Q2 FY2023 (July 1, 2022 – September 30, 2022)
Financial Announcement – November 10, 2022
Transcript

Moderator: Opening remarks
It is now time for us to start the Tokyo Electron Financial Announcement for the Second Quarter of theFiscal Year Ending on March 31, 2023. Thank you very much for joining us today despite your busy
schedule. I am Koichi Yatsuda of the IR Department, acting as the moderator for today's session.
I would like to introduce today's attendees. Mr. Toshiki Kawai, Representative Director, President & CEO.
(I’m Tony Kawai, nice to meet you everybody.) Next, Mr. Hiroshi Kawamoto, Vice President and General
Manager, Finance Unit. (I’m Hiroshi Kawamoto. Thank you very much for joining us.)Prior to the presentations, let me explain the flow of today's conference. First of all, Mr. Kawamoto andMr. Kawai will make presentations. After that, until 6:30 Japan Time, we will take questions from your side.
This meeting will use two channels on Webex for simultaneous interpretation between Japanese andEnglish. As we explained in our email, you are kindly requested to use apps, PCs or mobile terminals ifyou plan to ask questions. But if you are not going to ask questions, you can join by telephone. In addition,
since this conference is intended for institutional investors and analysts, we would appreciate yourunderstanding that we receive questions only from institutional investors and analysts.
We will post the audio contents of this conference in Japanese and English on our website within a coupleof days, so it would be appreciated if you could also visit our website.
Now, Mr. Kawamoto, Vice President and General Manager, will present the consolidated financialsummary.

Q2 FY2023 Consolidated Financial Summary
Hiroshi Kawamoto – Vice President and General Manager, Finance Unit
Good afternoon. I am Hiroshi Kawamoto of the Finance Unit. I would like to present the consolidated
financial summary of the second quarter of the fiscal year ending in March 2023.
Financial Summary: Slide 4This slide shows the quarterly results. In the second quarter, we generated net sales of ¥709.2 billion, a49.7% increase from the previous quarter, as shown in the red box. In the first quarter, there were delays
in equipment shipment and startup due to the impacts of the lockdown, and also a supply shortage due
to a disruption in logistics. As these difficulties were resolved in the second quarter, the result exceeded
our financial estimates for the first half of this fiscal year.
By segment, SPE net sales recorded ¥689.0 billion, delivering our highest ever quarterly net sales. FPD
net sales were ¥20.1 billion. Net sales, operating profit and operating margin hit record highs. Gross profit
margin remained high at 46.3%.
Financial Performance: Slide 5This is a graphic representation of the financial summary on the previous slide.
Financial Summary (H1): Slide 6
Next, this slide shows the financial results for the half year. Again, I’d like you to look at the figures in thered box. In the first half of this fiscal year, we generated net sales of ¥1 trillion, 182.8 billion, exceeding
the financial estimate we announced on August 8th. This is a record high. Regarding sales by segment,
SPE net sales recorded ¥1 trillion, 153.0 billion, exceeding our financial estimates. FPD net sales were
¥29.7 billion, which was almost as expected. Gross profit margin was 44.7% and operating margin was29.6%.
Segment Information: Slide 7
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Q2 FY2023 (July 1, 2022 – September 30, 2022)
Financial Announcement – November 10, 2022
Transcript
This shows segment information. For SPE on the left-hand side, you can see FPD in the middle, and you
can see total sales composition on the right. For SPE, we generated net sales of ¥689.0 billion andachieved a segment profit margin of 36.7%. While we keep investing in such areas as R&D for futuregrowth, thanks to the significant increase in net sales, the segment profit margin rose by 7.9% from thefirst quarter. For FPD, net sales were ¥20.1 billion, and the segment profit margin was 10.0%. For thecomposition of net sales in the second quarter, SPE sales accounted for 97%, while FPD sales accountedfor 3%.
SPE Division: Sales by Region: Slide 8This slide shows SPE sales by region. As you can see, SPE sales showed a considerable increase fromthe first quarter in many regions such as Japan, North America, Taiwan and China. As for China, theimpacts of the lock down in the first quarter were resolved.
SPE Division: New Equipment Sales by Application: Slide 9This slide shows SPE new equipment sales by application. On the right, where you can see the second
quarter from the bottom of the chart, sales from logic manufacturers accounted for 61%, non-volatilememory accounted for 24% and DRAM accounted for 15%.
Field Solutions Sales: Slide 10
Next, this shows Field Solutions sales. In the second quarter, sales amounted to ¥131.7 billion, increasing
by 20% from the previous quarter, driven by an increase in sales such as modifications. As you can see,sales have been increasing along with time.
Balance Sheet: Slide 11
This shows the balance sheet. Total assets were ¥2 trillion, 138.0 billion. Cash and cash equivalents were¥484.6 billion. Accounts receivable and contract assets were ¥507.7 billion. Cash and cash equivalents
as well as accounts receivable and contract assets increased due to the increase in net sales. Inventories
were ¥552.9 billion. Along with revenue recognition, many products in inventory were shipped, but due tothe proactive arrangement of raw materials, inventories remain almost unchanged. Liabilities were ¥645.8billion, net assets were ¥1 trillion, 492.1 billion, increasing by 177.3 billion yen due to the increase of netincome. The equity ratio was 69.2%.
Cash Flow: Slide 12
My last slide shows cash flow. The cash flow from the operating activities increased to ¥193.4 billion due
to the profit achieved along with the net sales increase. The cash flow from investing activities was minus¥23.1 billion. This includes CAPEX. The cash flow from financing activities was minus ¥2.1 billion. As aresult, the free cash flow was ¥170.2 billion, which was at a high level. This concludes my presentation
about the consolidated financial summary.

Moderator: Introduction of the next presentation
Now, Mr. Kawai, our CEO, will present the business environment and financial estimates. Mr. Kawai,
please.

Business Environment and Financial Estimates
Toshiki Kawai – Representative Director, President & CEO
Once again, good afternoon, everybody. Thank you so much for joining us despite your very busy
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Q2 FY2023 (July 1, 2022 – September 30, 2022)
Financial Announcement – November 10, 2022
Transcript
schedules. I’m Tony Kawai. I’d now like to talk about the business environment and financial estimates.
CY2022 Business Environment (Outlook as of November 2022): Slide 14
First of all, let me start with the business environment. In the financial announcement in August, I said
that the WFE market in CY 2022 was expected to grow by 5 to 15% on a year-on-year basis. We currently
expect that the growth rate will land at around 10%. Due to expectations for semiconductor technology
innovation driven by the progress of the digital shift in society, and the realization of a decarbonizedsociety, our outlook remains unchanged for mid- to long-term growth of the SPE industry.
For the FPD production equipment market (TFT array process), there is no change. A slight increase is
expected in investment on a year-on-year basis.
FY2023 Q2 Business Progress: Slide 15
Next, this shows business progress in the second quarter of the fiscal year ending in March 2023. Our
sales to logic and NAND manufacturers increased significantly. For all of our key products, shipments
increased considerably. As a result, we generated net sales of ¥709.2 billion, delivering record highquarterly net sales. Operating margin was 32.8%, again the highest ever for a quarterly basis. Sales inthe Field Solution business also hit a record high of ¥131.7 billion, thanks to steady sales generated byupgrades and modifications for memory device scaling. This achievement of quarterly net sales
exceeding ¥700 billion, despite various challenges in such areas as procurement and logistics, serves asa touchstone for our efforts to pursue net sales of ¥3 trillion, set as a target in the Mid-term ManagementPlan. This has given us great confidence. Such achievement is strongly supported by the cooperation ofour partners. It was the quarter that we reinforced our belief that our company’s strengths heavily rely on
our solid supply chain. Penetration of strategic products and winning of development PORs for our future
growth proceeded steadily in accordance with the Mid-term Management Plan.
Highlights: Slide 16
Just as an example, we have delivered promising results in the items shown over here. We are winning
PORs steadily. All of these constitute the seeds of our future growth.
FY2023 Financial Estimates: Slide 17, 18
Next, I will present the financial estimates for the fiscal year ending in March 2023. We are going to revise
the financial estimates, primarily reflecting the changes in memory manufacturers WFE investment andexport administration regulations against China that have been further enforced by the US government.
On a full year basis, we expect net sales of ¥2 trillion, 100.0 billion. Gross profit of ¥910.0 billion. Operating
income of ¥546.0 billion, and net income attributable to owners of parent is ¥400.0 billion.
FY2023 SPE Division New Equipment Sales Forecast: Slide 19
This slide shows the SPE new equipment sales forecast. Due to the same reasons that I stated for therevision of financial estimates, we have revised the new equipment sales forecast for the second half of
this fiscal year. In the first half of this fiscal year, we generated new equipment sales of ¥917.7 billion,
hitting a record high which exceeded the financial estimates by about ¥67.7 billion. New equipment sales
are expected to be ¥700.0 billion in the second half and ¥1 trillion, 617.7 billion yen for the full year. On acalendar year basis, we expect growth of about 20%. On a fiscal year basis, we expect about 8% growthfrom the record high new equipment sales delivered in the previous fiscal year.

Initiatives for Medium- and Long-term Growth: Slide 20
Let me now present initiatives we are working on toward mid-term and long-term growth using severalslides.
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Q2 FY2023 (July 1, 2022 – September 30, 2022)
Financial Announcement – November 10, 2022
Transcript
WFE Market: Slide 21
As you know, semiconductor is becoming increasingly important to promote ICT, digital transformation
and build a decarbonized society. Electric vehicles and fuel cell vehicles are expanding while autonomous
driving is being introduced more widely. Along with the spread of AR, VR and MR, the metaverse will
pervade even further. While 5G communication continues to be deployed broadly in the industry andsociety, development of post-5G technology will proceed to realize higher speed, larger network capacity,
lower latency, and multi-connectivity. Such innovation of new technologies will drive continuous growth ofthe WFE market.
As announced by SEMI, as many as 67 new 300 mm fabs are expected to begin construction from 2022
to 2025. Therefore, SPE demand is expected to increasingly grow in the future.
Evolution of Logic Device Structure and EUV Lithography Technology: Slide 22
In addition to the increase of fabs and manufacturing lines, constant technology innovation also drives
WFE demand. As you can see here, the structure of logic devices changes about every two years. At
present, logic devices of three nanometer, FinFET structure, are manufactured in high volumes. Thestructure will evolve to gate all around (GAA) nanosheet structure, and eventually to the CFET structure
to achieve higher performance and lower power consumption of logic devices. EUV lithography is one of
the critical technologies to realize such complex and dense structure. EUV lithography has already been
deployed in high volume manufacturing lines while high-NA EUV is expected to be introduced as
innovative lithography technology for further device scaling from the technology node of 1.4nm.
Joint Development of High-NA EUV with imec and ASML: Slide 23
To support the development of next generation logic device materialized by this high-NA EUV, ourcompany is currently working on joint development with imec and ASML. In order to contribute to thedevelopment of next generation leading edge devices, Tokyo Electron works with customers around theworld and promotes collaboration in consortia and with multiple companies.
Business Opportunities and Focus Areas by FY2025: Slide 24
This slide shows business opportunities and focus areas for the coming three years. For logic devices,to achieve lower power consumption and higher speed CPU in the 2nm node, the GAA nanosheet andbackside PDN structure will be at the center of changes to the technology. For DRAM, to deliver DDR5,high speed working memory, EUV lithography and high-k metal gate will be introduced. For NAND, torealize larger storage, an initiative to deliver a high stacking structure of 300 layers will begin. In addition,
the NAND manufacturing process is expected to adopt multi-tier stacking, and bonding technology tobond memory cells and peripheral circuits fabricated on different wafers. Our company offers a broad
product portfolio coping with such future technology innovation. We believe the area indicated in boldface, in particular, will provide us with great business opportunities. We aim to expand our share in highvalue-added areas.
Further Expansion of Field Solution Business: Slide 25
In the Field Solution business, in addition to the current business area including reengineered models,
modifications and parts sales, we think it's very important to make attractive proposals about newsolutions that leverage existing process tools effectively when we pursue our future growth. Firstly,
establishing the infrastructure essential for data utilization such as servers associated with process tools
and groups of process tools. Secondly, establishing sensing technology to monitor process tools andwafer processing condition. Thirdly, analyzing domain knowledge of equipment and process througheffective use of digital support tools, and last but not least, utilizing AI for efficient process improvement
and equipment function development. Accumulating these efforts and enhancing each one of them will
provide optimal solutions and strive to maximize equipment performance and enhance productivity. With
keywords such as IoT, communication, metaverse and green application, the business opportunities for
Field Solutions will be increasingly expanding. We are working on the strategy for further growth of this4/5

Q2 FY2023 (July 1, 2022 – September 30, 2022)
Financial Announcement – November 10, 2022
Transcript
Field Solution business.
Medium-term Management Plan: Slide 26
By promoting these various activities, we will go forward to achieve the Mid-term Management Plan that
we announced in June 2022. Aiming at net sales of ¥3 trillion or more, operating margin of 35% or moreand ROE of 30% or more, we will make every effort to outperform the market and facilitate further growth
so that we can become the one and only company in the prime market of Tokyo Stock Exchange to do
so within five years.
FY2023 R&D Expenses, CAPEX Plan: Slide 27
This shows our plan for R&D expenses and CAPEX. The plan remains unchanged. As we previously
announced, we will invest more than ¥1 trillion in R&D and more than ¥400 billion for Capex for the next
5 years, especially for evaluation tools. To achieve the Medium-term Management Plan, we will continue
proactive R&D investment and capital investment.
FY2023 Dividend Forecast: Slide 28
My last slide shows the dividend forecast. For interim dividend, we plan to pay ¥857, which is a record
high interim dividend. Along with the revision of our financial estimates, the year-end dividend is expected
to be 425 yen.
Tomorrow, on November 11th, Tokyo Electron will mark its 60th year foundation day. In this fiscal year, weexpect to deliver record high net sales and we have been promoting various initiatives for further growthin the future. Furthermore, we are steadily winning POR by leveraging our strategic equipment. With oursincere gratitude to the shareholders who kindly supported our growth, we are planning a commemorative
dividend of ¥200 per dividend at the end of this fiscal year.
Thank you very much. This concludes my presentation. Thank you very much for listening today.

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