companies

Set individual goals related to environmental issues,monitor progress, work to achieve our goals

Twice annually

TEL Corporate Environment Council

The GM in charge of the environment anddepartment heads, etc.

The promotion of environmental activities across the entire
Group, set company-wide goals

Appropriately

Council for the Regular Reporting ofEnvironmental Activities(Since fiscal 2022)

CEO, corporate directors in charge of theenvironment

Report on matters discussed at the Global Environment
Council and the TEL Corporate Environment Council andreview items for approval

Quarterly

Manufacturing Companies Presidents’Council*

Corporate directors in charge of theenvironment, etc.

Monitor and supervise progress related to environmental
issuesQuarterly

CO2 emissions reduction goals
Products

30% reduction

Plants and offices

70% reduction
Total emissions(compared tofiscal 2019)

Per wafer(compared tofiscal 2019)100%
A rate ofrenewable energy usage

Long-term Environmental Goals (2050)
As a leading corporation in environmental management, Tokyo
Electron works actively to conserve the global environment. We
will realize net zero* by proactively promoting the reduction ofenvironmental burden of both our facilities and products.
We strive to contribute to the development of a dream-inspiring
society by providing evolutionary manufacturing technologies
that effectively reduces the power consumption ofelectronic products.
* Reducing greenhouse gas emissions to net zero-Own emissions (Scope 1, 2): by 2040
-Emissions other than own (Scope 3): by 2050

* At the Manufacturing Companies Presidents’ Council, information is shared on business affairs and issues regarding environment, safety, quality, supply chain management, etc.

CO2 Emissions across the Value Chain
Based on our environmental slogan “Technology for Eco Life,” weaim to resolve environmental problems through leading
technology and reliable services, understand the environmental
impact generated throughout our entire value chain, andpromote business activities to reduce that impact.
Our total CO2 emissions of Scope 1 and Scope 2 is 90 kilotons,

Upstream
Scope 3 upstream

while Scope 3 as the sum of upstream and downstream activities
accounts for a total of 29,020 kilotons, approximately 99.7% of
the total. Of this, CO2 emissions when using products is 28,254
kilotons, about 97% of the total. This is why we consider thedevelopment of products with low CO2 emissions during
operation to be important.

Downstream

498 kilotons

Not from our Group90 kilotons

Scope1, 2

Own emissions

28,522 kilotons

Scope 3 downstream Not from our Group

Fuel- andenergy-related activities ............

15 kilotons
Capital goods .............................. 172 kilotons
Purchased goods
and services ...............................

282 kilotons

Employee commuting .................

12 kilotons

Scope 1: Direct greenhouse gas (GHG)
emissions from use of fuel and gas we
owned or controlled
Direct emissions from fueland gas use
Scope 1 ..............................................

16 kilotons

End-of-life treatment ofsold products ......................................

Use of sold products ......

3 kilotons

28,254 kilotons

Indirect emissions from electricity use
and heat purchase
Scope 2 .............................................
kilotons

74

Business travel .....................................
Waste generated in operations .....
Upstream transportationand distribution .............................

1 kiloton
1 kiloton

15 kilotons

37 TOKYO ELECTRON Integrated Report 2022

Downstream transportationand distribution .......................

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Tokyo Electron is merging business activities with a variety of sustainability initiatives, focusing on the environment, society andgovernance to help create new value.

Environmental Management System
Environmental measures are growing even more crucial. We
have established the Environment Promotion Department at ourheadquarters, headed by a corporate director in charge of theenvironment, which oversees multiple meetings to promote
efforts to address medium- to long-term environmental issues
across the entire Group. The details are shown in the table below.
To continuously promote our environmental activities, webegan operation of an environmental management system
based on ISO 14001 since fiscal 1998, primarily at our
manufacturing subsidiaries. In March 2017, the entire Groupobtained ISO 14001 certification together, which had previously
been obtained at each plant and office in Japan. In accordanceSales

265 kilotons

Scope 2: Indirect GHG emissions from use ofelectricity, steam and heat we purchased
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* Scope 3 is divided into upstream activities,
which include emissions associated withpurchased or procured products andservices, and downstream activities, which
include emissions associated with soldproducts and services

fiscal 2022 were reduced by 11% compared to the base year.
We have started to introduce renewable energy (electricity)
at plants and offices in Japan, the United States and China. As aresult, the ratio of company-wide renewable energy use in fiscal
2022 was 60%, and CO2 emissions were reduced by 49% fromthe base year. In fiscal 2023, we plan to complete theintroduction of renewable energy at all of our manufacturing
sites in Japan, as well as at other overseas plants and offices.
Through these efforts, we expect to achieve a 90% of renewableenergy usage and a 74% reduction in CO2 emissions for fiscal
2023. We will continue to develop activities that contribute to
the achievement of our medium-term environmental goals by
fiscal 2031 for our products, plants and offices.
In January 2022, we applied for SBT* certification of ourgreenhouse gas emission reduction goals, and we plan to receive
certification within fiscal 2023. We are working together as one on
initiatives to achieve the long-term environmental goals by 2050.
* SBT: Science Based Targets. The Paris Agreement aims to limit global warming towell below 2°C, preferably to 1.5°C, compared to pre-industrial levels. SBT is aninternational initiative to certify greenhouse gas emission reduction targets set bycompanies for the next five to 15 years, consistent with the levels required by theParis Agreement.

Reduction in CO2 Emissions through the Introduction of
Renewable Energy
Total CO2 emissions for Scope 1 and 2 (kilotons)
Rate of renewable energy usage (%)

174

In fiscal 2022, we identified CO2 emissions during the use of
our reference products and set a roadmap for each product withgoals for fiscal 2031. In addition to the status of electricity,
process gases and chemicals, water and other resources used in
the production and use of each product, factors such as theeffects of plans to reduce their use and the reduction effects ofproductivity improvements were also considered in setting thisroadmap. The CO2 emissions per wafer for products shipped in

Initiatives to Reduce Water Consumption
With the growing importance of water resource preservation, we
use WRI Aqueduct1 and freshwater resource quantity indicators
to conduct water risk assessments in Japan and overseas. In
addition, we confirm the status of water resource use in the
supply chain, rainwater and wastewater management and goal
setting with suppliers once a year.
We have established an annual sustainability goal of
maintaining the same water consumption level of the base year
(fiscal 2012 for plants and offices in Japan and a fiscal year of theirchoosing for each overseas operation). Our ongoing efforts toachieve these goals include reusing pure water from ourmanufacturing operations, installing water-saving devices,
watering lawns with rainwater and implementing theintermittent operation of cafeteria faucets.

100
90

60
90
45
25
2

2019.32022.32023.32031.3

During fiscal 2022, as a consequence of the operation of newbuildings and an increase in water consumption associated withproduct development and evaluation, water consumption
amounted to 1,417,000 m³, up 1% year-on-year. However, water
consumption per net sales was down 29% year-on-year.
Moreover, in terms of our goals at each plant and office in Japanand overseas, we achieved 7 of the 14 goals.
In recognition of these efforts, we were selected as aprestigious A List company in the CDP2 Water Security Categoryof the survey in December 2021.
1 WRI Aqueduct: A water risk assessment tool developed by the World
Resources Institute2 CDP: An international environmental non-profit organization (NPO) founded in
the United Kingdom that conducts surveys on climate change and water security
measures on private companies and municipalities and publishes the results

TOKYO ELECTRON Integrated Report 2022

38

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Initiatives Related to Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)• Risk Management
Based on the TCFD recommendations, we examine the risks andWe utilize enterprise risk management1 to identify a wide range
opportunities that climate change poses to our business andtake various response measures as we endeavor to makeof risks arising in business activities, and classify “Environmental
ongoing disclosures.
Issues” including climate change as a key risk having high impact
In fiscal 2022, in addition to the previous fiscal year’s study,
and probability of manifestation. We formulate and execute
we examined the 1.5°C scenario, which limits the average global
measures to minimize this risk, monitor the effect of said
temperature increase to less than 1.5°C above pre-industrial levels.
measures and work to understand the status of risk control, andimplement the PDCA cycle for management.
Short-, medium- and long-term company-wide risk
Status of Initiatives Related to Recommendations of the
management initiatives that related divisions and councils
TCFD• Governancerecommend are deployed to the facilities and divisions of theGroup companies after approval by the Manufacturing
We have established the Environment Promotion Department
Companies Presidents’ Council, which includes the corporate
and the Corporate Sustainability Management Department at
director in charge of the environment.
our headquarters, and the entire Group is pursuing initiatives for
For Scope 1 and 2 CO2 emissions, in addition to implementing
the TCFD recommendations.
Under the supervision of the CEO, the corporate director andmeasures to reduce CO2 emissions at our key manufacturingexecutive officer in charge of the environment and sustainabilitysites in Japan with high emissions, we are pursuing the adoption
give reports to the Board of Directors on our responses toof renewable energy on a global scale. For Scope 3 emissions, weclimate change-related risks and opportunities and progressrecognize the importance of providing products that generate
toward our goals, and conduct reviews.
fewer CO2 emissions because about 97% of the emissions in ourAt the Global Environmental Council, comprised of members
entire value chain are generated during use of products after
appointed by executives of headquarters and the Groupsale, so we are focusing on development of a range ofcompanies, goals are set, progress is monitored and theenvironmental technologies.
achievement of these goals is promoted.
We also formulate business continuity plans (BCPs) in• Strategy
anticipation of natural disasters caused by abnormal weather
We are conducting analysis that takes into account the following
and other factors, and take measures with our suppliers topoints in order to identify medium- to long-term risks andensure that business operations can be maintained.
• Metrics and Targets
opportunities that climate change poses for our business.
- Location of plants and offices
We are pursuing the following initiatives for the development of- Occurrence of natural disasters caused by climate change anda data-driven society and preservation of the global
status of damages
environment.
- Demands from customers, industries, and investors• With our semiconductor production equipment technology, we- Government policies and regulations and taxation
will contribute to enhancing the performance and reducing- Technological trends relating to renewable energy andpower consumption for semiconductor devices being usedenergy savingaround the world- Climate change scenarios predicted by external agencies and• Initiatives for our medium- and long-term environmental goals2
research results
In order to achieve our long-term environmental goals of
realizing net zero by 2050, we have established the following
Under the 1.5 ˚C scenario we identified transition risks
medium-term environmental goals and are carrying out
including rising energy costs associated with fuel and energy
various activities
taxes, and under the 4 ˚C scenario we identified physical risks- Reducing our emissions: a 70% reduction in total CO2
such as the impact of abnormal weather. Also, on theemissions for plants and offices (by fiscal 2031, compared toopportunity side we identified proactive initiatives to address
fiscal 2019), a rate of 100% renewable energy usage at plants
climate change through R&D. In response to these risks andand offices (by fiscal 2031), and reducing energy
opportunities, we will implement the findings from our scenario
consumption by 1% year-on-year at each plant and officeanalysis into our business strategies and establish medium- and(per-unit basis)long-term environmental goals, while also pursuing the adoption- Reducing other emissions: a 30% reduction in CO2 emissionsof renewable energy and the reduction of greenhouse gas
per wafer when using products (by fiscal 2031, compared toemissions strategies across the entire supply chain.
fiscal 2019)
We will increase our resilience (responsiveness to climate- Reducing the volume of water resources used3 and thechange) as a company by periodically reviewing the identified
environmental burden of logistics4, etc.
risks and opportunities and our responses thereto, and ensure• We launched “E-COMPASS5” in June 2021 as an initiative to buildthat response measures are implemented.
sustainable supply chains, and are promoting technologicalinnovations for semiconductors, and reducing environmental impacts

39 TOKYO ELECTRON Integrated Report 2022

Anticipated Risks and Opportunities of Climate Change Impact and Our Response
Timeline: Short-term = five years or less; medium-term = 2030; long-term = 2050
Scenarios used: 1.5˚C scenario (1.5˚C temperature increase), 4˚C scenario (4˚C temperature increase)
Scope: The entire Group as well as the entire value chain including upstream and downstream
Type(Scenario)

Timeline of Risk
Manifestation

Anticipated Risks and Opportunities

Our Response• P romote energy-saving and adopt renewable energy at plants and• Increased energy costs due to taxes levied on fuelShort- tomedium-termand energy: Assuming our greenhouse gas (GHG6)
emissions and use of renewable energy remain at
fiscal 2022 levels, if a carbon tax7 were applied, we
estimate our energy costs would increase by 700
million yen/year by fiscal 2026 (assuming a carbon
tax of 8,625 yen per ton of CO2) and 2.1 billion yen/year by fiscal 2041 (assuming a carbon tax of 23,575
yen per ton of CO2)

• R educed reputation among investors, NGOs andTransition Risks(1.5˚C Scenario)

local communities if a response to climate change
and other environmental issues is delayed

offices in order to achieve the medium-term environmental goals.
Furthermore, as a result of adopting renewable energy, the increased
burden from fiscal 2022 levels due to the introduction of a carbon
tax will be reduced by 800 million yen for fiscal 2026 and 2.2 billion
yen for fiscal 2041 compared to the amounts originally estimated infiscal 2021

• T hrough the activities of our supply chain initiative, “E-COMPASS,”
we are promoting energy-saving and the adoption of renewableenergy in the supply chain•W e publish the progress of efforts to achieve the medium-term

environmental goals in the Integrated Report and Sustainability Report• B y expressing our approval of the TCFD and utilizing its framework,
we are conducting risk management and promoting information
disclosures•D evelop semiconductor production equipment technology that
Medium- tolong-term•D ecreased net sales if we are unable to meetcustomers’ requirements and demands to address
the environment

contributes to enhanced performance of semiconductor devices andlower power consumption• R &D for future technology markets• P roduct development to achieve the medium-term environmental

goals (reduce per-wafer emissions of CO2 when products are in use)

• P romote our business continuity plans (BCPs) and business
continuity management (BCM)

Short- tolong-term
Physical Risks(4˚C Scenario)• Impacts on us, our suppliers and customers fromabnormal weather (net sales decrease as a resultof supply chain disruptions, operation stoppages,
production/shipping delays, and other factors)•D eploy procurement BCPs to suppliers, and implement BCP
assessments• P eriodic implementation of training, drills, etc.
•M aintain a database of suppliers’ production sites• E nroll in insurance in preparation for disasters resulting fromabnormal weather

Opportunities(Common)Medium- tolong-term• Increased costs associated with increased air-conditioner
and chiller usage due to higher temperatures• P romote energy saving at plants and offices• A dopt the use of renewable energy from our own power generation

Short- tolong-term•H igher productivity due to environment-related• P romote energy saving and adopt renewable energy at plants and• A ccelerated drive to create new value, including•D evelop semiconductor production equipment technology that

operations streamlining, thus reducing energy costs

innovation toward development of lowGHG products and services, and equipment
and technologies that contribute toward the
manufacture of low-power consumption devices

Medium- tolong-term• E ngaging in proactive initiatives for climate change

offices in order to achieve the medium-term environmental goals

contributes to enhanced performance of semiconductor devices andlower power consumption•G lobally promote the latest in research and development with afocus on the future of semiconductors and electronics to continually
supply the high-value-added Best Products with innovativetechnology in a timely mannerand creating added-value in products and services
supplied to the market to gain superiority andbusiness opportunities•D evelop technology to achieve reduced per-wafer emissions of CO2• S ecuring a competitive advantage and contributing• T hrough the activities of our supply chain initiative, “E-COMPASS,”

to improved corporate value by building resilience(responsiveness to climate change) into global operations

when products are in use

address climate change as it pertains to supply chains, respond toenvironmental regulations and innovate environmental technology

1 Refer to Risk Management on p. 57
2 Refer to Medium- and Long-term Environmental Goals on p. 38
3 Refer to Initiatives to Reduce Water Consumption on p. 38
4 Refer to “Logistics Initiatives” in the “Tokyo Electron Sustainability Report 2022” www.tel.com/sustainability/report/
5 Refer to E-COMPASS on p. 41
6 GHG: Greenhouse Gas
7 Carbon tax: We referred to the International Energy Agency (IEA) Net Zero Emissions by 2050 Scenario for the increase in tax associated with GHG emissions. 1 U.S. dollar
was converted as 115 yen

TOKYO ELECTRON Integrated Report 2022

40

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

E-COMPASSIn June 2021, we introduced E-COMPASS (Environmental CoCreation by Material, Process and Subcomponent Solutions) as a
new initiative for building sustainable supply chains. Under thisinitiative, we share goals such as reducing the environmental
burden of procurement and logistics, eliminating
environmentally hazardous materials, and proactive
environmental R&D for equipment with our suppliers,
developing activities accordingly. Furthermore, we will also
openly seek proposals on reducing environmental burden in
relation to the environmental performance of our equipment,
manufacturing processes and procurement and logistics, by
proactively adopting superior technology and initiatives we arepromoting to achieve these goals.
In fiscal 2022, we held the E-COMPASS briefing session for
suppliers where, in addition to informing them of the status of
our initiatives, we also shared measures for mutual growththrough co-creation with our suppliers. We also conducted the“E-COMPASS Survey” to confirm matters including the state ofsuppliers’ environmentally conscious product development andthe status of their products’ compliance with environmental
laws and regulations. Based on these results, we will discuss

response measures with our suppliers and aim to further
enhance the green performance of the industry as a whole.
We believe that reinforcing partnerships with our suppliers
and leadership in the industry are key to the development of adata-driven society and preservation of the global environment.
By utilizing every management resource at our disposal topromote E-COMPASS, we will actively endeavor to preserve theglobal environment throughout the entire supply chain.

Environmental Co-Creation by Material, Process and Subcomponent Solutions

Semiconductors

Production equipment

Business activities

Pursuing higher device
performance and lower
power consumption

Achieving both highprocess performance andenvironmental performanceof the equipment

Reduction of CO2 emissions
in all business activities

Human Rights
Approach to Human Rights
We at Tokyo Electron are conscious of our corporate social
responsibility, and we recognize that it is important to conduct
ourselves with a strong sense of integrity. Based on thisrecognition, we have firmly upheld human rights since ourfounding, as reflected in the spirit of our Corporate Philosophy
and Management Policies. For us, respecting human rights
means a significant undertaking, not only to fulfill our
responsibility for eliminating adverse impacts on people caused
through business activities but also to respect those people who
support our business activities, and contribute to the realizationof a sustainable, dream-inspiring society. We incorporate theconcept of respect into every aspect of our business activities,
and strive to nurture a dynamic corporate culture where each
person can realize their full potential.

Human Rights Initiatives
Our Human Rights Policy1, summarizing our approach to humanrights specifies five focus areas: Freedom, Equality & NonDiscrimination; Freely Chosen Employment; Product Safety &Workplace Health and Safety; Freedom of Association; andAppropriate Working Hours & Breaks/Holidays/Vacations. In
preparing the Human Rights Policy, we referred to the United
Nations’ Guiding Principles on Business and Human Rights andthe International Bill of Human Rights and the ILO Declaration on
Fundamental Principles and Rights at Work referred to therein,
the Ten Principles of the United Nations Global Compact, and the
RBA Code of Conduct2.
We ensure that our executives and employees, as well as
suppliers, are fully aware of this content. Specifically, we publish
the Human Rights Policy on our website and also implement
online training targeting all of our executives and employees.

Initiatives which Align with the United Nations’ Guiding Principles on Business and Human Rights

Commitment

Assessment

Remediation

ReportCommitment to respecting
human rights•H uman Rights Policy publication•A wareness and implementation•E ducation

Assessment of human rights risks inbusiness and supply chains• Human rights risk assessment• Human rights impact assessment

Actions to reduce risks based on
assessment results• Feedback sheet publication• Program development and review
according to issues

Regular disclosure of information• Publication of the Integrated
Report and Sustainability Report• Postings on the website

41 TOKYO ELECTRON Integrated Report 2022

We identify human rights risks and conduct human rights due
diligence to develop remediation actions every year. In fiscal
2022, we unified the survey contents with reference to the RBA
auditing standards, and surveyed 12 companies out of the entire
Group in Japan and overseas, including the head office, andapproximately 650 business partners involved in materials,
staffing, customs services, packaging, etc.
Consequently, potential/actual risks (Priority/Major/Minor)
turned out to be 17% of our Group companies and 18% of
suppliers, with labor- and health and safety-related risks
comprising the majority of the risk breakdown.
In the area of labor, items including the formulation ofpolicies and procedures pertaining to thorough management ofworking hours and the employment of student workers, interns
and trainees were identified as risks. In the area of health andsafety, items including the implementation of evacuation drills
for all workers and deployment of trained emergency response
personnel were identified as risks.
With regard to these identified risks and their impact, inside
our Group companies we are conducting checks at each of oursites based on feedback sheets, and implementing a remediation
program to review the execution of working hours management,
formulate various policies and procedures, carry out evacuation
drill initiatives, and address ethics and management systems. To
our suppliers, using feedback sheets we provide reports on thepotential/actual risks identified in the survey and are working on
remediation activities to reduce these risks.
In addition, the percentage of companies where no potential/
actual risks are considered to exist (conformance) was 80% for
our Group companies and 73% for our suppliers.
Furthermore, we recognize the importance of having highly
effective grievance mechanisms related to human rights and areworking to establish reporting systems3 for employees andsuppliers in Japan and abroad, and to further strengthen theoperation of those mechanisms. By adopting highly justified andfair grievance mechanisms, we are identifying adverse humanrights impacts at an early stage and building mechanisms to help
remediate them.
Going forward, in addition to proactively deploying humanrights-related initiatives and further enhancing their efficacy andtransparency, we will work to reduce human rights risks in ourcompanies and in our supply chain.
1H uman Rights Policy:
www.tel.com/sustainability/management-foundation/human-rights.html
2 RBA Code of Conduct: A set of standards established by the RBA (Responsible
Business Alliance) for supply chains in the electronics industry for a safe labor
environment, to ensure that workers are treated with respect and dignity,
and that companies take responsibility for environmental impact in the
manufacturing process.
3 Refer to Compliance on p. 60

Percentages of Conformance and Potential/Actual Risks (Priority/Major/Minor)4
Ethics 1%
Health and Safety 48%

Ethics 1%
Health and Safety 51%

Management Systems 1%
Labor 50%

Breakdownof Potential/
Actual Risks

Major 6%
Priority 1%
N/A 3%

Minor 10%

Management Systems 4%
Labor 44%

Breakdownof Potential/
Actual Risks

Major 6%
Priority 1%
N/A 9%

Minor 11%

Internal

Suppliers

Conformance 80%

Conformance 73%

4 Our classifications and definitions of conformance as well as potential/actual risks based on RBA auditing standards are as follows.
Priority: Issues considered particularly serious, which are at significant risk and require immediate priority remediation
Major: High-urgency issues which are at significant risk and require immediate remediation
Minor: Minor issues and risks recognized in each area which require remediation
Conformance: No issues were recognized in each area and requirements are being met
N/A: Indicates that “listed options do not resemble actual circumstances, or that the question is not applicable.”

TOKYO ELECTRON Integrated Report 2022

42

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Supply Chain Management

SafetyPrinciples and System of Supply Chain Management
To build a supply chain that is sound and sustainable, Tokyo
Electron has formulated a procurement policy based on the laws,
regulations and social norms of each country, as well as the RBA
Code of Conduct, and together with its suppliers, isimplementing activities based on this policy. To identify issues inthe supply chain from a variety of perspectives, we also value
ongoing communication with diverse suppliers, including
materials suppliers that handle parts and raw materials, staffing
suppliers that provide services and logistics suppliers that handle
physical distribution operations. Under the leadership of theCEO, any identified issues are shared with relevant divisions andefforts are made to implement concrete measures for improvement.
We will continue to strive to create value in the supply chain
by working to build relationships of trust with our suppliers, who
support our business as partners, and by working together to
conduct operations in compliance with global standards.
Initiatives in the Supply Chain• Sustainability Operations
To keep track of our suppliers’ engagement in sustainability, we
have conducted a sustainability assessment in areas such aslabor, health and safety, the environment and ethics since fiscal
2014. We analyze the assessment results, provide feedback to
suppliers, and together, promote initiatives for improvement as
required. In fiscal 2019, we completely revised the content of thesurvey based on audit standards stipulated by the RBA, and in
addition to materials1 suppliers, included staffing2 and logistics3
suppliers in the scope of surveys.
In fiscal 2022, we confirmed surveys and conducted that
suppliers had implemented measures to prevent any
reoccurrence of cases of false reporting that were identified in
the previous year’s assessment and making efforts for
improvement, including establishing committees to oversee
these measures.
To ensure that all people in our supply chain can work of theirown free will, we have expressly stipulated our zero-tolerance
policy for forced labor and bonded labor, and havecommunicated this to our major suppliers.

• Responsible Procurement of Minerals (Conflict Minerals)
We see taking action against conflict minerals (3TG4) obtained
through illegal exploitation, which lead to human rights
violations and poor working conditions, as our corporate social
responsibility. Our resolute goal is to eliminate the use of raw
materials made from these conflict minerals, as well as any parts
or components containing them.
In alignment with this way of thinking, we conduct surveys on
potential conflict materials using the CMRT⁵ and referring to theOECD6 Due Diligence Guidance for Responsible Supply Chains ofMinerals from Conflict-Affected and High-Risk Areas. In fiscal
2022, we conducted our eighth annual survey on potential
conflict minerals. As a result, we were able to identify 243 RMAP7
conformant smelters, providing us confidence that 3TG sourced
from these smelters were conflict-free. In addition, none of thematerials we procured were found to contain 3TG involved in conflict.
4 3TG: Tantalum, tin, tungsten and gold
5 CMRT: Conflict Minerals Reporting Template. Survey format for reporting conflictmaterials, provided by the Responsible Minerals Initiative (RMI), which has
established international guidelines on conflict minerals.
6 OECD: Organisation for Economic Co-operation and Development
7 RMAP: Responsible Minerals Assurance Process. A program promoted and led by
the RMI for auditing smelters/refiners to validate that they do not use conflictminerals.

• Procurement BCP
As part of our business continuity plans (BCPs), we collaborate
with suppliers on ongoing disaster preparation.
We maintain a database of suppliers’ production sites so that
if a crisis arises, we can promptly identify impacted suppliers andquickly collaborate in recovery efforts. During fiscal 2022,
approximately 24,000 supplier sites were registered, and we
conducted 11 post-disaster impact surveys. In addition, we
conduct BCP assessments on our suppliers and analyze their
responses to provide them with feedback so that they canpromote improvements in areas of concern.

1M aterials suppliers: Surveys have been conducted since fiscal 2014 for suppliers
accounting for more than 80% of our procurement spend.
2 S taffing suppliers: Surveys have been conducted since fiscal 2019 on 100% of
employment agencies and contracting companies (internal contractors).
3 L ogistics suppliers: Surveys have been conducted since fiscal 2019 on 100% of
customs-related operators.

Supply Chain Sustainability Process

Plan

Do

Check

Act

Formulation of supply chain
policies

Notification of requests toour suppliers and appeal forsustainability activities

Implementation of supply chain
sustainability assessment andanalysis of response

Provision of feedback basedon the results and requests for
improvements to suppliers

43 TOKYO ELECTRON Integrated Report 2022

Approach to Safety
Under the “Safety First” slogan, everyone at Tokyo Electron, fromtop management to on-site personnel, is actively andcontinuously improving safety and promoting health, giving
safety and health the highest
priority when carrying out
various types of operations
such as development,
manufacturing, transportation,
installation and maintenance.

safety education is added as necessary.
Also, to ensure the concept of safe equipment design
permeates from design, manufacture and service operations, wehold a semiannual safe equipment design seminar at our
manufacturing sites in Japan, inviting an external guest to speak.
We also promote our initiatives to prevent incidents, byproviding our suppliers and customers with safety informationas circumstances demand. As a result of having maintained ahigh priority on creating safe work environments, TCIR* has been
maintained at less than the Company’s goal of 0.50, with 0.30 infiscal 2022.

Safe Design of Equipment
Taking the entire product life cycle into consideration, we carryout product risk assessments as early as possible in thedevelopment phase. We implement safe equipment design1 to
reduce the risks posed to humans by incorporating theassessment results in the design. We conduct global surveys of
increasingly strict laws and regulations and conduct compliancechecks through third-party assessment bodies to ensure
conformity with international safety standards, SEMI S22, and CE
Marking3 on the equipment we ship. We have also established asystem to comply with safety regulations of the regions where
our equipment is delivered while working with overseas companies.

* TCIR: Total Case Incident Rate. The number of workplace incidents per 200,000
work hours.

1 Safe equipment design: A design concept that eliminates the cause of themachine’s harm to humans through the safety design of the machine
2 SEMI S2: This is a set of environmental, health and safety guidelines forsemiconductor production equipment. It is used mainly by the leading
manufacturers of semiconductor equipment in the United States and Europe, notonly for semiconductors but also as safe procurement guidelines for electric andelectronic device manufacturing equipment around the world.
3 CE marking: When exporting into the European Union, CE marking defines rules
for displaying a CE mark as proof that the equipment is safe and complies with
EU-defined rules (directives)

Incident Reporting System
In the event of an incident, we operate the TEL Incident Report
System (TIRS) to quickly share information with all parties
involved and follow up with the relevant department to confirm
the incident response as well as to implement measures toprevent reoccurrence. Through the operation of this system, we
will continue to strive for speedy information sharing andincident response.
Safety Education
To help create a safe workplace, we have put in place two
education programs globally.
Basic safety education is basic safety training targeting all
employees. It is provided as introductory training for new hires,and thereafter, employees are required to take refresher training
once every three years. Advanced safety education is a more
specialized type of safety training targeted at workers on
production lines and in cleanrooms. Those who are eligible forthis training are required to take refresher training every year. For
overseas transferees, the laws and regulations in their previous
and future places of employment are compared, and additional

TCIR

0.30

New Incident Prevention Initiatives
We are deploying the following new activities with the aim ofcreating a safer working environment.
• Safety Education Using VR (Virtual Reality)
We are striving to increase danger awareness and prevent
incidents by implementing safety education using realistic
simulated experiences such as falling from a high place, falling
down stairs, electric shock and incidents caused by getting
trapped between objects. We are also building a system thatallows multiple people to take courses at the same time bydeveloping our own interactive VR system.
• Pocket-edition Work Safety Rules
We have turned basic rules for work safety into pamphlets thesize of a business card and distributed them to all employees
involved in the work. The pamphlets are made from materials
that can be viewed even in clean rooms and are available inJapanese, English, Korean and Chinese.
• Shortening Equipment Start-up TimeWe are promoting the development of safer equipment andworking to shorten the time from installation to operation. By
reducing work times and types of work, we are aiming to
reduce the frequency of mistakes and incidents at sites.

TOKYO ELECTRON Integrated Report 2022

44

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Quality
Initiatives for Quality Improvement
In order to help each of our employees correctly understand andimplement quality assurance activities, we realize theimportance of clearly defining the ideal form of quality assurance(goals), along with creating an environment and culture forwidely disseminating it. From the ideal form, we established “OurApproach to Quality” and “Quality Policy” and communicate theimportance of quality to our employees at various opportunities
to increase their quality awareness. We are establishing rules forwhat has to be done in quality assurance activities as well as
correctly implementing those rules. In addition, to ensure that
Approach to Quality
We define our approach to quality in the following way: “TheTokyo Electron Group seeks to provide the highest-quality
products and services. This pursuit of quality begins at
development and continues through all manufacturing,
installation, maintenance, sales and support processes. Our
employees must work to deliver quality products, quality
services and innovative solutions that enable customer success.”
We strive to implement this policy.

Quality Policy
1. Quality Focus
Focusing on quality to satisfy customers, meetproduction schedules and reduce required
maintenance even with temporary cost increases.
2. Quality Design and Assurance
Building quality into products and assuring inprocess quality control, from the design anddevelopment phase throughout every process.
3. Quality and Trust
When a quality-related problem occurs, working as ateam to perform thorough root cause analyses andresolve problems as quickly as possible.
4. Continual Improvement
Ensuring customer satisfaction and trust by
establishing quality goals and performance indicatorsand 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.

45 TOKYO ELECTRON Integrated Report 2022

our employees are always aware of their roles and purposes andperform their work, we are striving to make the rules
comprehensive, reassess and deploy our quality education fromtime to time and visualize appropriate quality information. Basedon these foundations, we help our employees mutually enhanceawareness about quality in a variety of situations so that theirefforts lead to the improvement and growth of our businessprocesses, enabling us to provide product quality and services
that surpass customer expectations.

We strive to implement self-process assurance systems bycarrying out strict quality-related risk management anddevelopment/design inspections beginning at the development
stage, and also by ensuring thorough verification of customers’
operations using simulations. We have also built an importantcomponent traceability system to strengthen our information
environment. Specifically, to prevent various types of nonconformance, we built a system that allows One Platform1 toview information such as past problems, adjustment values usedduring manufacturing and assembly and important component
inspection information from suppliers, and have successfully
strengthened our risk management (FMEA2).
By thoroughly implementing these self-process assurance
system and prevention measures, it creates time for employees
to focus on high-value-added business operations and promotes
initiatives for Shift Left (front-loading).
1 One Platform: A platform that makes it possible to easily view multiple different
systems as seamless information sources, in order to effectively and efficiently
achieve traceability.
2 FMEA: Failure mode and effects analysis. A method to identify, prevent andmitigate risks in advance.

Customer
Investments

Creation ofvalue-added
operations bysolving issues atthe early stage ofdevelopment

Development
quality

We are introducing a new enterprise system (ERP1) to further
improve productivity and quality. The new ERP, being operated
across operational and national boundaries, is aimed at creating
the following five benefits: (1) compliance with the new revenue
recognition standards2 in Japan; (2) management decision-making
with quick response to change; (3) large improvements in business
operation efficiency; (4) utilization of globally integrated
information with an eye toward digital transformation; and (5)realization of ultimate work style reform.
In fiscal 2022, we started with introduction of the new ERP at
headquarters, and we completed (1) compliance with the newrevenue recognition standards. From fiscal 2023 onward, we willtake full advantage of the knowledge gained in the process of

Scheduler(Plan)(Opportunities
and Forecast)Accelerated issue
identification

Detailed
designContinuous Improvement of Business Operations

Sales
CRM

Front-loading
development style

Conceptual
designaudits by internal auditors as well as third-party organizations.
In addition, the Quality Assurance Division is in charge ofdetermining shipping risks of evaluation machines and reviewing
the transition to mass production in the development process.
To ensure the stable supply of parts in the mass production
process, we employ methods such as using a statistical method
to control process abnormalities as well as making strict
equipment shipping judgments to prevent defects from leaking
into the market. We promote the realization of self-processassurance and maintenance and improvement of product quality
in the upstream processes, providing high-quality and highvalue-added products and services leading to the continuous
improvement of customer satisfaction.

introducing the system at headquarters, and gradually introduce
the system at manufacturing sites in Japan and at overseas
subsidiaries. In addition, with the aim of realizing a globally
integrated system, we will work with our partner companies toimprove operations, increase efficiency, and develop functions tofurther enhance system performance.
1E
 RP: Enterprise Resource Planning. A system that integrates the core business
operations of an enterprise, such as accounting, personnel, production, logistics
and sales, for better efficiency and centralized information.
2 New revenue recognition standards: New Accounting Standard for Revenue
Recognition that establishes rules for calculating sales in financial statements,
and which became applicable to listed companies, etc. from April 2021

Overviewof the New Enterprise System
新基幹システム概要

Shift Left (Front-loading) Initiatives
Man-hours

Quality Management
We have established the TEL Manual (TM) and TEL Guidelines(TG) based on our company-wide quality policy for each major
business category, including development, design,
manufacturing and services, and are deploying them to theentire Group, including manufacturing sites, as well as suppliers.
Each of our manufacturing sites has established a quality
management system based on the TM and TG and have acquired
the international standard ISO 9001:2015. With the Quality
Assurance Division as the core, we are striving to continuously
improve our quality management system by setting annual
quality goals based on the results of the previous fiscal year andassessing degree of achievement based on periodic reviews, aswell as by effectively operating the PDCA cycle through repeated

Opportunities

Product
Lifecycle
Management■ IT System

Supply Chain
Management(Procurement)(Design)

Forecast

Production
Planning

Production
Preparation

Manufacturing
Execution
SystemWarehouse
Management
System(Manufacturing)

DesignBooking

Procurement

Manufacturing

Global Trade
Management■ Key Processes

Service CRM(Field-support)(Export)(Warehouse)

DeliveryStart-up

Technical
Acceptance

Sales

Warranty

Post-sale

ERP (Sales, Inventory, Accounting)

Prototypeevaluation

Full-scale
production

Supplier
qualityTime

Operation
streamlining

TOKYO ELECTRON Integrated Report 2022

46

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Human Resources
Employees Both Create and Fulfill Company Values
Tokyo Electron operates in 77 sites in 18 countries and regions. We
believe it is important for human resources with different cultural
backgrounds, experiences and attributes to share values and work
together as one toward value creation. In addition to
implementing a common global job-based human resource
system (GTC: Global TEL Career-paths) and this system, we arealso focusing on global human resource management to promote
career advancement under a common platform without biases
against any country or the Group companies affiliation. This
allows us to respond to changes in business environments andallocate resources in an agile and optimal manner.
We believe that each of the 15,634 employees who work at
our company maintaining a high level of engagement anddemonstrating their full potential will lead directly to our growth
as a company. By sharing with our employees the direction
toward which management is aiming and providing platforms
for direct dialogue through the employee meetings anddiscussions held at each site, we are striving to build mutual trust
between the organization and individuals. Furthermore, torealize our Corporate Philosophy, we established TEL Values,
which delineate Tokyo Electron’s values, the mindset that each
employee must possess and the codes of conduct to be passed
on to the future. The TEL Values—pride, challenge, ownership,
teamwork and awareness—are being put into practice by our
employees all over the world.
We believe that our corporate growth is enabled by people,
and our employees both create and fulfill company values. Basedon this approach, we practice motivation-oriented
management. We actively invest in our employees andimplement important measures such as below while also
providing many opportunities for employees to challengethemselves to achieve high-level goals by making the most of
their individual potential.

Practicing Motivation-oriented Management
Important Measures• Formulating a new Vision and promoting TSV (TEL’s Shared Value)•S etting world-class financial targets in the new Medium-termManagement Plan•M
 aking plans to invest more than 1 trillion yen in research anddevelopment in 5 years•E xecuting ESG initiatives aimed at continuous corporate valueenhancement•O ffering opportunities to gain global work experience and acquire wideranging knowledge•O perating a shared global human resource system• I ntroducing a performance-linked conpensation system•D eveloping human resource education program using TEL UNIVERSITY•S haring the CEO mission and having active dialogue with employees• Increasing opportunities for meetings between employees and the GM ofeach department

Human Resource Development Concept at TEL UNIVERSITY
We have established TEL UNIVERSITY as an in-house educational
establishment, helping employees to independently build theircareers and realize their personal goals for their growth anddevelopment. We are promoting the following initiatives andfocusing on the development of human resources who are
essential to our development.
• Provision of Global and On-demand Learning Opportunities
Since each employee’s growth is different, we are implementing
on-demand education1 that allows employees to learn when theywant according to their own needs. In addition to group training,
we are proactively utilizing e-learning programs and providing acommon platform from learning from any location in the world.
• Support for Career Development
We are expanding our education programs to help employees
quickly acquire basic skills. We also provide information and tools

47 TOKYO ELECTRON Integrated Report 2022

Five Perspectives for Motivation-oriented Management• Awareness that our company and work contributes to society

Diversity and Inclusion
At Tokyo Electron, diversity and inclusion are management pillars
that lead to the continuous generation of innovation andincreased corporate value. We are actively promoting them withthe strong commitment of our management. We have taken on
gender, nationality and generation as major themes and set thefollowing goals based on the characteristics of each region. We
are implementing various initiatives at each Group company.
• In terms of succession planning, we conduct a diversityconscious talent pipeline (plan for developing humanresources), and are implementing initiatives to achieve the goalof increasing the ratio of female managers1 to 8.0% globally and5.0% in Japan by fiscal 2027 (as of March 31, 2022: globally 5.5%
and in Japan 2.6%)• Taking into consideration that many of our employees areengineers, we actively invest in the use of recruiters and branding
to hire female engineers at a level that is equal to or greaterthan the general ratio of female engineers2 in each region• We create an organizational structure where even those fromoutside of Japan can take on corporate roles through the use oftechnology and shared global human resources systems• We organize events such as “Diversity and Inclusion Day” andother events with internal promotion leaders and external
experts, create networking opportunities for employees withsimilar characteristics and experience, and hold roundtablediscussions regarding careers before and after taking
maternity/paternity leave and childcare leave

Diversity and Inclusion Day
Diversity and Inclusion Day, an online event with simultaneous
streaming for Group companies worldwide, was held in
February 2022.
In his opening speech, the CEO stated, “We need toincorporate all wisdom and diverse ideas to maximize the growthpotential of the entire Group. In order to do this, it is essential topromote diversity and inclusion.” In addition, members from the U.S.
including the president of Tokyo Electron America spoke about theimportance of diversity and inclusion at a talk session. From Japan,
two outside directors participated in a panel discussion regarding
the roles of the company in a rapidly changing global society.
Through this event, the importance of embracing and making
the most of diversity was once again confirmed.
1 Include experts in the number of managers
2 The ratio of females majoring in science or engineering

Ratio of Female Managers
8.0

(%)

5.0

5.5

2027.3(goal)

2022.3(%)

2.6
2022.32027.3(goal)
GlobalJapan• Dreams and expectations of the Company’s future• Opportunities to take on challenges• Fair evaluations that recognize employee efforts and globallycompetitive rewards• Workplace with open atmosphere and positive communication

so that employees can gain a more concrete image of their own
learning, experience and career development.
• Leader Programs
In order to nurture the next generation of leaders to support our
future, we identify and systematically nurture staff to take on
the role of realizing medium- to long-term corporate valueenhancement. We provide next-generation management
candidates with opportunities to build networks throughparticipation in events such as external training, to develop a
broader perspective, and to receive 360-degree feedback2. In
addition, management, including outside directors, conduct
systematic assignment considerations and reviews.

Employee Engagement
Improving employee engagement is essential to maximize
corporate performance and achieve sustainable growth.
Recognizing that employees both create and fulfill company
values for us, we have been regularly conducting engagement
surveys since fiscal 2016 to assess the current state of
employee engagement and identify issues. Based on the resultsof the surveys, we make improvements to foster a better
workplace environment and culture by increasing
opportunities for dialogue between management andemployees as well as continuously communicating messages
that emphasize safety, quality, and compliance. These
initiatives resulted in an increase in the overall employee
engagement score of 12 points from fiscal 2016 to fiscal 2021. In
addition, the retention rate* in fiscal 2022 was 96%, a high leveleven on a global scale.
We will continue these initiatives, such as clarifying career paths
and improving operational efficiency through digital transformation,
since we believe that improving employee engagement is importantto providing increase value to our stakeholders.

Regular Engagement Survey Process

Up 12 points
Reviewingofcircumstances

Improvementofmeasures

Planningformeasures

Fostering abetter workplaceenvironmentand culture
Confirmationofeffects

Implementationofmeasures・Opportunities for dialogue between
management and employees
・Communication of messages
emphasizing safety, quality andcompliance* Retention rate is calculated using data on turnover rate.

1 On-demand education: Education programs that allow employees to learn at theirown convenience, anywhere, anytime
2 360-degree feedback: Process for collecting feedback from the subordinates,
peers and supervisors of employees, as well as self-evaluations by the employees
themselves

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Research
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andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Corporate Governance Framework

Corporate GovernanceCorporate Governance System
Basic Stance
We regard building corporate governance structures as important
for achieving success in global competition and realizing
sustainable growth. To that end, we have built a structure for
utilizing to the maximum the worldwide resources we possess andhave worked to incorporate a wide range of opinions to strengthen
our management foundation and technology base, establishing agovernance structure capable of ensuring that we attain globallevel earnings power. We established the Corporate Governance
Guidelines* and outlined the corporate governance structures that
we have developed and reinforced ahead of other companies.
* Corporate Governance Guidelines: www.tel.com/about/cg/

Further Development of Corporate Governance
We use the Audit & Supervisory Board System, which consists ofa Board of Directors and an Audit & Supervisory Board, and haveachieved effective governance based on the supervision ofmanagement by the Audit & Supervisory Board.
In April 2022, we transited to the Prime Market of the Tokyo
Stock Exchange and took the following actions reinforcing
corporate governance to respond to the expectations of capital
markets including compliance with the Corporate Governance
Code and to enhance corporate value even further.

(1)	Changed the composition of the Board of Directors to three
inside directors and three outside directors(2)	Appointed a majority of outside directors to the Nomination
Committee and the Compensation Committee, including
their respective chairpersons(3)	Introduced a Corporate Officer system, under which
corporate officers, as the highest decision-making body on
the executive side of the Group, are responsible for the entire
Group management and business execution(4)	Established the Corporate Officers Meeting and appropriately
delegated authority from the Board of Directors to the
executive side to conduct prompt decision-making and agile
operational execution(5)	Corporate officers attend Board of Directors meetings andapply the details of Board deliberations to business execution
in an appropriate and speedy manner
By establishing a Board of Directors that performs its
supervisory functions and a robust business execution system inthe semiconductor production equipment industry, where
technological innovation is rapid and market changes are active,
we will further promote growth-oriented group management on
global basis, expand short-, medium- and long-term profit andachieve continuous corporate value enhancement.

Changes in Corporate Governance (Since CY1998)
1998

1999

2000

2002

2003

2016

2017

2018

2019

2020

Board of Directors

Audit & Supervisory Board

Composition: 	Three inside directors and three outside directors
	Corporate officers also attend meetings to give
explanations and reports, etc.
Chairperson:
Inside director (non-executive)
Number of Meetings: 12 in fiscal 2022

Composition: 	Two full-time Audit & Supervisory Board members andthree outside Audit & Supervisory Board members
Chairperson:
Full-time Audit & Supervisory Board member
Number of Meeting: 9 in fiscal 2022

Nomination Committee

Compensation Committee

Composition:
One inside director and two outside directors
Chairperson:
Outside director
Number of Meetings: 12 in fiscal 2022
Deliberation Topics: 	Appointment and dismissal of corporate directors
and the CEO, candidates of independent outside
directors, status of successor development,
other topics

Composition:
One inside director and two outside directors
Chairperson:
Outside director
Number of Meetings: 10 in fiscal 2022
Deliberation Topics: 	Policies concerning determination of individualcompensation for corporate directors and others
and the details of compensation, compensation ofindividual remuneration, etc. of representative
directors, other topics

Shareholders’ Meeting
Appointment or Dismissal of Audit &Supervisory Board Members

Appointment or Dismissal of Corporate Directors

Management& Supervision

Nomination
Committee
Compensation
Committee

Appointment
or Dismissal

Audit

ReportBoard of Directors

Audit

ReportCooperate

Audit &
Supervisory Board

Independent Auditors

Audit

Proposal & ReportSupervision

Cooperate

Cooperate
ReportBusiness Execution
CSS(Corporate Senior Staff)

Representative Director,
President & CEO

ReportGlobal Audit Center

2021

2022

Four of Twelve
Directors(One-third)

Three ofSix Directors(One-half)Business Ethics Committee

Two

Risk Management Committee

Audit

Corporate Officers Meeting
OutsideDirectors(Ratio)

One

Two

Three

Sustainability Committee
Diversity(Female & Foreign
Nationals)

One

Two

Three

Audit

Information Security Committee
Term of Office
Executive
Changed from Officer System
Two Years
Introduced
to One Year

Corporate
Directors &Executive Officers

Export Trade Control Committee

Corporate
Officer System
Introduced

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

Nomination
Committee
Established

Nomination
Committee

Chairperson:
Outside Director

Compensation Compensation
Committee
Committee
EstablishedDirector
Compensation

Stock Option
SystemIntroduced

Majority ofMembersare Outside
Directors

Chairperson:
Outside Director

Disclosure ofCompensationof Individual
Representative
Directors

Stock-based Clawback Policies,
Compensation Stock Ownership
System for
Guidelines
Outside Directors
Introduced
Introduced

Medium-term
Performance-linked
Compensation
System Introduced

Evaluating theEffectivenessof the Board of
Directors

Start of
Evaluation(Self-evaluation)

Majority ofMembersare Outside
Directors

Involvement ofThird-party
Organizations

Corporate Officers Meeting

Committees on the Executive SideThe highest decision-making body on the executive side; established inJune 2022
Composition: 	Six corporate officers
	Inside directors who are not corporate officers andinside Audit & Supervisory Board members also
participate
Chairperson:
CEO
Meeting Frequency: Once a month in principle● Business Ethics Committee

CSS (Corporate Senior Staff)
Sustainabilityrelated
Disclosures

Environmental
and Social
Report Issued

Sustainability
Report Issued

Integrated
Report Issued

49 TOKYO ELECTRON Integrated Report 2022

Reviews progress management and implementation of management
plans from a global perspective
Composition:	Executive officers, management executives ofoverseas subsidiaries and others
Meeting Frequency: Once a quarter

Investigates the revision and revocation of the Code of Ethics andverifies the status of practice in accordance with the Code of Ethics
Proposes and supports training and educational programs relating tobusiness ethics● Sustainability Committee

Sets annual sustainability goals (short, medium, and long term) and
implements measures to achieve them
Implements company-wide projects (the environment, human rights,
RBA, etc.)● Risk Management Committee

Performs and shares information on company-wide risk management
Promotes initiatives to address individual risk items in collaboration
with risk owners

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andandDevelopment Manufacturing

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Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Establishment of the Director Compensation System
Basic Policy on Director Compensation
The entire Group emphasizes the following points in its basic
policies on compensation for corporate directors and Audit &Supervisory Board members.
(1) Levels and plans for compensation to secure highly competentmanagement personnel with global competitiveness(2) High linkage with business performance in the short term andmedium-and-long term increase of corporate value aimed atsustainable growth(3) Securement of transparency and fairness in the decision
process of compensation and appropriateness of compensation
Overview of Compensation
The table below provides an overview of the composition ofcompensation and policies and decision-making for each typeof compensation.
Role of the Compensation Committee
To secure transparency and fairness in management and theappropriateness of compensation, the Compensation
Committee, which is chaired by an independent outside director,
utilizes advice from an external expert who attends all meetings,
compares compensation levels with companies in Japan andoverseas and analyzes the latest trends and best practices inJapan and overseas (such as reflecting ESG in compensation). The
committee then proposes to the Board of Directors acompensation system that is the most appropriate for the Groupand individual compensation amounts for the representative
directors based on the basic policies on compensation.

RecipientType of Compensation

Fixed Basic Compensation
Cash Bonuses

AnnualStock
PerformanceCompensationlinked
based Stock
Compensation
Options

InsideDirectors

○

○

○

○

－

－

○

Performance
Share(Stock-based
Compensation)○

Restricted
NonStock Units
performance(Stock-based
linkedCompensation Compensation)－

Medium-term
Performancelinked
Compensatin

Audit &
Outside Supervisory
Directors
Board
Members

－

－

○

－

－

－

Overview of Compensation

・Determine within the limit of total fixed basic compensation, which has been resolved at the
Meeting of Shareholders
・For executive directors, amounts are determined according to the scale of job responsibilities bymaking reference to the job grade frameworks of external expert organizations
・Amount is linked to business performance in the relevant fiscal year to raise awareness ofenhancing performance in each fiscal year・Consists of cash bonuses and stock compensation-based stock options; the composition ratio is
approximately 1:1
・Specific amounts and the number of stock options granted are commensurate with the corporate
business performance and the results of individual performance evaluations in the relevant fiscal
year(Indicators of the corporate business performance)
Net income attributable to owners of parent and consolidated ROE are adopted, andthe results of comparisons of operating margin and operating margin growth ratio withcompetitors are reflected on the amount of payment(Individual performance evaluation items)
Contribution to short- and medium-term management strategy targets including ESG・ Profit-sharing type compensation paid commensurate with business performance in each fiscal
year, therefore no policy is in place for the payout proportion of fixed basic compensation
・ Stock compensation-based stock options are subject to a three-year exercise restriction period
to motivate recipients to share a shareholder perspective while contributing to increasing
corporate value over the medium to long term・Paid to motivate recipients to contribute to medium- to long-term businessperformance improvement
・If the payout rate is 100%, the payment amount is set at about 30% to 100% of the fixed basic
compensation, commensurate with the scale of job responsibilities
・The number of shares delivered is determined depending on the level of achievement of
performance goals for the covered period (three fiscal years)
・Consolidated operating margin and consolidated ROE have been adopted as the indicators forevaluating business performance
・The remuneration system is designed to be more consistent with the expected role of giving advice
to management from the perspective for increasing corporate value over the medium to long term
・Standard amounts are set at about 50% to 60% of the fixed basic compensation to ensure anadequate balance between cash compensation and stock-based compensation
・Provided in the form of share delivery after the covered period (three fiscal years) has passed

Advanced Initiatives Relating to Director Compensation⚫Shareholding Guidelines
We have established the Shareholding Guidelines (effective July 1,2021) to further ensure that management’s interests align withthose of stakeholders in pursuit of sustainable enhancement ofcorporate value. We have set targets for management to holdcompany shares equal to the following within five years after theeffective date of the guidelines or appointment.
CEO
Inside Directors
Corporate Officers
Outside Directors
Executive Officers

51 TOKYO ELECTRON Integrated Report 2022

3 times
Fixed basic compensation(annual amount)

2 times
1 time1 time⚫Clawback Policy
We have enacted a clawback policy (effective July 1, 2021)
whereby we can demand a refund of annual performance-linked
compensation and medium-term performance-linked
compensation if financial figures are found to be in need of majorcorrection due primarily to the willful misconduct of an executive
director or corporate officer.
The amount of compensation subject to refund is the excess
portion of the performance-linked compensation received in thefiscal year in which such misconduct was found as well as thethree preceding fiscal years.

Evaluating the Effectiveness of the Board of Directors
Overview of Evaluations of EffectivenessTo further enhance our governance and the effectiveness of theBoard of Directors, we have conducted annual evaluations of theeffectiveness of the Board since fiscal 2016 and have disclosed
summaries of the results. Since fiscal 2019, we have used external
experts as a third-party organization to verify the status ofinitiatives relating to issues identified in the preceding fiscal year,
identify future issues and work toward continuous improvement.
Evaluation of the Effectiveness of the Board of Directors for
Fiscal 2022
⚫Scope of Evaluation
Board of Directors Overall (including details of the activities of
the Nomination Committee and Compensation Committee)⚫Process
Survey administered to all
corporate directors and Audit &Supervisory Board members

Interviews of all corporate directors
and Audit & Supervisory Board
members by external experts

Report by external experts

Meetings for exchanges of opinions
by outside directors and outside
Audit & Supervisory Board members

Deliberations at internal meetings

Discussion and self-evaluation by the Board of Directors⚫Evaluation Items
The main evaluation items for evaluating effectiveness are
as follows.
• Overall effectiveness of Governance System and the Board of Directors-Roles and functions of the Board of Directors-Size and composition of the Board of Directors-Operational status of the Board of Directors• Composition, roles and operational status of the Nomination
Committee• Composition, roles and operational status of the Compensation
Committee• Further support to outside directors• Roles of Audit & Supervisory Board members• Relationship with investors and shareholders⚫ Fiscal 2022 Initiatives• Reinforcement of continuous deliberation concerning mediumto long-term management strategies
Two off-site meetings were held for in-depth discussions on
growth strategies, the Medium-term Management Plan, thefuture governance system and other issues.
• Promoting diversity and developing and appointing global
human resources
Initiatives and the status of disclosure regarding human capitalare reported to the Board of Directors, and with respect todiversity, the Board discusses, sets and discloses targets for theratio of female managers and implement specific measures.
• Reinforcement of the internal audit system and collaboration
between the Internal Audit Department and the Board of Directors
The status of implementation of internal audits is reported to

the Board of Directors. Also, risk-based audits are conductedpursuant to the audit map.
• Enhancement of information sharing by the Nomination
Committee and the Compensation Committee with the Boardof Directors
The status of activities of the Compensation Committee,
discussion points concerning review of compensation systems,
the status of progress of successor development plan and othermatters are reported to the Board of Directors.
⚫Overview of Fiscal 2022 Evaluation Results
We recognize that the Board of Directors appropriately performs its
roles and obligations, generally with a high level of effectiveness, andthe Board, including the Nomination Committee and theCompensation Committee, functions effectively (the analysis andevaluation by external experts resulted in a similarly high evaluation).
⚫Future Initiatives
Based on the results of the most recent evaluation, we willcontinuously take action regarding the following items and work
to enhance effectiveness even further.
(1) Measures to enhance the effectiveness of the Board of Directors in the
60th fiscal year
-Clarify the division of roles and decision-making authority and ensure
appropriate checks and balances between the executive side and theBoard of Directors-Conduct appropriate operations of the newly established Corporate
Officers Meeting to ensure effectiveness(2) Continuous deliberation by the Board of Directors to achieve growth overthe medium to long term and continuously enhance corporate value-After clarifying specific timeframes (short, medium and long term),
organize targets and strategic themes and risk issues (deepen discussion
relating to medium- to long-term growth strategies)-Continuously address diversity and inclusion(3) Investigate optimal information sharing among members of the Board of
Directors and with the voluntary committees-Ideal state of information sharing on the activities of the Nomination
Committee with the Board of Directors-Establish venues for exchanges of opinions among outside directors andoutside Audit & Supervisory Board members

Main Topics for the Board of Directors and Off-site Meetings
in Fiscal 2022
CEO・Reports on status of business execution by CEO (each meeting)・Sharing of CEO missions
・Market environments over the medium to long term and our growthplans
Medium- to
Long-term ・New Medium-term Management Plan and future growth strategies
Growth・Expansion and reinforcement of development and production facilities
Strategies
in Japan and overseas
・Business innovation projects

Risks

・Improvement of risk management processes
・Legal affairs and compliance
・Procurement risks

・Future governance system and decision-making processes
・Action policies concerning sustainability and diversity
・Reports on investment in human capital and intellectual property
activities
・Reports on internal audits
Governance ・Status of investment targets and cross-shareholdings and status of
IR activities
・Status of the activities of the Compensation Committee
・Status of progress of successor development plan・Closed session on evaluation of representative directors(corporate directors, excluding representative directors, and Audit &Supervisory Board members; once a year)

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Skills Matrix
We define “Product Competitiveness,” “Customer
Responsiveness,” “Higher Productivity” and “Management
Foundation,” which supports our overall business activities, as
material issues.
We will address priority themes relating to each material issue

Directors, Audit & Supervisory Board Members and Corporate Officers (As of July 1, 2022)
and achieve expansion of medium- to long-term profit andcontinuous corporate value enhancement by each corporate
director and Audit & Supervisory Board member demonstrating
their skills in global business, governance, sustainability and inparticular, the areas listed below.

Directors

Expected Skills
Name

Corporate
Directors

Corporate
Management

Semiconductor/
FPD

Sales/
MarketingToshiki Kawai

●

●

●

●

Sadao Sasaki

●

●

●

●

●

●

●

●

●

Yoshikazu Nunokawa
Michio Sasaki

Outside●Makiko Eda

Outside●Sachiko Ichikawa

Outside●Finance,
Accounting/Engagement with
Capital Markets●

Kazushi Tahara
Kyosuke Wagai

OutsideMasataka Hama

OutsideRyota Miura

OutsideLegal Affairs/
RiskManagement

Toshiki Kawai

Sadao Sasaki

Yoshikazu Nunokawa

Representative Director
President & CEO
Corporate Officer

Representative Director
Senior Executive Vice President
Corporate Officer
President & Representative Director,
Tokyo Electron Technology Solutions
Ltd.

Corporate Director
Chairman of the Board of Directors

Michio Sasaki

Makiko Eda

Sachiko Ichikawa

Outside Director
Director and Vice President,
SHIFT Inc.
Outside Director,
ZUIKO CORPORATION

Outside Director
Chief Representative Officer,World Economic Forum Japan
Outside Director,
FUJIFILM Holdings Corporation

Outside Director
Partner, Tanabe & Partners
Outside Director, OLYMPUS CORPORATION
Statutory Auditor,
The Board Director Training Institute of Japan

●

●

●

Yoshiteru Harada
Audit &
Supervisory
Board
Members

Manufacturing/
Development

●

●

●

●

●

●

●
●

●

●

●
●

Audit & Supervisory Board Members* Definition of Expected Skills
Corporate Management
Semiconductor/FPD
Manufacturing/Development
Sales/Marketing

Experience of corporate management (experience serving as a representative director or chairman/president)
Knowledge of semiconductor/FPD-related industries
Knowledge/experience in manufacturing and development at Tokyo Electron and other manufactures
Knowledge/experience in sales and marketing at Tokyo Electron and other manufactures

Finance, Accounting/Engagement with Capital Markets

Knowledge in financial accounting and M&A, or knowledge/experience in engagement with capital markets

Legal Affairs/Risk Management

Knowledge in legal affairs, compliance and risk management

Yoshiteru Harada

Kazushi Tahara

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Kyosuke Wagai

Masataka Hama

Ryota Miura

Outside Audit & Supervisory Board
MemberRepresentative, Wagai CPA OfficeOutside Audit & Supervisory Board Member,
Mochida Pharmaceutical Co., Ltd.

Outside Audit & Supervisory Board
MemberOutside Director,
Nissay Asset Management Corporation

Outside Audit & Supervisory Board Member
Partner, Miura & Partners Legal Profession Corporation
Corporate Auditor, TECHMATRIX CORPORATION
Outside Director, Eisai Co., Ltd.

Tatsuya Nagakubo

Seisu Ikeda

Yoshinobu Mitano

Takeshi Okubo

Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Diversity of Board Members
Expected Skills of Corporate Directors and Audit & Supervisory Board Members

Independence and Diversity of Corporate Directors(Unit: persons)

6

Corporate Management

6

Semiconductor/FPD
Manufacturing/Development

5

Sales/Marketing
Finance, Accounting/Engagement with Capital Markets
Legal Affairs/Risk Management

5

53 TOKYO ELECTRON Integrated Report 2022

6
4

Independent Outside Directors

3/6
2/6

Female Corporate Directors(Unit: persons)

Corporate Officers

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Messages from Outside Directors

Michio Sasaki

Makiko Eda

Independent Outside Director (Nomination Committee Chairman)

Independent Outside Director

Contributing with an awareness of priorities,balance and speed to expand profits andincrease corporate value

Fostering a culture that embraces diversity
and nurturing it to become a strength that isa part of the company’s DNA

Tokyo Electron’s corporate culture, Corporate Philosophy, Management Policies and TEL Values, which are one of thesources of its competitiveness, are clearly reflected in the Board of Directors, and there is an open, candid and active
exchange of opinions. I believe that carefully listening to the opinions of outside directors and Audit & Supervisory Board
members, speedy and high-quality execution and organizational values have contributed to high evaluations of theeffectiveness of the Board of Directors every year.
The explanation of business performance and other important matters in the CEO reports at each Board of Directors
meeting is detailed, easy to understand and helpful in gaining an overall understanding. Off-site meetings are alsovaluable opportunities to deepen understanding of matters such as medium- to long-term management strategies anddevelopment investments through in-depth explanations and discussions, so I would like the company to continue thesegoing forward.
I would like to utilize the management experience I have accumulated in the development and manufacturing industry
until now as well as my current experience in the IT industry to continue to contribute as an outside director. I would liketo do this with a particular awareness of whether our priorities, balance and speed are optimized in order to expand profit
and improve corporate value, including ESG, SDGs, development investment, DX, human resource development and risk
management such as security in order to achieve our new Medium-term Management Plan.

Discussions at Tokyo Electron’s Board of Directors are open, fast-paced and lively. I expected Japanese companies to place
more of an emphasis on formality, but Tokyo Electron is completely different. Things that need to be discussed are
discussed with the necessary depth and internal discussions are becoming more transparent. In my participation in the
Board of Directors meeting over the past few years, I have seen that Tokyo Electron is a lively company that continues to
evolve, learn and embrace new opportunities to grow without any hesitation.
As the company continues to grow, it is essential to be able to incorporate the talents of people from diverse
backgrounds. This was more clearly defined as both a company policy and a growth strategy in 2021. Setting a numericaltarget is just the first step. The true work is in fostering a culture that embraces diversity, building a framework andnurturing this diversity to become a strength that is part of the company’s DNA.
As Tokyo Electron grows rapidly, we must quickly assess and respond to a variety of opportunities and risks.
Semiconductors shape the future, and in this regard, I believe that Tokyo Electron has a significant role to play. From myposition as an outside director, I would like to contribute to Tokyo Electron’s sustainable growth from a medium- tolong-term perspective.

Role of the Nomination Committee
The most important role of the Nomination Committee is selecting candidates for the next CEO and proposing themto the Board of Directors.
The Nomination Committee holds fair and open-minded discussions every month regarding the creation of aframework to select and develop the next CEO who will inherit Tokyo Electron’s excellent corporate culture, which isthe foundation of its growth, and who will achieve both sustainable growth and improved corporate value over the
medium to long term. Specific selection and development frameworks are discussed at the Top Management
Review Meeting (TRM) consisting of the representative director, the executive officer in charge of human resourcesand other members, and attended by members of the Nomination Committee. There, the next generation leader
development PDCA cycle is reviewed and assignments are determined.
In the next-generation leader development program, the cycle is as follows:
1. A succession planning roadmap is established2. Executive officers, division general managers and the Human Resources Department select succession
candidates and continuously update the succession pool
3. Individual development plans for succession candidates are formulated, followed by the person in charge,
capability development through other competitions, and training using TEL UNIVERSITY
4. Review is conducted at TRM
Through this cycle, we reinforce the leadership, on-site skills, judgment, environmental adaptability and sense ofbalance of candidates and promote the continuous development of next-generation leaders.
The Nomination Committee consults with the CEO and selects several future CEO candidates, discussing andformulating a roadmap that follows them on the path to becoming CEO. Through this process, we work with therecognition that it is our responsibility to our stakeholders to propose a leader to the Board of Directors who canrealize Tokyo Electron’s medium- to long-term growth and expansion of profits.

55 TOKYO ELECTRON Integrated Report 2022

Sachiko Ichikawa
Independent Outside Director

Governance has performed well to date;however, governance is never complete andalways requires improvement
The Board of Directors and its members have a responsibility to shareholders and other stakeholders. This responsibility is
not limited to the current fiscal period but rather extends over the medium to long term. Tokyo Electron’s strong
performance in fiscal 2022 despite the difficult economy environment can be seen as a product of its corporate
governance to date.
At Tokyo Electron’s Board of Directors meetings, the words “investor and shareholder reaction,” “time axis” and“alternative scenarios” appear frequently. This shows that the Board of Directors is looking further and wider while
monitoring and supervising the current status of business execution. This perspective is necessary to avoid short-term
bias, closed-minded thoughts and a lack of analysis. This receptive approach to listening has made Tokyo Electron what it
is today. However, governance is never complete and always requires improvement. Furthermore, the level of uncertainty
in the economic environment has increased significantly. The needs of stakeholders are likely different than they havebeen in the past. I will strive to realize a Board of Directors that has an eye on the future, conducts investments andstructure improvements in advance to continue producing good business results, and allows the executive side to fully
demonstrate its abilities when opportunities arise.

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Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
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Services

Sustainability Initiatives in the Value Chain

Item

Risk Management
Approach to Risk Management
We are building and developing a risk management system torespond appropriately and promptly to risks that are growing
increasingly complex and diverse as society and the businessenvironment change. We identify cross-division andcomprehensive risks across the entire Group to build a solid
financial foundation based on the new Medium-termManagement Plan that is competitive globally. We makedecisions and supervise particularly material risks at the
Corporate Officers Meeting and the Board of Directors, andimplement countermeasures without fail alongside each of theGroup companies and related departments.
We believe accurately understanding the risks and impacts
that we may face in our businesses with an eye on the future,
viewing them as opportunities for business growth andappropriately addressing them are essential to sustainablegrowth as a company that is trusted by society.
Risk Management System
We have established the organization to oversee the entire
Group at our headquarters and carry out enterprise risk
management1 to promote more effective risk management. This
organization, together with the respective departments
responsible for each operation, comprehensively identifies awide range of risks associated with our business activities, suchas compliance, human resource, labor and business continuity,and classifies those with high impact and probability as ourmaterial risks.
In addition to holding management workshops and training
for employees and raising awareness company-wide, we arealso working to strengthen the PDCA cycle and improve theeffectiveness of risk management by formulating and executing
measures to mitigate material risks, monitoring the effect of saidmeasures and holding discussions at major internal meetings.
Specifically, we review the response status of the executive
department and each of the Group companies regarding theidentified material risks at the BUGM meeting, quarterly
Item

1. Market Fluctuations

2. Geopolitics

review meeting and the CSS, etc., and decide a response policy at
the Corporate Officers Meeting. We ensure the operating
rhythm of this procedure and also report periodically to theBoard of Directors.
Additionally, we are continuing to focus on the revision andoperation of our BCP, including responses to COVID-19, and are
rapidly executing business continuity measures.
In fiscal 2021, we introduced CSA2, with each risk owner of theGroup further strengthening risk management in the 13 defined
categories. We will continue to implement autonomous andhighly effective risk management.
1 Enterprise risk management: Group-wide systems and processes related to risk
management activities

Risk Management Initiatives
We have begun to address emerging risks from a medium- tolong-term perspective, going a step further than its conventional
approach of assessing the current risk management state,
identifying known and unknown risks that may surround thecompany in the future and examining mitigation measures.
In fiscal 2022, the 13 risks identified to date were reviewed
and reevaluated from the perspective of their potential to have asignificant impact on our operating results, financial conditionand cash flow. We then pushed forward risk management
initiatives for each identified risk even further.

Main Potential Risks

Main Risk Management Initiatives• A rapid contraction of the semiconductor market could lead to
overproduction or an increase in dead inventory• A sharp increase in demand could lead to an inability to supply
customers with products in a timely manner, resulting in lost
opportunities• Periodically review market conditions and orders received at
the Board of Directors and other important meetings, andappropriately adjust capital investments, personnel/inventory
planning and other aspects of business• The Account Sales Division and the Global Sales Division
strengthen the sales framework and customer base by grasping
investment trends of customers and responding to a wide
range of customer needs• Geopolitical tensions could undermine the international orderand global macroeconomic conditions, affecting national andregional security, foreign, industrial or environmental policy. This
could in turn lead to supply chain disruptions or deteriorationof the macroeconomic environment, restricting the Company’s
ability to operate business• Carefully monitor the international situation as well as the
diplomatic and security measures and industrial policy trends ineach country and region• Anticipate the impact of macroeconomic fluctuations andregulations related to product imports/exports or technologicaldevelopment on the Company’s business and consider
countermeasures in advance57 TOKYO ELECTRON Integrated Report 2022

Main Risk Management Initiatives• Establish the Corporate Innovation Division and build a Groupwide development framework that integrates innovativetechnology development with the technologies of eachdevelopment division• Provide highly competitive next-generation products aheadof competitors by collaborating with research institutions andsharing a technology roadmap spanning multiple generations
with leading-edge customers

4. P rocurement, Productionand Supply• Interruptions in the Company’s production due to a natural
disaster or delays in component procurement due todeterioration in the business conditions of a supplier or an
increase in demand that exceeds the supplier’s supply capacity
could lead to delays in the supply of products to customers• Formulate business continuity plans, develop alternate
production capabilities, promote the seismic reinforcement ofplants, level production, enhance the backup capabilities for
information systems, use multiple sources of important parts,and maintain appropriate inventory levels• Share forecasts based on demand projections with suppliers
and build a system for the stable supply of products

5. Safety• Safety problems with the Company’s products could lead todamage to customers, liability for damages and a decline in the
Company’s credibility• Based on the “Safety First” approach, place the highest priority
on the safety and health of all people, implement inherently
safe design with an awareness of risk reduction at the productdevelopment stage, promote safety training, and establish an
accident reporting system• The occurrence of a product defect could lead to liability fordamages, costs for countermeasures and a decline in the
Company’s credibility• Establish a quality assurance system and a world-classservice system• Resolve technical issues from the product development anddesign stage• Investigate the cause of any defects and implement measures
to prevent the same or similar defects from occurring• Monitor the quality status of suppliers, conduct audits andprovide support for improvement• Violations of the laws and regulations of the countries andregions where the Company operates could lead to diminishedpublic confidence in the Company, fines, liability for damages or
restrictions on business activities• Monitor compliance activities at key sites in and outside Japan
under the direction of the Chief Compliance Officer• Have assessments conducted by external experts and report
identified issues to the CEO, the Board of Directors and the
Audit & Supervisory Board for swift and effective action• The inability to obtain exclusive rights to proprietary technologies
could lead to reduced product competitiveness• Infringement of the intellectual property rights of third parties
could lead to restrictions on the production and sale of products
as well as liability for damages• Advance the intellectual property strategy, business strategy
and R&D strategy in an integrated manner to build an
appropriate intellectual property portfolio• Breaches of information or the suspension of services due
to unauthorized access by cyberattack, natural disasters orother factors could lead to diminished public confidence in the
Company or liability for damages• Launch a dedicated security organization and establish an
information security system that conforms to international
standards by having security assessments conducted byexternal experts, etc.
• Establish globally standardized rules and regulations for
information management and implement response guidelines• The inability to recruit and retain necessary human resources on
an ongoing basis or the inability to create an environment where
people with diverse values and expertise can play an active role
could lead to diminished product development capability or
customer support quality• Make continuous improvements to work environments andpromote diverse work styles as well as health and productivity
management (e.g., sharing our visions by management,
establishing training plans for human resource who will leadthe future, visualizing career paths for employees and offering
attractive remuneration and benefits)• The inability to respond appropriately to each country’s climatechange policies, environmental laws and regulations, andcustomer needs could lead to additional related costs such as
for developing new products or changing specifications, as wellas to reduced product competitiveness and diminished publicconfidence in the Company• To achieve industry-leading medium- to long-term
environmental goals that include the net zero target,
implement measures such as reducing greenhouse gas
emissions from the use of our products, increasing the rate ofrenewable energy usage at plants and offices, reducing overall
power consumption, reviewing packaging materials, andpromoting a modal shift• Provide technologies, etc., that contribute to higher
performance and energy efficiency of semiconductor devices
through implementation of our E-COMPASS initiative• The spread of COVID-19 could slow the Company’s businessactivities or lead to a global economic downturn• Establish an Emergency Task Force headed by the CEO• Restrict travel to high infection-risk countries and regions,maintain supply chains and thoroughly implement infection
prevention measures at plants and offices• Business could be influenced by the global and regional politicallandscape, economic environment, financial and stock markets,foreign exchange fluctuations and other factors• Take appropriate measures to counter such risks

3. Research andDevelopment

2 CSA: Control Self-Assessment. Internal risks and controls are evaluated andmonitored by those who are actually performing the duties with the goal ofbuilding and maintaining an autonomous risk management system.

Auditing by the Internal Audit Department
The Global Audit Center serves as the internal audit department
for the entire Group, conducts audits based on plans, provides
instructions and support for making improvements to issues andconfirms the progress of these improvements.
The Group’s internal control over financial reporting during
fiscal 2022 was evaluated as effective by the independent
auditors, the same as in the previous fiscal year.

Main Potential Risks• Delays in the launch of new products or the mismatch of suchproducts with customer needs could lead to a decline in thecompetitiveness of products

6. Quality

7. Laws and Regulations

8. Intellectual Property
Rights

9. Information Security

10. Human Resources

11. Environmental Issues

12. Novel Coronavirus(COVID-19)

13. Other Risks

TOKYO ELECTRON Integrated Report 2022

58

Value Creation by the Value Chain

Chapter 3

Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Information Security

Compliancetransformation and other measures, and actively promotemeasures that protect the entire supply chain from the risk ofcyberattacks that target companies.

As the data-driven society advances and the importance of
information security increases, we aim to achieve both datautilization and information security by promoting digital
Main Activities
Information Security Systems

Security at Manufacturing Sites

The Vice President and General Manager,
Information Security, run the Security Committee
and implement measures on a global scale. We holdthe TEL Group Information Security Committee
twice a year, and Information Security Committees
at each company more than twice a year.

We implement security measures at eachmanufacturing site to ensure that the
manufacturing systems that support our businessactivities are operating safely and stably while
maintaining QCD1.

Information Security Management

Supply Chain Security

We established global information security rules,
and conduct security education twice a year andphishing email training every month for all
executives and employees. We hold seminars twicea year to share the latest situation to all Group
members. In addition, we implement risk
assessments and internal audits for eachdepartment of the entire Company to identify risks
and strengthen technological, human,organizational and physical security measures.

We respond to customer requests for security andmonitor the security status of our suppliers toensure that confidential information andinformation on our customers and suppliers that isshared in the course of business activities can beused safely without a loss of convenience.

Increasing Resilience
We operate a system that can detect theoccurrence of security incidents. We confirm
pre-determined procedures so that we can do theright actions for a swift response and recovery byimplementing incident response training. We also
implement a penetration test2 once a year to verify
system vulnerabilities.

Responses to Security Threats
We have proactively introduced advanced
technology and established a dedicated security
organization to build a robust monitoring system inorder to respond to security threats such as
cyberattacks and information leaks.

24

Approach to Compliance
To practice Tokyo Electron’s Corporate Philosophy, it is vital thateach employee performs their daily duties with strong interest in
and a deep understanding of compliance. We established “Tokyo
Electron’s Code of Ethics” as a code of conduct to ensure that ouremployees are aware of the risks around them and conduct
themselves appropriately. We have built a global system that candirectly raise questions and concerns about compliance andbusiness ethics to quickly address potential problems.
Compliance System
In order to effectively promote a compliance program that is
expected of a global company, Tokyo Electron has appointed a
Chief Compliance Officer (CCO) and established a dedicatedCompliance Department at its headquarters. Additionally, thepersons responsible for compliance who called Regional
Compliance Controllers have been appointed at key overseas
sites, an operation for direct reporting to the Chief Compliance
Officer and Compliance Department.
Compliance Initiatives
Business Ethics
Tokyo Electron has established the Business Ethics Committee topromote and raise awareness of compliance and business ethics
more effectively together with implementing “Tokyo Electron’s
Code of Ethics” as the standard of conduct for all executives andemployees. We have also set up the Disciplinary Committee as asubordinate organization of the Business Ethics Committee toensure the implementation of reasonable and appropriate
disciplinary action and proper procedures. In addition, throughregular meetings with each of the Group companies, we discussand implement measures to promote compliance.

Initiatives for Anti-Bribery and Corruption and forCompetition Laws
We have globally established the Basic Policy on the Preventionof Bribery and Corruption and the Guidelines for Gift, Hospitality,
and Entertainment in the area of anti-bribery and corruption,and the Basic Policy on Competition Law Compliance andGuidelines in the area of competition laws. In order to prevent
violations, we regularly provide training to promote
understanding and awareness of these Policies and Guidelines
as well.
Internal Reporting System
Preventing problems from occurring and resolving them quickly
when they occur requires a system that allows employees toraise questions and concerns about business ethics andcompliance without reservation or hesitation and to discussthem fully. We have established an internal reporting systemthat ensures complete confidentiality, anonymity and theprohibition of retribution, so that employees can safely andreassuringly provide information and seek redress outside thechain of command about behavior that is, or may be, in violationof laws, regulations or business ethics.
Specifically, we have established and are operating the Tokyo
Electron Group Ethics & Compliance Hotline—a global common
internal point of contact that uses a third-party system that is
also accessible to our suppliers—as well as an external point ofcontact that allows direct consultation with an outside law firm.
The internal point of contact can be accessed via phone or a
dedicated website 24 hours a day, 365 days a year, andaccommodates all languages used by employees.

1 QCD: Quality, Cost, Delivery
2 Penetration test: A test method for verifying vulnerabilities in networks, PCs, servers and systems.

Global Response to Internal Reports

Overview of Information Security
Mechanisms that support
information security activities
Vice President andGeneral Manager,
Information Security

TEL Group Information
Security Committee

Day-to-day activities implemented globally

Systems established in preparation for
emergencies

Tokyo Electron

Security Monitoring Organization

Information Security Management
Responses to security threats

Early detection ofsigns of potential
attacks

Report/Consult

Progress/Results Report

Information
Providers

Human/Organizations

Technology

PhysicalMinimization ofdamage when an
incident occurs

24

NoticeInternal Pointof Contact

Progress/Results Report

Follow-up
Redress

Incident Response Organization
Information Security
Committees at eachcompany

Board of Directors
Audit & Supervisory Board Member

Third-party System

Report/Consult

Progress/Results Report
Follow-up

External Pointof Contact(Outside Law Firm)

ReportComplianceDepartment/
Legal, Compliance
Division of each
Overseas
Subsidiary

ReportRepresentative Director, President & CEO
GM of Legal, Compliance Unit
Chief Compliance Of f icer

Report/Consult

Request for Investigation/
Corrective and Preventative Action

Report/Consult

Progress/Results Report

Relevant Divisions, etc.

Strengthen/Improve

59 TOKYO ELECTRON Integrated Report 2022

Plan

Do

Act

Check

Supply Chain
Security
Customers

Suppliers

TOKYO ELECTRON Integrated Report 2022

60

Chapter 3

Value Creation by the Value Chain
Research
Procurement
andandDevelopment Manufacturing

Sales

Installation and
Maintenance
Services

Sustainability Initiatives in the Value Chain

Reports and consultations received via these points of contact
are handled with sincerity and investigations are undertaken inaccordance with internal regulations. If a compliance violation isfound, disciplinary action is taken in accordance with the Rules of
Employment*, and preventive measures and corrective
measures, such as improvements to the workplace environment,
are implemented as necessary.
In fiscal 2022, a total of 95 cases were received via the internalreporting system, of which 19 were recognized as complianceviolations. The reports and requests for advice primarily related toharassment and the workplace environment. Based on this result,
we have conducted regular education programs for our
employees with the goal of preventing harassment and haveprovided thorough follow-up with those concerned or involved.
There were no reports or cases of non-compliance that could
have had a serious impact on our business or on local communities.

Breakdown of Consultation/Report Contents

Recognition Program⁸.
Regarding our IR activities, we received “the Best IR Award,”
and were selected as the “Most Honored Company”.
The Tokyo Electron Integrated Report 2021 was selected as an“Excellent Integrated Report” by the Government Pension
Investment Fund (GPIF)’s external asset managers entrustedwith domestic equity investment.

Workplaceenvironment
29%

Other
27%

Fiscal 2022
Gift/Entertainment 2%
Company asset 2%
Sexual harassment 3%
Information security/Intellectual property 5%

Abuse of authority
24%

Safety/Environment 8%* A leniency system has been introduced whereby any disciplinary action may
be reduced or exempted in the event the employee involved in a complianceviolation has made a report or sought advice on their own volition.

1D
 JSI: Dow Jones Sustainability Indices. An ESG investment index of S&P Dow Jones Indices LLC. The DJSI Asia Pacific covers companies in that region.

Engagement with Capital Markets
Our management actively engages in IR (investor relations) andSR (shareholder relations) activities to contribute to oursustainable growth and increase corporate value over the
medium to long term.
For IR activities, in addition to quarterly earnings conferences,
the CEO and each company’s executive appear at Medium-termManagement Plan announcement and IR Day events to share
our business strategies and growth story. Simultaneousinterpretation and subtitles are used to broadcast briefings inJapanese and English in an effort to provide fair disclosures tooverseas investors. The IR Department, which was establishedunder the direct control of the CEO, also supplements
explanations as appropriate through individual interviews andregularly reports opinions from investors to management andthe Board of Directors so that feedback can be of use inmanagement. In addition, we actively participate in IR and ESG
conferences in Japan and overseas and encourage dialogue withcapital markets through the cooperation of company executives
and the IR Department to gain a deeper understanding of theGroup. In fiscal 2022, we received a Best IR Award from Japan

2 FTSE4Good Index: An index related to environmental performance and corporate social responsibility developed by FTSE Russell.

Investor Relations Association and were selected as a Most
Honored Company by Institutional Investor magazine in the U.S.
for the seventh consecutive years.
As a part of our SR activities, company executives play acentral role in constructive dialogue with our major investors andproxy advisory firms. In addition to explaining the Shareholders’Meeting agenda in advance, we engage in repeated dialogue
throughout the year on a wide range of topics including
corporate governance, our policies about sustainability-related
initiatives, the environment, human rights, and diversity anddeepen mutual understanding.
To encourage active discussion and facilitate smooth andefficient voting at Shareholders’ Meetings, we send convocation
notices at an early stage, and also post notices in both Japaneseand English on our website prior to sending notices and takeother measures to provide information to shareholders in atimely manner. In addition, we analyze the results of the exercise
of voting rights, report to the Board of Directors, and use theresults to further enhance engagement with investors.

3 MSCI World ESG Leaders Indexes: Companies that have high ESG performance are selected from the MSCI Global Sustainability Index, an ESG investment index developed by
Morgan Stanley Capital International (MSCI). Please refer to the link for the logo’s disclaimer. www.tel.com/sustainability/review.html
4 Euronext Vigeo World 120 Index: An index selected by NYSE Euronext and Vigeo Eiris composed of 120 companies that excel from an ESG perspective.
5 STOXX Global ESG Leaders indices: STOXX, a subsidiary of Deutsche Börse, selects companies that meet its evaluation standards based on the results of research from the
ESG research company Sustainalytics.
6 S ustainalytics’ ESG Risk Ratings: An ESG risk measured for institutional investors by Sustainalytics in the Netherlands. The rating is based on a company’s exposure toindustry-specific material ESG risks and how well a company is managing those risks. Copyright ©2022 Sustainalytics. All rights reserved. This article contains information
developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) andare provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to becomplete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers.
7C
 orporate Governance of The Year®: Carried out by the Japan Association of Corporate Directors since 2015 with the endorsement of the Ministry of Economy, Trade andIndustry and other organizations to encourage companies that practice sound corporate governance to attain medium- to long-term growth.
8C ertified Health & Productivity Management Outstanding Organizations Recognition Program: The program publicly recognizes particularly outstanding organizations thatare practicing health-oriented business management, based on initiatives attuned to local health-related challenges and toward health promotion initiatives led by the
Nippon Kenko Kaigi.

Participation in Global Initiatives
We participate in a variety of global initiatives and promote sustainability in our business activities.

United Nations Global Compact

The United Nations Global Compact (UNGC) is a global initiative that promotes sustainability,
proposed by ex-UN Secretary-General Kofi Annan at the 1999 World Economic Forum. We signed
onto the UNGC in 2013 and are working to contribute to the realization of sound globalization anda sustainable society in accordance with its Ten Principles in the areas of Human Rights, Labor,
Environment and Anti-Corruption.

Responsible Business Alliance

The Responsible Business Alliance (RBA) is a global initiative promoting supply chain sustainability
focused on the electronics industry. We joined the RBA in 2015, and as a member company, we work
together with suppliers to ensure compliance with the RBA Code of Conduct comprised of fivesections: Labor, Environment, Health and Safety, Ethics and Management Systems.

Task Force on Climate-related
Financial Disclosures

In 2020, we expressed our approval of the recommendations offered by the Task Force on Climaterelated Financial Disclosures (TCFD*). We are conducting ongoing disclosures and discussions basedon the framework of governance, strategy, risk management, metrics and targets relating to the risks
and opportunities that climate change presents to our overall business.

Evaluation from Third-party Institutions
Our sustainability initiatives have allowed it to continue to be
selected as a constituent stock under leading global ESG
investment indices, including the DJSI1 Asia Pacific Index,
FTSE4Good Index2, MSCI World ESG Leaders Indexes3, Euronext
Vigeo World 120 Index4 and STOXX Global ESG Leaders indices⁵.
At the same time, we were evaluated as a low-risk company in
Sustainalytics’ ESG Risk Ratings6.
In 2021, we were selected as a prestigious A List company in

61 TOKYO ELECTRON Integrated Report 2022

the water security category of a survey conducted by the CDP,
and won recognition as the “Grand Prize Company,” an award
given to the most outstanding company, in the Corporate
Governance of the Year®7 2021 program sponsored by the Japan
Association of Corporate Directors.
Additionally, the entire Group in Japan received recognition as
top 500 companies under the 2022 Certified Health &Productivity Management Outstanding Organizations* Refer to Initiatives Related to Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) on p. 39

TOKYO ELECTRON Integrated Report 2022

62

Chapter 4

Toward Further Growth

Medium- to Long-term Outlook

2020
Societal Trends

Advancement of Digitalization in Society

Society today is facing a variety of challenges,
including prolonged outbreaks of COVID-19,
changes in social conditions due to conflicts
between nations, abnormal weather conditions
and natural disasters caused by climate change,
human rights issues, demographic changes,
stagnation of supply chains, geopolitical risks,cyber-attacks and so forth. Mitigating climatechange and eliminating inequality in human rights
in particular are pressing issues, and global efforts
involving not only international organizations andnational governments but also by the private
sectors are expected to become more important
going forward.

As digitalization in society accelerates, lifestyles and business models arechanging drastically with the creation of new technologies and services. In
addition, the demand for semiconductors to support these societal trends iscontinuously growing along with technological innovation. The market was
driven by personal computers in the 1990s and mobile devices such as
smartphones in the 2000s. Today, the spread of IoT, AI, 5G/6G, cloudcomputing, the metaverse and other technologies are further increasing thedemand for semiconductors. Going forward, it is expected that there will be ashift to a world where people are connected with everything in society
through the shift to EVs for automobiles, autonomous driving, developmentof smart cities as well as smarter industries in the plant, agriculture, medical
and energy sectors.

2030

Expansion of IoTtechnologies

To the world where people and societies arelinked all together

Smart Manufacturing

Cloud server

Smart Transport
Diversification

Integration

Smart Health Care

Smart phone

Personal computers

Smart Energy

Future of Computer Technology and Semiconductors
Climate change

Human rights

Demographic changes

As data-driven society progresses rapidly, the computer technology that is
responsible for information processing will also evolve. In addition toconventional bit-based computers such as personal computers and dataservers that perform mathematical processing, new technologies such as
quantum computers and brain-inspired computers that copy the movementsof the human brain are expected to emerge going forward. A variety of services
and products are expected to give color to future society by processing
enormous amount of data at high speeds and with low power consumption inaccordance with the characteristics of each computer technology.
In addition, the semiconductor market that supports computer
technology is also expected to evolve under the three scenarios of Moore’s
Law, Customization and Hyper-Mass.

Customization: As applications and services diversify, there will be demand forsemiconductor devices that are optimized for specific applications. The overall optimizationof technologies such as design and manufacturing technology as well as implementation andsoftware technology as well as goal of maximizing efficiency are expected. In this scenario,
there will be value in quickly providing the best manufacturing method solution to meet therequirements of customers who manufacture semiconductor devices.

tionmiza ologies suchg
o
t
s
u
n
rin
C
f tech anufactu
tion oiza
nd m
Optim s design aaBit-based
computers

Moore’s Law
Improved performance throughscaling and integration

Semiconductor
devices

Moore’s Law: There will continue to be increasing demand for performance improvements
through scaling and integration in the manufacturing of semiconductor devices in order tofurther increase the computational power of computers. In this scenario, there will be value
in introducing innovative technologies as well as controlling manufacturing costs.

Quantum
computers

Hype
r-Ma
Ultra
ss
-efficien

Braininspired

computers

t pro
ducti
vity

Hyper-Mass: There will be demand for an enormous amount of semiconductor devices for high-capacity data communications and their processing and analysis.
Additionally, overwhelming cost reductions will be necessary to realize a world in which everyone can enjoy the benefits of ICT (information andcommunication technology). In this scenario, there will be value in ultra-efficient productivity, including for non-advanced devices. In addition, the provision of
manufacturing methods that autonomously optimize environmental impact will also be important.

Supply chain

Initiatives to Achieve Further Growh of Tokyo Electron
Geopolitics

Cyber security

63 TOKYO ELECTRON Integrated Report 2022

We achieved the financial model for fiscal 2024 in the previous Medium-termManagement Plan, formulated in May 2019, two fiscal years ahead ofschedule.
In response, we formulated a new Medium-term Management Plan and a
Vision in June 2022 to achieve further growth. The new Medium-termManagement Plan sets financial targets as well as key indicators including areas
related to ESG such as efforts to reduce greenhouse gas emissions to net zero.
We will put our Corporate Philosophy into practice by promoting TSV (TEL’s
Shared Value), steadily implementing the new Medium-term Management Plan,and realizing our Vision for mid- to long-term profit expansion and continuous
corporate value enhancement.

World-classoperating margin and ROE

Realization of Vision: “A company
filled with dreams and vitalitythat contributes to technologicalinnovation in semiconductors”

Medium- to long-term
profit expansion

Continuous corporate valueenhancement
Practice of Corporate Philosophy

Previous Medium-term Management Plan → New Medium-term Management PlanTSV

TEL’s Shared ValueTOKYO ELECTRON Integrated Report 2022

64

Chapter 4

Toward Further Growth

Aiming to Be a Company Filled with Dreams and Vitality

The Theworld
is currently
pushing
firmlyahead
withwith
implementing
ICT (information
and andcommunication
technology)
as as
world
is currently
pushing
firmlyahead
implementing
ICT (information
communication
technology)
wellwell
as takingactionto realize
decarbonizationin orderto builda strong
and andresilientsocietyin which
economic
as takingactionto realize
decarbonizationin orderto builda strong
resilientsocietyin which
economic
activities
do notunder
any any
circumstances.
activities
do stopnot stop
under
circumstances.
Semiconductors
are growing
evenevenmoremore
importantas social
infrastructure
withwith
increasing
technologicaldemands
suchsuch
Semiconductors
are growing
importantas social
infrastructure
increasing
technologicaldemands

Towardbuilding
a strong
andresilientsocietyin whichTowardbuilding
a strong
andresilientsocietyin which
economic
activities
dodo
notnotstop
underanyanycircumstances
economic
activities
stop
under
circumstancesas larger
capacity,
higherspeed,
higherreliability
and andlower
power
consumption.
as larger
capacity,
higherspeed,
higherreliability
lower
power
consumption.
Tokyo
Electronwill strive
towardmediumto long-term
profitexpansionand andcontinuous
corporatevalueenhancement
Tokyo
Electronwill strive
towardmediumto long-term
profitexpansion
continuous
corporatevalueenhancementby continuously
creating
high-value-added,
leading-edge
equipment
and andtechnical
services
to applyits expertiseas a as aby continuously
creating
high-value-added,
leading-edge
equipment
technical
services
to applyits expertisemanufacturerof semiconductor
production
equipment
and andusing
all management
resources,
includingits employees
manufacturerof semiconductor
production
equipment
using
all management
resources,
includingits employees
whowhocreateand andfulfillfulfill
company
values.
createcompany
values.

Developmentof ofDevelopment
a data-driven
societyandanda data-driven
societypreservationof ofpreservation
the theglobalenvironment
globalenvironment
ICT/DX
ICT/DX Decarbonization
Decarbonization

Increasing
importanceof ofIncreasing
importancesemiconductors
semiconductors
as social
infrastructure
as social
infrastructure

Led Ledby technologicalby technologicalinnovationof semiconductors
innovationof semiconductors
Largercapacity,
higherspeed,
Largercapacity,
higherspeed,
higherreliability
andandhigherreliability
lower
power
consumption
lower
power
consumption

Basedon these
activities,
we willour Vision,which
specifies
our medium-to
long-termbusiness
aspirations
and andBasedon these
activities,
we realize
will realize
our Vision,which
specifies
our medium-to
long-termbusiness
aspirations
the directionof ourfuture;practice
our Corporate
Philosophy,
which
specifies
our mission
in society
and andthe thethe directionof nearour near
future;practice
our Corporate
Philosophy,
which
specifies
our mission
in society
purposeof ourand andmeetmeetthe expectationsof allofofallour
purposeof existence;
our existence;the expectationsof stakeholders.
our stakeholders.
We started
our 60th
fiscalfiscal
yearyearin April
2022.
Going
forward,we will
to takeon challenges
and andevolveto betoabe a
We started
our 60thin April
2022.
Going
forward,
we continue
will continue
to takeon challenges
evolvecompany
filledfilledwithwith
dreamsand andvitality
thatthatis loved
and andhighlytrustedby allbystakeholders.
company
dreamsvitality
is loved
highlytrustedall stakeholders.

Createsocialandeconomic
value
byby
continuously
creating
Createsocialandeconomic
value
continuously
creating
high-value-added,
leading-edge
equipment
andtechnical
services
high-value-added,
leading-edge
equipment
andtechnical
servicesto toutilizeexpertiseas asa manufacturer
of ofsemiconductor
utilizeexpertisea manufacturer
semiconductor
production
equipment
andall allmanagement
resources
production
equipmentandmanagement
resources
Corporate
Philosophy
Corporate
Philosophy

WeWe
striveto tocontributeto tothethedevelopment
strivecontributedevelopmentof ofa dream-inspiring
societythrougha dream-inspiring
societythroughourourleading-edge
technologies
andreliableleading-edge
technologies
andreliable
serviceandsupport.
serviceandsupport.

65 TOKYO ELECTRON Integrated Report 2022

Mediumto to
long-term
profitexpansionandMediumlong-term
profitexpansion
andcontinuous
corporatevalueenhancement
continuous
corporatevalueenhancement

Meetthetheexpectationsof of
all allstakeholders
surrounding
Meet
expectations
stakeholders
surrounding
thethecompany
byby
realizing
Visionandpracticing
Corporate
Philosophy
company
realizing
Visionandpracticing
Corporate
Philosophy

TOKYO ELECTRON Integrated Report 2022

66

Data Section

Financial Review
From the beginning of fiscal 2022, Tokyo Electron (TEL) applies“Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29, March 31, 2020). Comparisons between the same period in
the previous year in the explanation of operating results and cash
flows and comparisons between the end of the previous fiscal year
in the explanation of financial positions are made using figuresfrom the consolidated results of the previous fiscal year prior to
the application of the change in accounting standard.

Income before income taxes was 596.6 billion yen (year-onyear growth of 88.2%) and net income attributable to owners ofparent was 437.0 billion yen (year-on-year growth of 79.9%).
As a result, net income per share was 2,807.84 yen comparedto net income per share of 1,562.20 yen in the previous fiscal year.

Financial Conditions
Current assets at the end of fiscal 2022 were 1,408.7 billion
yen, an increase of 393.0 billion yen compared to the end of
the previous fiscal year. This was mainly due to an increase of
242.2 billion yen in notes and accounts receivable-trade, andcontract assets, an increase of 69.6 billion yen in cash and cash
equivalents, and an increase of 58.5 billion yen in inventories.
Tangible fixed assets increased by 26.1 billion yen from theend of the previous fiscal year, to 223.0 billion yen. Investments
and other assets increased by 49.9 billion yen from the end of theprevious fiscal year, to 262.6 billion yen.
As a result, total assets increased by 469.0 billion yen fromthe end of the previous fiscal year, to 1,894.4 billion yen.
Current liabilities increased by 140.9 billion yen from the endof the previous fiscal year, to 468.5 billion yen. This was largely
due to an increase of 57.9 billion yen in income taxes payable, anincrease of 30.3 billion yen in trade notes and accounts payable,
and an increase of 20.8 billion yen in customer advances.
Long-term liabilities increased by 5.6 billion yen from the endof the previous fiscal year, to 78.8 billion yen.
Net assets increased by 322.4 billion yen from the end of theprevious fiscal year, to 1,347.0 billion yen. This was largely due
to an increase of 437.0 billion yen resulting from recording net
income attributable to owners of parent, a decrease resulting
from the payment of 166.2 billion yen in year-end dividends forthe previous fiscal year and interim dividends for fiscal 2022,
and an increase of 27.3 billion yen in net unrealized gains on
investment securities. As a result, the equity ratio was 70.5%.

Operating Results
During fiscal 2022, despite the effects of the COVID-19 pandemic
and heightened geopolitical risks, a gradual recovery in the global
economy has been observed.
In the electronics industry, where the TEL operates, further
growth in semiconductor production equipment market is
expected due to the growing importance of semiconductors,
driven by the transition to a data society due to the expansionof communications technologies and efforts toward realizing adecarbonized society.
In this environment, the consolidated business results forfiscal 2022 are as follows.
Net sales for the fiscal year increased 43.2% from the previous
fiscal year to 2,003.8 billion yen. Domestic net sales increased
16.6% from the previous year to 230.3 billion yen, while overseas
net sales increased 47.6% to 1,773.4 billion yen to account for
88.5% of net sales.
Cost of sales increased 30.9% to 1,091.9 billion yen and grossprofit increased 61.4% to 911.8 billion yen. As a result, the grossprofit margin expanded by 5.1 points to 45.5%. Selling, generaland administrative (SG&A) expenses increased 28.0% to 312.5
billion yen, while the ratio to consolidated net sales declined by
1.9 points to 15.6%.
As a result, operating income increased 86.9% to 599.2 billion
yen and operating profit ratio increased 7.0 points to 29.9%.

Net Sales and Gross Profit Margin
Net Sales (Billions of yen)

42.0

41.2

40.1

Operating Income and Operating Margin

Gross Profit Margin (%)

40.4

45.5
2,003.8

Operating income (Billions of yen)
Operating Margin (%)

29.9

Net Income Attributable to Owners of
Parent and ROE

24.9

599.2

437.0

24.3

Net Income Attributable to Owners of Parent (Billions of yen)
ROE (%)

29.0
1,278.2

281.1

204.3

2019.32020.32021.367 TOKYO ELECTRON Integrated Report 2022

2022.32018.32019.32020.32021.32022.32018.3

21.8

242.9

185.2

237.2

2018.3

We conduct production activities while flexibly responding tomarket changes. As our production trends are similar to thoseof our sales, we omit description of these results. We also do
not indicate order results because they are not necessarily anappropriate indicator for projecting medium- to long-term
corporate performance, with short-term orders tending tofluctuate significantly according to customers’ investment trends.
Sales results by major customer and their ratio to total sales
results are as shown below.
Fiscal 2021 (Fiscal year ended March 31, 2021)
Ratio
(%)

Sales
(Millions of yen)

Name of customer
Samsung Electronics Co., Ltd.

256,656

18.3

Intel Corporation

193,706

13.8

Taiwan Semiconductor Manufacturing Company Ltd.

164,340

11.7

Fiscal 2022 (Fiscal year ended March 31, 2022)
Ratio
(%)

Sales
(Millions of yen)

Name of customer
Samsung Electronics Co., Ltd.

312,279

15.6

Intel Corporation

303,982

15.2

Taiwan Semiconductor Manufacturing Company Ltd.

231,393

11.5

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

Financial Conditions

Millions of yen

2018.32019.32020.32021.32022.3

Total current assets¥946,597¥982,897¥962,484¥1,015,696¥1,408,703

Net property, plant and equipment

125,952

150,069

175,580

196,967

223,078

Total investments and other assets

130,246

124,661

140,431

212,699262,676

Total assets

1,202,796

1,257,627

1,278,495

1,425,364

1,894,457

Total current liabilities

368,452

304,882

382,578

327,661

468,578

Total liabilities

431,287

369,510448,802400,801

547,408

Total net assets

771,509888,117829,692

1,024,562

1,347,048

Notes: From fiscal 2019, the Company applied the Accounting Standard Board of Japan’s “Partial Amendments of Accounting Standard for Tax Effect Accounting” (ASBJ Statement No.
28, revised on February 16, 2018). Total current assets, total investments and other assets, total assets and total liabilities for fiscal 2018 have been restated in accordance with therevised accounting standard

26.5
248.2

320.6

310.5

Cash and cash equivalents at the end of fiscal 2022 increased by
69.6 billion yen compared to the end of the previous fiscal year,
to 335.6 billion yen. The combined balance including 35.6 billion
yen in time deposits and short-term investments with maturities
of more than three months that are not included in cash andcash equivalents was 371.2 billion yen, an increase of 59.7 billion
yen from the end of the previous fiscal year. The overall situation
regarding cash flows for fiscal 2022 was as described below.
Cash flows from operating activities were positive 283.3
billion yen, an increase of 137.4 billion yen from the previous
fiscal year. The major positive factors were 596.6 billion yen inincome before income taxes, a 36.7 billion yen in depreciation
and amortization, and a 32.0 billion yen increase in customer
advances. The major negative factors were 195.5 billion yen
increase in notes and accounts receivable-trade, and contract
assets, a 106.0 billion yen in income taxes paid, and a 100.3 billion
yen increase in inventories.
Cash flows from investing activities were negative 55.6 billion
yen compared to negative 18.2 billion yen in the same period of
the previous fiscal year. This was largely due to the payment of
56.1 billion yen for the purchase of fixed assets.
Cash flows from financing activities were negative 167.2
billion yen compared to negative 114.5 billion yen in the same
period of the previous fiscal year. This was largely due to thepayment of 166.2 billion yen in dividends.

Cash Flows

30.1

1,399.1
1,127.2

Production, Orders and Sales Results

37.2

22.9
21.0

1,130.7

Cash Flows

2019.32020.32021.3

Millions of yen

2018.32019.32020.32021.32022.3

Cash flows from operating activities¥186,582¥189,572¥253,117¥145,888¥283,387

Cash flows from investing activities(11,833)(84,033)

15,951(18,274)(55,632)

Cash flows from financing activities(82,549)(129,761)(250,374)(114,525)(167,256)

Cash and cash equivalents at end of year

257,877

232,634

247,959

265,993335,6482022.3
TOKYO ELECTRON Integrated Report 2022

68

Data Section•Semiconductor Production Equipment
Capital investment in semiconductors for logic/foundry has been
robust in a wide range of areas, from cutting-edge to mature
generations of semiconductors, driven by the digitalization ofsociety. Furthermore, as the quantity of data being handledcontinues to increase on an annual basis, capital investments
in both DRAM and NAND flash memory continue to see highlevels of investment. Consequently, net sales to customers
in this segment during fiscal 2022 were 1,943.8 billion yen an
increase of 47.8% from previous fiscal year. Segment profit was
667.4 billion yen, an increase of 84.1% from the previous fiscal
year. As described as the business environment, customers havebeen actively investing in new equipment against a backdrop of
growing demand for semiconductors, and our sales strategies
in the key fields have progressed steadily. As a result, net
sales in fiscal 2022 increased significantly, especially for logic/
foundry and DRAM. In addition, net sales of used equipment andmodifications as well as parts and services also grew steadily
due to an increase in the cumulative number of equipment
installations and high equipment utilization by customers.
The segment profit margin for fiscal 2022 was 34.3%, up 6.7
points from 27.6% in the previous fiscal year. This was mainly
due to a decline in the ratio of fixed costs associated with
substantial increase in net sales as a result of the Company
succeeding in reliably responding to rapidly increased demand forsemiconductor production equipment.

Management Discussion and Analysis of State ofOperating Results
Our operating results for fiscal 2022 were a record-high 2,003.8
billion yen, an increase of 43.2% from the previous fiscal year, due
to active capital expenditure by customers in the semiconductor
production equipment market.
Together with the significant increase in net sales, operating
income also reached 599.2 billion yen, an increase of 86.9% fromthe previous fiscal year, and the operating margin was 29.9%, anincrease of 7.0 points from the previous fiscal year. This was mainly
due to the increase in gross profit margin from the increase in salesof newly acquired high value-added processes in the key fields,
and the decrease in the ratio of selling, general and administrative
expenses arising from the significant increase in net sales. Total
R&D expenses increased by 21.6 billion yen (year-on-year growth of
15.8%) from the previous fiscal year to a record-high of 158.2 billion
yen in order to achieve the financial model of the Medium-termManagement Plan announced in May 2019 as well as to achieve
further growth in the future.
Net income attributable to owners of parent—which isoperating income with other income and expenses reflected lesstax expenses—was 437.0 billion yen, and its ratio against net sales
was 21.8%, an increase of 4.4 points from the previous fiscal year.
Net income per share was 2,807.84 yen due to the increase in profits
resulting from the increase in net sales, as mentioned above.
With regard to objective indicators to assess the achievement
status of management policy, management strategy andmanagement goals, the Group uses net sales, operating margin andreturn on equity (ROE) as indicators for the financial model of theMedium-term Management Plan.
The following is our understanding, analysis and consideration
about the state of operating results for each segment. Please notethat segment profit corresponds to income before income taxes on
the consolidated statements of income.

Selling, General and Administrative Expenses
and Ratio to Net Sales
Selling, General and Administrative Expenses(Billions of yen)
Ratio to Net Sales (%)

312.5

R&D Expenses (Billions of yen)
Ratio to Net Sales (%)

Capital Expenditures (Billions of yen)
Depreciation and Amortization (Billions of yen)

158.2

54.6

136.6

214.6

113.9

193.8

17.1

Capital Expenditures and Depreciation andAmortization

R&D Expenses and Ratio to Net Sales

244.2
215.6

•FPD Production Equipment
As capital investment for large-sized LCD panels for televisions
has run its course, the overall manufacturing equipment market
for FPD TFT arrays has slowed. Meanwhile, capital investments insmall and medium-sized OLED panels continues in conjunction
with displays installed in end products being converted from
LCD panels to OLED panels. Consequently, net sales to externalcustomers in this segment during fiscal 2022 were 59.8 billion
yen, a decrease of 28.6% from the previous fiscal year. Segment

16.9

17.5

8.6

.

Net Income per Share(Yen)

2,807.84
57.2

Semiconductor Segment Sales andProfit Margin
Segment Sales (Billions of yen)Segment Profit Margin (%)

36.7

15.6

7.9

20.6

1,245.48

24.3

1,562.20

1,513.58

1,055.2

FPD Segment Sales and Profit Margin
Segment Sales (Billions of yen)Segment Profit Margin (%)

111.2

1,943.8
34.3

28.0
25.5

29.1

9.8

* Turnover period for total assets = Average total assets / Net sales × 365

For the details of financial data, please refer to the “Consolidated Financial Statements” on the Company’s website.
www.tel.com/ir/library/consolidated-financial-statements/

29.8

33.8
8.9

Regarding our financial conditions, total assets stood at 1,894.4
billion yen at the end of fiscal 2022, an increase of 469.0 billion yen
from the end of the previous fiscal year. This was mainly due to theincrease in notes and accounts receivable – trade, and contract
assets, inventories, property, plant and equipment, and investment
securities included in investments and other assets. Notes andaccounts receivable – trade, and contract assets reached 433.9
billion yen, an increase of 242.2 billion yen from the end of theprevious fiscal year, due to the significant increase in net sales against
the backdrop of rapid growth in the market for semiconductor
production equipment. Inventories reached 473.8 billion yen, an
increase of 58.5 billion yen from the end of the previous fiscal year,
in reflection of the robust demand for equipment and spare parts—
which will continue into the following fiscal year—as well as a resultof incorporating measures such as leveling of production. Tangible
fixed assets reached 223.0 billion yen, an increase of 26.1 billion yen
from the end of the previous fiscal year. The increase mainly reflects
the acquisition of equipment and metrology tools necessary for
R&D of leading-edge technology and the construction completionof the Miyagi Technology Innovation Center, which is intended for

49.7

120.2

10.7

Management Discussion and Analysis of State of
Financial Conditions and Cash Flows, and Information
Related to Sources of Capital and Fluidity of Funds

45.6

97.1
19.1

53.8

development of production technology and collaboration with
suppliers, as well as a new development building under construction
in Nirasaki City, Yamanashi Prefecture. Investment securities
increased 39.9 billion yen year-on-year to 144.9 billion yen due to thehigher market prices of strategically-held listed shares. Due to thesefactors, total assets increased since the end of the previous fiscal
year, but as the increase in net sales was greater, the turnover period
for total assets* decreased from 353 days in the previous fiscal year to
301 days, improving asset efficiency.
Regarding cash flows, the balance of cash and cash equivalents
including deposits and short-term investments with original
maturities of more than three months decreased 59.7 billion yen
year-on-year to 371.2 billion yen. This was largely attributable tosignificant growth in business performance for fiscal 2022.
With the expansion of business, the level of inventories
continued to rise and necessary working capital increased in fiscal
2022. Against this background, we continued growth investments,
such as investment in R&D to create innovative technologies
with high added value that meet growing technological demands
and differentiate us from competitors, and collaboration with
suppliers in consideration of production technology innovations andreduction of environmental impact. At the same time, we returned
166.2 billion yen to our shareholders based on our shareholder
return policy of a 50% dividend payout ratio. These were all covered
using cash on hand obtained through business operations. We willcontinue to maintain a solid financial foundation built up by a highprofit margin, and at the same time, undertake growth investments
for the future and proactive efforts to return profits to shareholders.
Return on equity (ROE), one of our management indicators,
increased from 26.5% in the previous fiscal year to 37.2%,
improving capital efficiency. This was due to the increase in theratio of net income attributable to owners of parent against net
sales as well as the decrease in the turnover period for total assets.

profit was 3.8 billion yen, a decrease of 56.1% from the previous
fiscal year. With fiscal 2022 being a transition period to shift from
LCD to OLED, capital investment was adjusted for FPD production
equipment. Consequently, net sales in this segment decreased.
The segment profit margin for fiscal 2022 was 6.5%, down 4.0
points from 10.5% in the previous fiscal year. This was mainly due toa decrease in sales of new equipment in fiscal 2022 amid customers’
adjustments to their investment for FPD production equipment.

1,166.7

27.6

83.7
75.0

1,315.2

1,060.9

21.8

17.7

66.0

59.8

16.0

1,170.57

10.5
6.5

2018.32019.32020.32021.32022.32018.32019.32020.32021.32022.32018.32019.32020.32021.32022.32018.32019.32020.32021.32022.32018.32019.32020.32021.32022.3

Notes: Segment profit corresponds to income before income
taxes on the consolidate statements of income.

69 TOKYO ELECTRON Integrated Report 2022

2018.32019.32020.32021.32022.3

Notes: Segment profit corresponds to income before income
taxes on the consolidate statements of income.
TOKYO ELECTRON Integrated Report 2022

70

Data Section

Consolidated Eleven-Year Summary

The amounts in this summary in millions and thousands of yen; thousands of U.S. dollars; and thousands of shares as of and for the years ended March 31, 2016 and prior are rounded to the nearest unit. Suchamounts as of and for the years ended March 31, 2017 and onward are truncated at the nearest unit. Accordingly, totals for the years ended March 31, 2017 and onward do not necessarily agree with the sumof the corresponding individual amounts.

Tokyo Electron Limited and Subsidiaries
From fiscal 2012 to fiscal 2022
Thousands
Thousands
ofofU.S. dollars
U.S. dollars
1
1
Net Netsalessales

Semiconductor
Semiconductor
production
production
equipment
equipment
FPDFPDproduction
production
equipment
equipment2019.32019.32018.32018.32017.32017.32016.32016.32015.32015.32014.32014.32013.32013.32012.32012.3¥ 1,278,240¥ 1,278,240¥ 1,130,728¥ 1,130,728 ¥ 799,719¥ 799,719 ¥ 663,949¥ 663,949 ¥ 613,125¥ 613,125 ¥ 612,170¥ 612,170 ¥ 497,300¥ 497,300 ¥ 633,091¥ 633,091

15,882,375
15,882,3751,943,843
1,943,843 1,315,200
1,315,200 1,060,997
1,060,997

1,166,781
1,166,781 1,055,234
1,055,234 749,893
749,893 613,033
613,033 576,242
576,242 478,842
478,842 392,027
392,027 477,873
477,873

488,849
488,849

PV production
PV production
equipment
equipment
Electronic
Electronic
components
components
and andcomputercomputer
networks
networks
1,075
1,075

Other
Other

Millions
Millionsof yenof yen

66
6
6
2022.32022.32022.32022.32021.32021.32020.32020.3$ 16,372,300$ 16,372,300¥ 2,003,805¥ 2,003,805¥ 1,399,102¥ 1,399,102¥ 1,127,286¥ 1,127,286

59,83059,83083,772
83,772

66,092
66,092111,261
111,261

75,06875,06849,38749,38744,68744,68732,71032,71028,31728,317

20,077
20,07769,88969,889

--

--

--

--

--

--

--

3,618
3,618

3,806
3,806

83 83

--

-- 100,726
100,726

--

--

--

--

--

--

--

84,66584,66584,86884,868131131129129197197

197197425425438438

6,229
6,229

555555479479448448461461

OperatingOperatingincomeincome4,896,405
4,896,405 599,271
599,271 320,685
320,685 237,292
237,292

310,571
310,571 281,172
281,172 155,697
155,697 116,789
116,789

88,113
88,11332,20532,205

12,54912,54960,44360,443

IncomeIncome(loss)(loss)
beforebeforeincomeincometaxestaxes

4,875,384
4,875,384 596,698
596,698 317,038
317,038 244,626
244,626

321,508
321,508 275,242
275,242 149,116
149,116 106,467
106,467

86,82886,828(11,756)(11,756)

17,767
17,76760,60260,602

Net Netincomeincome(loss)(loss)
attributable
attributableto owners
to ownersof parentof parent

3,571,176
3,571,176 437,076
437,076 242,941
242,941 185,206
185,206

248,228
248,228 204,371
204,371 115,208
115,208

77,892
77,892

71,88871,888(19,409)(19,409)

6,076
6,076

36,72636,726Comprehensive
Comprehensive
incomeincome(loss)(loss)

3,972,410
3,972,410 486,183
486,183 305,801
305,801 187,084
187,084

242,696242,696 206,152
206,152 119,998
119,998

60,98460,98480,29580,295(10,889)(10,889)

15,826
15,82636,95436,954

Domestic
Domestic
salessales

1,882,250
1,882,250 230,368
230,368 197,566
197,566 161,812
161,812208,796
208,796 148,760
148,760 101,122
101,122 121,808
121,808

Overseas
Overseas
salessales

14,490,049
14,490,0491,773,437
1,773,437 1,201,535
1,201,535 965,474
965,47422
Depreciation
Depreciation
and andamortizationamortization
3

3

CapitalCapitalexpenditures
expenditures
R&DR&D
expenses
expenses

95,046
95,046 161,631
161,631 118,504
118,504 171,364
171,364

1,069,443
1,069,443 981,967
981,967 698,597
698,597 542,141
542,141 518,079
518,079 450,539
450,539 378,796
378,796 461,727
461,727

300,081300,081

36,72736,727

33,84333,843

29,107
29,107

24,32324,323

20,61920,61917,872
17,872

19,257
19,257

20,87820,87824,88824,88826,631
26,631

24,19824,198468,080
468,080

57,28857,28853,86853,86854,66654,66649,75449,75445,60345,603

20,697
20,697

13,341
13,341

13,184
13,184

12,79912,79921,774
21,77439,541
39,541

1,293,048
1,293,048 158,256
158,256 136,648
136,648 120,268
120,268

113,980
113,980

97,103
97,10383,80083,80076,28776,28771,35071,35078,66478,66473,24973,24981,506
81,506

5
5
TotalTotal
assetsassets15,478,858
15,478,8581,894,457
1,894,457 1,425,364
1,425,364 1,278,495
1,278,495

1,257,627
1,257,627 1,202,796
1,202,796 957,447
957,447 793,368
793,368 876,154
876,154 828,592
828,592 775,528
775,528 783,611
783,611

TotalTotal
net assets
net assets

11,006,199
11,006,1991,347,048
1,347,048 1,024,562
1,024,562 829,692
829,692

888,117888,117 771,509
771,509 645,999
645,999 564,239
564,239 641,163
641,163 590,614
590,614 605,127
605,127 598,603
598,603

15,634
15,634

NumberNumberof employeesof employees

14,47914,47913,837
13,837

12,742
12,742

11,946
11,946

11,241
11,241

10,62910,62910,844
10,844

12,304
12,304

12,201
12,201

U.S. dollars
U.S. dollars

10,684
10,684
Yen Yen

Net Netincomeincome(loss)(loss)
per shareper shareof commonof common
stock:
stock:$ 22.94$ 22.94¥ 2,807.84¥ 2,807.84¥ 1,562.20¥ 1,562.20¥ 1,170.57¥ 1,170.57

BasicBasic
4

4¥ 1,513.58¥ 1,513.58¥ 1,245.48¥ 1,245.48 ¥ 702.26¥ 702.26 ¥ 461.10¥ 461.10 ¥ 401.08¥ 401.08 ¥(108.31)¥(108.31) ¥ 33.91¥ 33.91 ¥ 205.04¥ 205.04

22.83
22.83 2,793.89
2,793.89 1,553.29
1,553.29 1,164.02
1,164.02

1,507.22
1,507.22 1,241.22
1,241.22

Net Netassetsassetsper shareper shareof commonof common
stock
stock

70.04
70.04 8,572.45
8,572.45 6,512.18
6,512.18 5,267.96
5,267.96

5,371.78
5,371.78 4,674.49
4,674.49 3,919.50
3,919.50 3,428.37
3,428.37 3,567.23
3,567.23 3,225.92
3,225.92 3,309.58
3,309.58 3,275.14
3,275.14

CashCashdividends
dividends
per shareper shareof commonof common
stock
stock

11.46
11.46 1,403.00
1,403.00

Diluted
Diluted

781.00781.00588.00588.00758.00758.00624.00624.00700.35700.35352.00352.00460.00460.00237.00237.00400.15400.15143.00143.00-50.00
50.00

33.85
33.85
51.00
51.00

204.72204.7280.00
80.00

NumberNumberof sharesof shares
outstanding
outstanding(thousands)(thousands)

157,210
157,210 157,210
157,210 157,210
157,210

165,210
165,210 165,210
165,210 165,210
165,210 165,211
165,211 180,611
180,611 180,611
180,611 180,611
180,611 180,611
180,611

NumberNumberof shareholdersof shareholders

34,25834,25850,84350,84329,54729,54730,34830,34835,18635,186

21,937
21,937

24,664
24,664

20,82920,82930,56330,56341,28741,28742,41442,414%%

ROEROE

37.237.2

26.526.5

21.821.8

30.130.1

29.029.0

19.119.1

13.013.0

11.811.8(3.3)(3.3)

1.0 1.0

6.3 6.3

OperatingOperatingmarginmargin29.929.9

22.922.9

21.021.0

24.324.3

24.924.9

19.519.5

17.617.6

14.414.4

5.3 5.3

2.5 2.5

9.5 9.5

70.570.5

71.171.1

64.164.1

70.070.0

63.863.8

67.267.2

70.970.9

73.073.0

69.869.8

76.576.5

74.974.9

1.211.21

1.031.03

0.890.89

1.041.04

1.051.05

0.910.91

0.800.80

0.720.72

0.760.76

0.640.64

0.790.79

55EquityEquityratioratio
55TotalTotal
assetasset
turnoverturnover(times)(times)U.S. dollars
U.S. dollars

Net Netsalessales
per employee
per employee$ 1,047,224$ 1,047,224¥ 128,169¥ 128,169 ¥ 96,629¥ 96,629 ¥ 81,468¥ 81,468

1 From fiscal 2015, Electronic components and computer networks were excluded because Tokyo Electron Device Limited, a former consolidated subsidiary, became an equity method
affiliate. Photovoltaic panel (PV) production equipment was included in FPD production equipment until fiscal 2012 but from fiscal 2016, it has been included in Other.
2 Depreciation and amortization does not include amortization and loss on impairment of goodwill.
3 Capital expenditures only represent the gross increase in property, plant and equipment.
4 Dilution is not assumed for the year ended March 31, 2014.

71 TOKYO ELECTRON Integrated Report 2022

Thousands
Thousandsof yenof yen¥ 100,317¥ 100,317 ¥ 94,653¥ 94,653 ¥ 71,143¥ 71,143 ¥ 62,466¥ 62,466 ¥ 56,540¥ 56,540 ¥ 49,754¥ 49,754 ¥ 40,759¥ 40,759 ¥ 59,256¥ 59,256
5 From fiscal 2019, the Company applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (Statement No. 28, revised on February 16, 2018) released by the ASBJ.
Accordingly, total assets, equity ratio and total asset turnover for fiscal 2018 have been restated.
6 From fiscal 2022, the Company applies “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020). Each number for fiscal 2022 includes the effects of
the new standards.

TOKYO ELECTRON Integrated Report 2022

72

Data Section

Sustainability Data
Social2018.3
Number of users

Tokyo Electron Limited and Subsidiaries
From fiscal 2018 to fiscal 2022
* ⚫ denotes data in the “Tokyo Electron Sustainability Report 2022” with third-party assurance. www.tel.com/sustainability/report/

Second career support system

Men
Women

Percentage of regular employees who received regular performance and career
evaluations

2019.32020.32021.32022.3

31

30

23

23

18

30

28

18

20

15

1

2

5

3

3

100.0

100.0

100.0

100.0

100.0

Employee Retention (Japan and part of entire Group included)
Composition of Employees (Japan and entire Group)

2018.32018.3

Number of regular employees
Regular employees(Region/Entire Group)2019.32021.32022.3

11,696

12,46913,542

14,022

15,140

Japan

7,268

7,526

7,806

7,921

8,234

Rest of Asia

2,218

2,832

3,494

3,796

4,328

492

513

528

509

578

1,718

1,598

1,714

1,796

2,000

Europe and Middle East
North America

2018.32019.32020.32021.3

7,516

7,797

8,100

8,296

8,661

7,268

7,526

7,806

7,921

8,234

6,292

6,479

6,681

6,722

6,944

976

1,047

1,125

1,199

1,290

248

271

294

375

427

Men

181

220

263

348

403

Women

67

51

31

27

24

Non-regular employees

2021.32022.3

93.8

94.1

94.7

Men

94.3

93.5

94.6

94.8

95.0

Women

87.1

88.0

88.6

89.3

93.5

17 yrs. 1 mo.

17 yrs. 2 mos.

17 yrs. 2 mos.

17 yrs. 4 mos.

17 yrs. 2 mos.

Men

17 yrs. 4 mos.

17 yrs. 5 mos.

17 yrs. 5 mos.

17 yrs. 7 mos.

17 yrs. 6 mos.

Women

15 yrs. 7 mos.

15 yrs. 8 mos.

15 yrs. 11 mos.

15 yrs. 10 mos.

15 yrs. 8 mos.

103

108

82

87

87

82

88

54

75

69

Employee turnover
Women
Turnover2020.393.0

Average service years

2

2019.3

93.4

Men

Regular employees
Women

Employee retention

2022.3

Number of employees
Men

Employees(Employment type/Japan)

2020.3

Retention after three years of joining TEL1

21

20

28

12

18

Turnover percentage

1.4

1.4

1.0

1.0

1.0

Employee turnover (Entire Group)

―
―
―
―

―
―
―
―

―
―
―
―

―
―
―
―

589

Men
Women
Turnover percentage (Entire Group)

507
82
4.2

1 Average in recent five years 2 Turnover due to personal circumstancesWork-life Balance (Japan)
2018.3

Recruitment/Employment (Japan and part of entire Group included)
2018.3
Number hired
Under 30 yrs. old

New graduates hired

199

281

253

209

198

280

252

208

166

233

207

177

32

47

45

31

30–49 yrs. old

4

1

1

1

1

Men

4

1

1

1

0

Women

0

0

0

0

1

0

0

0

0

0

Men

0

0

0

0

0

Women

0

0

0

0

0

Percentage of women

19.2

16.1

16.7

17.8

15.3

Number hired

262

239

150

191

400

102

85

42

56

131

85

67

35

49

96

Women

17

18

7

7

35

30–49 yrs. old

156

145

96

123

250

Men

135

119

82

92

202

Women

21

26

14

31

48

4

9

12

12

19

Men

3

5

10

11

17

Women

1

4

2

1

2

Percentage of women

14.9

20.1

15.3

20.4

21.3

Percentage hired (TEL)

2.22
1.91

2.18
2.04

2.06
2.01

2.43
2.3

2.32
2.37

―
―
―
―

―
―
―
―

―
―
―
―

163

Percentage (senior directors and above3)

―
―
―
―

Number of people (Japan)

20

22

23

26

46

Percentage hired (Group in Japan)
Number of people
Percentage

Reemployment system

167
163
32

50 yrs. old and overFemale managers(Entire Group)2022.3

131

Men

1, 2

2021.3

Men

Under 30 yrs. old

Employees with disabilities

2020.3

Women

50 yrs. old and over

Career-track recruits

2019.3

Annual paid leave

Number of people (senior directors and above3)

1.8

2.0

2.0

2.2

2.6

201
196
5

242
235
7

313
305
8

389
376
13

1 Percentage of female managers, calculation method: Number of female managers/Number of managers × 100 (Include experts in the number of managers from fiscal 2022)
2 As of March 31, 2022 3 Employees of a certain level or position based on the global human resources system

73 TOKYO ELECTRON Integrated Report 2022

64.6

Number of those who took leave

639

605

901

688

512

Men

556

507

773

610

435

Women

83

98

128

78

77

Number of those who took leave

180

155

184

148

137

Number of those who took leave

41

56

46

41

70

4

8

12

16

36

37 (92.5)

48 (100.0)

34 (97.1)

25 (92.6)

34 (97.1)

44
6
38
93.6
90.0
176
24
152
455
281
174
120
19
101
3
2
1
47
25
22
0
0
0

43

48

54

60

6

8

15

32

Women
Percentage reinstatedRetention rate
Number of those who used
Men
Women
Number of those who took leave
Men
Women
Number of those who took leave
Childcare support leave

Men
Women
Number of those who took leave

Extended nursing care leave

Men
Women
Number of those who took leave

Short nursing care leave

Men
Women

10

156
155
1

62.5

Men

Leave to care for sick/injured
child

Shorter working hour system
for nursing care⚫

2022.3

72.6

Women (percentage who took leave)

Shorter working hour system

2021.3

67.2

Number of those who returned to work after leave

Childcare leave

2020.3

64.3

Men

2.2

Number of users
Women

Paternity leave

5.5

Percentage (Japan)
Men

Refreshment leave

2019.3Take-up rate*

Number of those who used
Men
Women

37

40

39

28

93.5

94.1

96.4

95.2

88.9

93.3

95.0

90.0

153

149

132

110

8

11

9

7

145

138

123

103

517

625

510

547

334

428

353

373

183

197

157

174

129

125

86

80

26

26

29

23

103

99

57

57

5

2

2

1

2

2

0

0

3

0

2

1

63

95

110

87

38

56

69

57

25

39

41

30

2

2

0

4

0

1

0

2

2

1

0

2

⚫

* Take-up rate of annual paid leave, calculation method: (Days of paid leave taken by employees*) / (Days of paid leave provided to employees*) × 100 * Incl.non-regular employees

Customers
2018.3
Percentage of respondents who selected “Very Satisfied” or “Satisfied” in thecustomer satisfaction survey

59.4

2019.3
84.4

2020.393.32021.396.7

2022.3100.0

TOKYO ELECTRON Integrated Report 2022

74

Data Section

Environment

Products/Innovation
2018.32019.32020.32021.32022.3

Total number of incidents of non-compliance with regulations and voluntary codes
concerning the health and safety impacts of products and services

0

0

0

0

0

Number of active issued patents

Active issued patents (Region/Country)

16,767

17,473

18,137

18,692

19,572

Japan

5,091

5,304

5,348

5,484

5,703

U.S.

4,321

4,415

4,606

4,822

4,988

Europe

185

179

191

206

167

Korea

2,864

3,076

3,223

3,363

3,731

Taiwan

2,675

2,817

2,948

2,925

3,014

China

1,631

1,682

1,821

1,892

1,969

2016.12*Global patent application rate
Patent application success rate

Japan
U.S.

2017.12*2018.12*2019.12*

Tokyo Electron Limited and Subsidiaries
From fiscal 2018 to fiscal 2022
* ⚫ denotes data in the “Tokyo Electron Sustainability Report 2022” with third-party assurance. www.tel.com/sustainability/report/

Greenhouse Gas Consumption/Emissions
2018.3Emissions metric (sales) (t-CO2/billion yen)
Emissions (kt-CO2)

CO2 from energy consumption

Japan
Overseas
Scope 11 emissions (kt-CO2)

2020.12*

76.1

81.2

79.8

74.3

74.6

71.5
78.0

82.9
85.1

83.1
85.5

84.9
87.3

79.8
83.9

Japan, energy-derived
Overseas, energy-derived
CO2 by scope

Scope 22 emissions (kt-CO2)
Japan* Calendar year when patents were filed/granted

Overseas

SafetyScope 33 emissions (kt-CO2)

2018.32019.32020.32021.3

Consumption (kt-CO2e) (Japan)

2022.3

Percentage 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)

0.77

0.40

0.51

0.63

0.66

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

0.38

0.20

0.23

0.27

0.30

Japan – HFCs
Japan – PFCs
Japan - SF6
Japan – Other
Non-energy-derived greenhouse gas

Consumption (kt-CO2e) (Overseas)
Overseas – HFCs
Overseas – PFCs

Procurement
2018.32019.32020.32021.3

Overseas - SF62022.3

Percentage of new important suppliers screened using social criteria

100

100

100

100

100

Rate of improvement after supply chain sustainability assessment

20.7

23.1

31.5

21.2

―*
19.4

35.8

Rate of improvement after supply chain BCP assessment

16.0

20.3

24.4

249 (100)

253 (100)

261 (100)

236 (100)

243 (100)

Number of identified RMAP conformant smelters (rate of identification)* Unable to compare with previous fiscal year due to comprehensive revisions, including the survey

Governance2018.32019.32020.32021.32022.3

Total number of critical incidents notified to the Board of Directors

0

0

0

0

0

Total number of incidents subject to legal action on the basis of anti-competitive conduct, antitrust
activity or monopolistic practices where the governance body’s involvement was revealed

0

0

0

0

0

Number of executive officers who received training on anti-corruption1
Total number (percentage) of directors who provided instructions on the body’s policies
and procedures in relation to anti-corruption1

13

0

0

15

20

12 (100)

12 (100)

11 (100)

11 (100)

12 (100)

Total number (percentage) of directors who received training on anti-corruption1

9 (75.0)0 (0)11 (100)

0 (0)

0 (0)

Payment to industry groups, etc. (thousand yen)2

20,54321,09329,92732,03656,374

Payment to politically affiliated organizations (yen)

0

0

0

0

0

Average tenure of directors

8.04

7.36

4.84

6.09

6.58

Average rate of attendance for Board meetings

99.46

98.24

99.39

98.96

99.50

Overseas – Other
Scope 14 emissions (kt-CO2e)2018.3
Education on TEL’s Code of Ethics/pledge rate*
Percentage of employees who have consented to the information security agreement

2019.32020.32021.3

―
99.9

―
100.0

―
100.0

98.8

91.6

99.4

99.9

0

0

0

0

0

Significant fines and non-monetary sanctions for non-compliance with laws andregulations in the social and economic area

* Scope: Entire Group

Consumption (thousand m3)

2018.3
Spending on social contribution (million yen)*

Cash donations
breakdown

2019.32020.32021.3Groundwater
Tap waterIndustrial water
Overseas

Copier paper

Use (t) (Japan)CO
2 Emissions fromEnergy Consumption
エネルギー起源CO
2 排出量の推移
Overseas
海外

127

119

2022.3

238

281

250

244

170

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

13

11

4

13

15

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

49

55

68

62

75

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

38

34

28

25

10

* Spending on social contribution activities excluding disaster relief contributions

75 TOKYO ELECTRON Integrated Report 2022

Japan

Japan
日本

Social Contribution

2021.3

1.38
155
127
28
11
10
2
144
118
26
22,691
59
6
24
11
18
―
―
―
―
―
16

2022.3

1.21
169
138
31
12
10
2
157
128
29
24,453
70
5
30
7
28
―
―
―
―
―
17

0.43
86
65
21
12
10
2
74
55
19
29,020
66
5
30
11
20
6
0
1
1
4
4

⚫

⚫

⚫

Resource Consumption

Water

2022.32020.3

1.24
159
127
32
9
7
2
150
120
30
25,354
47
3
18
11
15
―
―
―
―
―
15

1 Scope 1:	Direct GHG emissions from use of fuel and gas we owned or controlled
Calculation method: Emissions = Σ (fuel consumed × CO2 emission factor)
Emission factor based on Japan’s Act on Promotion of Global Warming Countermeasures
2 Scope 2:	Indirect GHG emissions from use of electricity we purchased
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 theemission factor for Japan
Emission factors based on values from the Emissions Factors 2019 edition published by the International Energy Agency (IEA) were used as the emission factor foroverseas 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. Past category 11 was reviewed. Calculations
for categories 8, 10, 13, 14 and 15 were not made as they are either not included in our 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 and properly treated) × global warming factor
Global warming factor is based on Japan’s Act on Promotion of Global Warming Countermeasures.
From fiscal 2022, the value for the amount recovered and properly treated have been reviewed to match actual conditions.

1 Scope: Japan 2 Industry groups were reviewed from fiscal 2022

Compliance2019.3

1.34
152
119
33
9
7
2
143
112
31
23,163
26
3
11
4
8
―
―
―
―
―
8

（千 t-CO2 ） 2)(kt-CO

2019.3
1,240
1,054
363
422
269
186
165

28

31

21

387

177
220

2018.32019.32020.32022.3
1,417
1,204
440
479
285
213
32

2021.32022.32018.3⚫

（千 m3 ）m3)
(thousand

1,054

359

65
32

2021.3
1,397
1,183
430
450
303
214
38

Water Consumption
水使用量の推移966

33

2020.3
1,305
1,098
390
411
297
207
132

Industrial
water (Japan)
Tap water (Japan)
Groundwater海外(Japan)
工業水（日本）
上水（日本）
地下水（日本）138

127

2018.3
1,143
966
359
387
220
177
194

1,183

1,098

363

390

430

422

411

450

186
269

2019.3207
297

2020.3

Overseas

1,204
440

479

214
303

213
285

2021.32022.3

TOKYO ELECTRON Integrated Report 2022

76

Data Section

Energy Consumption/Generation

Amount of Waste Generated
2018.3

Energy

0.75

0.68

0.50

Consumption (crude oil equivalent) (kL)1, 2

75,19981,07485,074

94,746100,265

Japan

59,76565,89770,642

78,12682,703

Overseas

15,434

15,177

14,432

16,62017,562282,274

305,795

317,614354,961

377,432

Japan

226,747

250,911265,293294,652

313,322

Overseas

55,52754,88452,32160,30964,110

3,083

2,991

3,565

3,820

3,796

Japan

1,947

1,948

2,611

2,728

2,738

Overseas

1,136

1,043

954

1,092

1,058

1,040

1,072

1,624

1,667

1,625

1,026

1,055

1,603

1,651

1,612

14

17

21

16

13

3,458

3,834

3,334

4,980

227,523

0

0

0

0

197,137

Japan
Overseas
Purchase (MWh)Renewable energy (electricity)

Japan
Overseas

3,458

3,834

3,334

4,980

30,386

4,414

4,392

3,804

4,068

3,890

4,414

4,392

3,804

4,068

3,890

0

0

0

0

0

1,386

1,382

1,225

1,285

1,195

1,386

1,382

1,225

1,285

1,195

0

0

0

0

0

2

2

2

2

60

Japan

1

1

1

1

63

Overseas

6

7

6

8

47

Power generation (MWh)Japan

PV power generation system

Overseas
Power sales (MWh)3Power sales

Japan
Overseas
Power use percentage

Renewable energy (electricity) use
rate

2018.32022.3

0.63

Consumption (crude oil equivalent) (kL)1, 2
Fuel (heavy oil A, diesel oil, kerosene,
gasoline)

2021.3

0.67

Consumption (crude oil equivalent) (kL)1
Gas (city gas, LPG)

2020.3

Consumption metric (sales) (kL/billion yen)Consumption (MWh)Electricity

2019.3

1 Calculated using the conversion factors for fuel, gas and electricity in relation to the ”Act on Rationalizing Energy Use”
2 Past energy consumption and fuel consumption were reviewed 3 Heat and steam not soldAmount generated (t)⚫

14,465

13,694

14,208

12,973

13,705

12,927

741

752

1,016

1,292

1,538

5,158

6,951

6,228

7,227

5,232

Japan (Specially controlled industrial waste)

4,904

6,619

5,911

6,718

4,706

Overseas (Dangerous/Hazardous waste per country)

254

332

317

509

526

14,211

14,77013,74814,814

14,195

13,561

14,092

12,831

13,587

12,795

650

678

917

1,227

1,400

224

190

241

183

270

Japan

133

116

142

118

132

Overseas

91

74

99

65

138

Recycled amount (t)RecyclingJapan
Overseas⚫

Amount of waste (t)Incinerated and landfill waste⚫

Water discharge volume (thousand m3)
Water discharges

905

1,006

1,078

1,195

1,194

Japan

759

850

900

1,006

1,009

Overseas

146

156

178

189

185

Chemical Substances Consumption/Emissions (Japan)
2018.3

PRTR Class I designated chemical
substances

2018.32019.32020.32021.32022.3

122

146

186

152

251

12

9

9

9

15

Overseas

110

137

177

143

236

Proportion of marine transportation (international)

36.4

35.9

31.9

34.3

33.2

Japan

Electricity
Electricity Consumption
Consumption(Unit: Million
kWh)(Million
kWh)Overseas

Overseas

101

121

144

119

82

84

98

106

85

Hydrogen fluoride and its water-soluble salts

12

11

12

24

22

Methylnaphthalene

5

5

10

13

11

0.0

0.0

0.1

0.1

0.1

VOCs*

Consumption (t)

36.4

35.9

34.3

31.9

294.7

313.3
186
146
122

1

1

1

111

131

108

5

5

10

13

11

Emissions (t)

11.5

9.6

11.9

13.0

13.1

SOx

Emissions (t)

2.7

2.8

4.0

4.9

4.8

Other
2018.3
ISO 14001

9

152

55.5

54.9

52.3

60.3

64.1

2018.32019.32020.32021.32022.32018.3

11

Japan

5

5

5

5

5

Overseas

4

4

4

6

6

22
718

17
595

18
368

18
52

16
87

0
0

0
0

0
0

0
0

0
0

34,11032,71531,184

28,862

Number of ecosystem tour participants*
Number of breaches of environmental laws and regulations
Amount of fines for breaches of laws and regulations

Recyclingrate(%):(Recycledamount/Amount
ofof
waste
generated)
× 100
Recyclingrate(%):(Recycledamount/Amount
waste
generated)
× 100

99.2
99.2

98.9
98.9

99.1
99.1

Ferricchloride
Ferricchloride
Methylnaphthalene
Methylnaphthalene

99.0
99.0

Target:
Maintainrecycling
rate
ofof
97%
oror
more
Target:
Maintainrecycling
rate
97%
more

55
1212

2022.3133
133

1161162018.32018.32019.32019.3

142
142

118
118

132
132

2020.32020.32021.32021.32022.32022.38282

2018.32018.3(t)(t)(t)

Hydrogenfluoride
anditsitswater-soluble
salts
Hydrogenfluorideandwater-soluble
salts
Other
Other
144
1441 11313
121121 1 1119119 1 1
2424
1010
11 11
101
101 1 1
1212
55
2222
11 11

236

2021.341,352

Volume of PRTR Class I Designated Chemical Substances
Handled in Japan

100
1001 1143

2020.32022.3
11

Number of ecosystem tours*

91372019.32021.3
9

15

12
110

2020.3
9

Incinerated
andlandfillwaste(t)(t)
Incinerated
andlandfill
waste

99.0
99.0
9

2019.3
9

Number of certified offices

Recycling Rate/Generation of Incinerated and Landfill Waste in Japan
Recycling
RecyclingRate/Generation
Rate/GenerationofofIncinerated
IncineratedandandLandfill
LandfillWaste
WasteininJapan
Japan

177

77 TOKYO ELECTRON Integrated Report 2022

1
96

* Scope: Japan

33.2
251

226.7

1
95

NOx

Total product shipment (t)*CO2 2Emissions
Emissionsfrom
fromLogistics
Logisticsand
andthe
Proportion
COthe
Proportion
ofof
Marine Transportation
Transportation
MarineLogistics in Japan (kt-CO2)
Overseas logistics (kt-CO2)
Proportion of marine transportation in international logistics (%)

250.9

2022.3100

Other

Environmental laws and regulations

265.3

2021.3Ferric chloride

Amount transported (waste amount) (t)Biodiversity

Japan

2020.3* VOCs: Volatile Organic Compounds

Emissions (kt-CO2)

Japan

2019.3

Volume handled (t)Environmental Impact of Logistics

CO2

2022.3

14,997

Amount generated (t)Dangerous/Hazardous waste

2021.3

13,989Overseas⚫

2020.3

14,960

Japan

Waste

2019.3

14,4358484

2019.32019.39898

2020.32020.3

106
106
8585

2021.32021.32022.32022.3

TOKYO ELECTRON Integrated Report 2022

78

Data Section

Consolidated Subsidiaries (As of March 31, 2022)
Japan• Tokyo Electron Technology Solutions Ltd.
• Tokyo Electron Kyushu Ltd.
• Tokyo Electron Miyagi Ltd.
• Tokyo Electron FE Ltd.
• Tokyo Electron BP Ltd.
• Tokyo Electron Agency Ltd.

Stock Information (As of March 31, 2022)
Corporate Name and Head Office

Common Stock Listed on

WebsiteTokyo Electron Limited
Akasaka Biz Tower
3-1 Akasaka 5-chome, Minato-ku,
Tokyo 107-6325, JapanTokyo Stock Exchange Prime Market(Stock code: 8035)

www.tel.com

Independent Auditor
KPMG AZSA LLC

Established

Administrator of Shareholders’ Register

November 11, 1963

Sumitomo Mitsui Trust Bank, Limited
4-1 Marunouchi 1-chome, Chiyoda-ku,
Tokyo, Japan

Annual General Meeting of Shareholders
June

Direct mail and inquiries to:
Sumitomo Mitsui Trust Bank, Limited
8-4 Izumi 2-chome, Suginami-ku,
Tokyo, 168-0063, Japan
Tel (toll free): 0120-782-031 (available onlyin Japan)Common Stock
Stock trading unit
Authorized
IssuedNumber of shareholders

100 shares
300,000,000 shares
157,210,911 shares
34,258U.S.
Major Shareholders

Number ofshares held
(thousands)

Votingshare ratio(%)• Tokyo Electron America, Inc.

The Master Trust Bank of Japan, Ltd. (trust account)

42,017

26.87

Treasury stock• TEL Technology Center, America, LLC

Custody Bank of Japan, Ltd. (trust account)

13,743

8.78

0.54%

JP Morgan Chase Bank 385632

8,137

5.20

TBS HOLDINGS, INC.

5,801

3.71

Other Japanese
corporations

Custody Bank of Japan, Ltd.
(securities investment trust account)

2,983

1.90

STATE STREET BANK WEST CLIENT - TREATY 505234

2,580

1.65

Custody Bank of Japan, Ltd. (trust account 4)

2,347

1.50

EuropeSSBTC CLIENT OMNIBUS ACCOUNT

2,229

1.42

JP Morgan Chase Bank 385781

1,917

1.22

• Tokyo Electron Europe Ltd.

The Dai-ichi Life Insurance Company, Limited

1,440

0.92

• Tokyo Electron U.S. Holdings, Inc.

• TEL Venture Capital, Inc.
• TEL Manufacturing and Engineering of America, Inc.

• Tokyo Electron Israel Ltd.
• TEL Magnetic Solutions Ltd.

Distribution of Ownership among Shareholders
Japanese financial institutions
and securities companies

47.67%

4.62%
Japanese
individuals
and others

Number ofissued shares
157,210,911 shares

5.38%
Foreign institutions
and others

Notes: 1. Shares of less than one thousand have been rounded down in the “Number of shares held.”
2. Voting share ratios are calculated excluding treasury stock (851,052 shares). Figures aretruncated after the second decimal place. Treasury stock excludes the 610,529 Company
shares owned by the executive compensation Board Incentive Plan (BIP) trust account andthe share-delivering Employee Stock Ownership Plan (ESOP).

41.79%

Stock Price and Trading Volume

Asia• Tokyo Electron Korea Ltd.
• Tokyo Electron Taiwan Ltd.
• Tokyo Electron (Shanghai) Ltd.
• Tokyo Electron (Kunshan) Ltd.
• Tokyo Electron Singapore Pte. Ltd.

(Yen)
(Thousands of shares)

70,00060,00050,00040,00030,00020,00010,00050,000Stock price

25,0000
Trading volume

26 consolidated subsidiaries in total, including the above 19 companies

CY2018CY2019CY2020CY2021

2018.32019.32020.32021.32022.3High (yen)23,87521,93525,87547,32069,170Low (yen)

11,455

11,595

13,76018,92542,670Total shareholder return (%)

169.8(115.9)143.0(110.0)183.7(99.6)

407.6(141.5)554.5(144.3)(TOPIX, dividends reinvested)

79 TOKYO ELECTRON Integrated Report 2022

0

CY2017

CY2022

TOKYO ELECTRON Integrated Report 2022

80