The 54th Annual General Meetingof Shareholders

June 20, 2017
The 54th Annual General Meeting of Shareholders

1

FY2017 Financial Report(FY2017: April 1, 2016 – March 31, 2017)

The 54th Annual General Meeting of Shareholders

2Consolidated Statement of Income
FY2016(Billion Yen)（％）

FY2017（％）
53期 （％）

Variance

Net sales

663.9

100.0

799.7
6,639

100.0
100.0

+135.7

SPE

613.0

92.3

749.8
6,130

93.8
92.3

+136.8

FPD

44.6

6.7

49.3
446

6.2
6.7

+4.6

Others

6.2

1.0

0.4
600

0.0
1.0

▲5.7

SPE: Semiconductor Production EquipmentFPD: Flat Panel Display Production Equipment

Consolidated sales up 20% YoY,
highest ever SPE sales

The 54th Annual General Meeting of Shareholders

3Consolidated Statement of Income(Billion Yen)FY2016（％）

FY2017
第52期

（％）
（％）

Variance

Net sales

663.9

100.0

6,639
799.7

100.0
100.0

+135.7Gross profit

267.2

40.2

322.2
2,672

40.3
40.2

+55.0

Operating income

116.7

17.6

155.6
1,167

19.5
17.6

+38.9

Ordinary income

119.3

18.0

157.5
1,193

19.7
18.0

+38.1

0148.4144▲1.4

Unusual or infrequent profit

1.4

Unusual or infrequent loss

14.4

Income before income
taxes
Net income attributable toowners of parent

106.4

16.0

149.1
1,064

18.6
16.0

+42.6

77.8

11.7

778
115.2

11.7
14.4

+37.3

▲5.9

Record high net income
The 54th Annual General Meeting of Shareholders

4Consolidated Profit and Loss Highlights
Setnew
recordhighs
Gross profit
for both gross profit
40.3%
margin and operating
Operating income
margin¥155.6B（Billion Yen）

150

100

Operating margin

19.5%

500(FY) 2013

2014

2015

2016

The 54th Annual General Meeting of Shareholders

20175Consolidated Balance SheetLiabilities & Net Assets

Assets(Billion Yen)

957.4

(Billion Yen)

793.3

957.4

793.3
315.3

Cash & cash equivalents*

311.4

Liabilities

645.9

Net assets

229.1

236.6
133.8

Trade notes, accounts
receivables

236.2

Inventories

116.5
195.0

69.1
96.3
17.6
62.0

90.4

Other current assets

100.4
15.4
65.6

Tangible assets
Intangible assets
Investment & other assets

2016/3/31

2017/3/31

564.2

2016/3/31

2017/3/31*Cash and cash equivalents: Cash and deposits + Short-term investments, etc. (Securities on B/S).
The 54th Annual General Meeting of Shareholders

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Consolidated Statements of Changes in Net Assets(Billion Yen)

Net income
attributable toowners of parent

700

CashDividends

▲39.3

650

Disposal oftreasury stock

0.1

Otherchanges

5.7

Net Assets

115.2
600
Net Assets

550

564.2

645.9

Balance
as of 2016/3/31

Balance
as of 2017/3/31

500

0The 54th Annual General Meeting of Shareholders

7Non-consolidated Financial Statement
Statement of Income

FY2016（％）

FY2017(Billion Yen)（％）

Variance

582.6

100.0

751.0

100.0

+168.4

Operating income

42.0

7.2

60.5

8.1

+18.4

Ordinary income

74.8

12.8

61.88.2▲12.9

Income before income
taxes

78.5

13.5

63.8

8.5

▲14.7

Net income

63.5

10.9

46.6

6.2

▲16.8

Net sales

Balance Sheet
Total assets
Total liabilities
Total net assets
Total liabilities & netassets
The 54th Annual General Meeting of Shareholders

FY2016（％）

FY2017（％）

Variance

100.0+142.655.7+131.5

52.6

768.6
428.1
340.5

44.3

+11.1

100.0

768.6

100.0

+142.6

625.9
296.6
329.3

100.0

625.9

47.4

8

FY2017 Dividends► Annual dividend per share（Yen）

352350300

2372501432001501005150FY2013

FY2014500FY2017

FY2015FY2016FY2017

Total
dividends

Payout ratio

InterimYear-end

Annualdividends

128yen224yen352yenThe 54th Annual General Meeting of Shareholders

57.7
Billion yen

50.1%9FY2018 Financial Estimates(FY2018: April 1, 2017 – March 31, 2018)

The 54th Annual General Meeting of Shareholders

10Business Environment

 SPE Capex
CY2017 WFE capex forecast to increase by around 10% YoY
driven by investment in next generation 3D NAND andadvanced logic

 FPD Capex
CY2017 demand for FPD manufacturing equipment forecast
to increase 30% YoY on continued capex for small/medium
panels for mobile devices and capex for large panels rampup
The 54th Annual General Meeting of Shareholders

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FY2018 Consolidated Financial Estimates
1st Half

2nd Half(Billion Yen)

Fullyear
通期

YoY changes

480.0

500.0

980.0

+22.5%

451.0
29.0

459.0
41.0

910.0
70.0

+21.4%

Operating Income

104.0

112.0

216.0

+38.7%

21.7%

22.4%

22.0%

+2.5pts

Ordinary Income

104.0

112.0

216.0

+37.1%

Income before income taxes

104.0

112.0

216.0

+44.9%Net income attributable toowners of parent

79.0

84.0

163.0

+41.5%Net Sales
SPEFPD+41.7%

SPE: Semiconductor Production Equipment
FPD: Flat Panel Display Production Equipment

Expect sales growth to exceed market growth,
Generating record high profits for second consecutive year
The 54th Annual General Meeting of Shareholders

12For further growth
1. Business environment and our business
2. Medium-term business planning
3. Returns to shareholders

The 54th Annual General Meeting of Shareholders

13１．Business environment and our business

The 54th Annual General Meeting of Shareholders

14Era of IoTIoTWorld IP TrafficCAGR

24%

3.3
Zettabyte

1.2Zettabyte

20162021

Source: CISCO Visual Networking Index（VNI）
Complete Forecast 2016 to 2021 (2017.6.6)

The amount of data is dramatically increasing
with the growing number of connected devices
The 54th Annual General Meeting of Shareholders

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Infrastructure evolution supporting the IoT era

Cloud, datacenter
Datacenter servers require higher capabilities
due to big data processing
The 54th Annual General Meeting of Shareholders

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Infrastructure evolution supporting the IoT era

5G Network
Compared to 4G: Speed: 100X
Data latency: 1/50th# of connectable devices: 100X
2G

3G

1990s

2000s

4G
2010s

5G
2020s

5G: 5th generation wireless systems

5G will establish the infrastructure for an IoT society
The 54th Annual General Meeting of Shareholders

17Services realized with 5G
Smooth video streaming

Self-driving

5G
More images and videos

No delay allowed in dataprocessing

Higher capacity and speed exceeding 4G generate
new services

The 54th Annual General Meeting of Shareholders

18Evolution of society

MedicalTraffic

Manufacturing

SNSFinance

Cloud-based and highly networked society isto be established
Semiconductors will be increasingly integratedthroughout society

The 54th Annual General Meeting of Shareholders

19Semiconductor industry going on to the next
phase of growth

The 54th Annual General Meeting of Shareholders

20World semiconductor market$ Billion$378B

500(CY2017F)
400
300

200
100

1981, IBM PC
MS-DOS0

1980

1985

1990

1995

2000

2005

2010

2015

2020

Source: WSTS (1986~2017F), TELEntering the IoT era, the semiconductor market isgreatly expanding

The 54th Annual General Meeting of Shareholders

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Expansion of WFE* market$ Billion
50

$40B~

40$30B

30$20B20
10$10B

0

1990

1995

2000

2005

2010

2015

*Equipment for wafer-level packaging is not included in the WFE market size here
Source：2001-2013 SEMI
2014-2018 VLSI “Chip Market Research Services Equipment Database, 1Q17 Update” Apr. 2017. Graph created by TEL using above data

WFE market is heading for its next growth phase
The 54th Annual General Meeting of Shareholders

22Amazing level of semiconductor scaling
Diameter of a human hair
0.1 mmPattern width
パターンの線幅
10 nm

10,000 : 1
Diameter of Tokyo Dome

Diameter of a ¥10 coin
23.5 mm244 m

10,000 : 1

Semiconductor technology is bound for ultimate
nanoelectronics
The 54th Annual General Meeting of Shareholders

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Semiconductor evolution
New structure/
New materials

New memory

Carbon/CNT
ReRAM

SiGe/III-V

Advanced patterning

3D NAND
FinFETEUVDSA

MRAM

PcRAM
FeRAM

Advanced packaging
Panel scale package

High-k metal gate

Multiple patterning

FO-WLP
TSV

Semiconductor
manufacturing technology

Evolution of semiconductors involves new, extensive
technologies
The 54th Annual General Meeting of Shareholders

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TEL SPE products
Semiconductor Production Equipment

Coater/Developers
CLEAN TRACK™
LITHIUS Pro™ Z

Single wafer
cleaning system

Plasmaetch system

CELLESTA™-i

Tactras™ Vigus™

Thermalprocessingsystem

ALD system
NT333™

Single wafer
deposition system
Triase+™EX-II™ TiNMulti-cell
test system
Cellcia™

TELINDY PLUS™

Exceptional performance and a variety of product lineup
drive technology innovations
The 54th Annual General Meeting of Shareholders

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IoT stimulates growth in the display industry

The 54th Annual General Meeting of Shareholders

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Growing use of displays as interface devices
Functionalities sought in displays:
Ultra-high resolution, low power consumption, flexibility (processability）

Smartphone

Head mounted display

In-car display

Flexible display

The display market continues further expansion andtechnological improvement
The 54th Annual General Meeting of Shareholders

27Evolution of TV screen

2008
Beijing

2004Athens

2012
London

37”

32”

2016
Rio de Janeiro

40”

2020
Tokyo60”

50”
2020

Full high vision

Ultra high vision

Super high vision

LCD
OLED

Even larger sized displays with higher resolution
More TV manufacturers launching OLED TV
The 54th Annual General Meeting of Shareholders

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TEL FPD products
FPD Production Equipment
FPD Etch/Ash system
Impressio™

Inkjet printing system for
manufacturing OLED panels
Elius™

TEL launches new products in the rapidly growing
OLED equipment marketThe 54th Annual General Meeting of Shareholders

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TEL creates and delivers high-value added
technologies like no other that the world
has never seen

The 54th Annual General Meeting of Shareholders

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TEL’s excellence is more than development
and sales of leading-edge products

The 54th Annual General Meeting of Shareholders

31Intensive efforts for service business
TEL’s world-wide installed base:Industry’s largest 62,000 units

Leading edge products

Field solutions

Development, production, sales

Contracted service, upgrades,
repair, parts, used equipment
Remote diagnosis
technology

TELeMetrics™

Installed equipment brings new business opportunities,
creating another value
32

The 54th Annual General Meeting of Shareholders

Growing field solution business
Field Solutions Sales¥ Billion
300260208200• Large demand from both
leading-edge and matured
technology areas

1000(FY)• Achieved ¥200B earlier
than planned

2014

2015

2016

2017

2018
(E)

Sales from the field solutions business included in the sales of SPE and FPD

IoT brings wide-ranging demand, leading to improved
profitability
The 54th Annual General Meeting of Shareholders

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TEL provides extensive support for its
customers’ semiconductor/ displaymanufacturing

The 54th Annual General Meeting of Shareholders

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２．Medium-term business planning

The 54th Annual General Meeting of Shareholders

35Current progress with medium-term financial targets
FY20152017/3

2018/3(E)Medium-term
financial targets(July, 2015 announced)

WFE*$31.9BNet sales
Operatingmargin¥613.1B¥799.7B ¥980.0B

14.4%

19.5%

22.0%

20%

25%

ROE

11.8%

19.1%

-15%

20%

～～

Market size

$35.0B$38.0B$30.0B$37.0B¥720.0B ¥900.0B

Steady improvement in results
Continue to focus on improving profit margins** Equipment for wafer –level packaging is not included in the WFE market size here
The 54th Annual General Meeting of Shareholders

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New targets set due to changes in marketconditions

The 54th Annual General Meeting of Shareholders

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New medium-term financial targets (toward FY2020)*Equipment for wafer-level package is included in the WFE market size here

WFE*Market size

$42B

$45B

Net sales¥1,050B¥1,200B

24%

26%

Operating marginROE

20%~25%

Pursue a global standard level of profitability
The 54th Annual General Meeting of Shareholders

38Three focus items for new growth opportunities
Pursue profits and enhance corporate value
ProductcompetitivenessResponsivenessto customers
Be sole strategic
partner
The 54th Annual General Meeting of Shareholders

Continually create strong
next-generation products

Enhanced
productivity
Continually pursue
operational efficiency
39

Increasing equipment demand driven by 3D NAND
Datacenter
server$ Billion

3D NAND
flash memory
Multi-layer structure

Etch market

15

Deposition$ Billion
market
1010PC

55Smartphone

0020132016 2019E20132016 2019E

TEL estimates

The increasing number of layers brings great business
opportunities to etch and deposition segments
The 54th Annual General Meeting of Shareholders

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Strengthening our Etcher business (Tokyo Electron Miyagi)
New R&D facility

Logistics facility

Completion scheduled forAug. 2018

Completion scheduled forDec. 2017

Future demand for etcher
expected to expand

Tactras™ Vigus™

Strengthening product competitiveness, enhancing
productivity
The 54th Annual General Meeting of Shareholders

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Being in the phase of growth, strengthening
corporate constitution matters

The 54th Annual General Meeting of Shareholders

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３．Returns to shareholders

The 54th Annual General Meeting of Shareholders

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Basic policy on shareholder returns

Create added-value through innovative technologies andgroundbreaking proactive solutions

Pursue profits, enhance corporate value
Appropriate returns to stakeholders

The 54th Annual General Meeting of Shareholders

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TEL shareholder return policy

Dividend payout ratio： 50%
Annual DPS of not less than 150 yen

We will review our dividend policy if the company does not
generate net income for two consecutive fiscal years

The 54th Annual General Meeting of Shareholders

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Dividend forecast
Dividend per share
600497(Yen)

Year-end256352400237
200

DPS for FY2018(E)expected to increase
more than 40% YoYInterim2410(FY) 2013 2014 2015 2016 2017 2018

Estimate

The 54th Annual General Meeting of Shareholders

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Semiconductor and display are headingfor its next growth phase

The 54th Annual General Meeting of Shareholders

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TEL technology contributes to the evolution ofsemiconductors and displays, the importanceof which is growing in all industries

The 54th Annual General Meeting of Shareholders

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Pursue a global standard level of profitability,
aim for sustained growth in corporate value

The 54th Annual General Meeting of Shareholders

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