Interview with THE CEO

Questions&Answers

Hiroshi Takenaka,President & CEO4Tokyo Electron

Annual Report 2010

QFiscal 2010, the year ended March 31, 2010, marked your firstyear as President of Tokyo Electron. How would you summarize your achievements in the first year?

A

Looking back, when I took over as president, we started

into developing new technologies for a new generation ofoff in a service business environment in which the future

products. As a result, there were two achievements ofoutlook was unclear. Nevertheless, we moved forward

note. First, we started the commercial introduction of asteadily believing in the importance of investing in people

new etch system that incorporates radial-line slot antenna

and product development for the future.

(RLSA) plasma technology, after around 8 years of con-

To put this in more concrete terms, my initiatives weretinuous development. Second, the Company commenced

not to necessarily cut personnel, but rather, to invest in

shipping a plasma CVD system for thin-film silicon PV

their training, and use the downturn as an opportunity toproduction. We have high expectations for these busi-enhance their skills to an even higher level. Similarly, wenesses in the future.

got employees to re-evaluate the operational efficiency ofOn the other hand, in the short term we also quickly

their work, which would have been hard to do during

adjusted the company’s size to match market conditions.

busier times, thereby preparing the Company for the next

Management and employees alike combined forces andphase of business growth. Needless to say, the key to

set about reducing costs in unnecessary or less criticalTokyo Electron’s success has always been rooted on its

areas of operations. These efforts allowed Tokyo Electronability to develop technologically superior products in ato surpass initial sales forecasts by ¥120.0 billion, whiletimely manner. So we have not only sought to further

curbing fixed costs.

improve existing products, but also fully channeled funds

Net Sales and R&D Expenses(Billions of Yen)
1,000

Consistently maintain adequate level of R&D expenses

8006001204008020040Tactras™ RLSA™ Etch, a new etch system withrevolutionary plasma technology
In addition to a strong presence in BEOL etch processing,
the Tactras™ RLSA™ Etch enables Tokyo Electron tofocus on a wider range of solutions, targeting transistorrelated processes (FEOL).

0001

02

03

04

05

06

07

08

09

10n Net Sales (left scale)
R&D Expenses (right scale)

Annual Report 2010

Tokyo Electron

5

Q

It appears that as the macro-economy recovers, the equipment industry that are Tokyo Electron’s
main markets are also starting to recover. What is your view on industry growth and the outlook
for the business environment?

AProduct inquiries have been recovering since about August

stimulate investment for the time being, but at the same

2009, and manufacturing volume has now recovered totime reducing costs is becoming imperative for us. In

the point where we are even struggling to meet delivery

addition, we will accelerate the development of various

schedules. The products that Tokyo Electron makes haveanticipated technologies such as production equipment

deep connections with social infrastructure and people’sfor OLED, a new next generation display. The businesslives. Consequently, as the economy begins to rebound,climate in the photovoltaic (PV) cell production equipment

our business is showing signs of recovery sooner thanbusiness has changed dramatically over the past year.

most industries.

While new chemical compounds have been attracting

Under these circumstances, I expect continued techno-attention, crystalline solar is maintaining a high market

logical advances to support renewed growth in the market

share due to lower silicon costs. Up to now, we havefor semiconductor production equipment (SPE). At thefocused most of our resources on thin-film technology,

same time, I also think that the competitive environment

and we expect thin-film to remain the best area for awill intensify and “the strongest survive” will become aproduction equipment supplier, like us, to leverage its exper-

watchword in the industry. That is the reason we aretise. Photovoltaic cells is a market that we expect to growprioritizing investment for technological differentiation. In

steadily over the next ten to twenty years. We will continue

the flat panel display (FPD) production equipment area,

watching the market, seeking whatever technology andChina’s efforts to promote TV market penetration willbusiness model is most appropriate to meet our goal.

V-shaped Recovery in Semiconductor Industry in Japan
Industrial Production Index

140906,092

851,975

160

Semiconductors

120

Passenger Cars
Iron and Steel

673,686100

508,082

418,637

80

Cement Products
Textiles

60
40
200

CY06

CY07

CY08

CY09

Note: Mining production index = Index of production trend with 2005 average set as 100.
Source: Ministry of Economy, Trade and Industry

6Tokyo Electron

Annual Report 2010

QThe markets that Tokyo Electron serves are changing, with increasing customer consolidation anda shift of customers to Asia. How is Tokyo Electron responding to these changes?

AThe scale of capital investment by our customers has

Any of these recent changes in the business environ-

become massive, and disparities in technological prowess

ment are ones that I think will benefit Tokyo Electron. In

are steadily growing. As a result, only a limited number offiscal 2010, we introduced the following measures aimed

our customers will be able to continue making theseat responding to market change:

large-scale investments. The production equipment indus-• Decided to construct the Miyagi Plant to strengthen

try is experiencing the same changes, with market leaders

the growing etcher business, while closing the pro-capturing a rising share of the overall market. Therefore it

duction/development site for cleaning systems at theSaga plant and consolidating it into the Koshi Plant

is increasingly vital for equipment suppliers to maintainthe technological expertise and financial strength needed• Decided to close the Kansai Technology Center into continue introducing the most advanced equipment inAmagasaki and integrated RLSA development worka timely manner.

at our facility in Sendai, to strengthen our focus on
this area of technology

Another trend we are seeing is that of the growing
post-sales business. Customers are not only purchasing• Reorganized the sales and R&D structure with the

cutting-edge production equipment, but also wish to use

goal of developing closer cooperative ties to ourthe equipment they have already installed for longer peri-customers

ods by improving and upgrading it. Tokyo Electron has• Strengthened TEL Technology Center, America, andshipped over 50,000 units of equipment which are cur-established a new technology center in Taiwan

rently in operation worldwide. This installed base offers• Established the “Field Solutions” business unit in

the Company excellent opportunities to develop neworder to enhance post-sales business operations

business in the future.

Global R&D and Manufacturing Bases

imec (Belgium)
Collaboration R&D with imec
on immersion lithography andextreme ultraviolet (EUV)
lithography

Tokyo Electron Korea Solution(Hwaseong, Gyeonggi-do)

TEL Technology Center, America(Albany, New York)TEL Venture Capital(Fremont, California)
Timbre Technologies(Fremont, California)

TEL Technology Center, Taiwan(Hsinchu, Taiwan)

About imec
imec is a world-leading independent research
center in nanoelectronics and nanotechnology. Its
research focuses on the next generations of chips
and systems, and on the enabling technologies forambient intelligence.

Tokyo Electron
Leading-edge Process
Development Center(Nirasaki, Yamanashi)

TEL Epion(Billerica, Massachusetts)

Tokyo Electron Technology
Development Institute(Sendai, Miyagi)
Manufacturing/development base in Japan:- Tokyo Electron AT (Nirasaki, Yamanashi)- Tokyo Electron Kyushu (Koshi, Kumamoto)- Tokyo Electron Tohoku (Oshu, Iwate)

Annual Report 2010

Tokyo Electron7

Q

Please tell us more about Tokyo Electron’s efforts todevelop next-generation technology and new businesses.

AIn the semiconductor industry, design rules have been
improving from 30nm to 20nm, then to 10nm. As thisshows, we are increasingly required to develop ultimate
technologies and, as we did in the past, we continue toexplore and open up new frontiers. We are pursuing many
new ideas that employ immersion technology such as
double-patterning technology and 3DI, a chip stack tech-channeling more resources into the development of ournology, and thus pushing the boundaries to get higher

own unique production equipment for photovoltaic cells.

density. With each passing day we are progressing closer

Tokyo ­Electron is making the utmost effort to realize these

towards our goal. In the flat-panel display industry, mean-

technological advances using an international R&D infra-

while, we are developing technology to support a larger

structure that includes not only consortia in Japan, but also

panel size, and also accelerating development of produc-

the Albany Nanotech project, in Albany, New York, andtion equipment for OLED displays. Finally, we areimec in Belgium.

Meeting the Challenge of New Technologies

Water purification
Organic PV
MOCVD
OLEDMEMS
Bio-sensor

Electronic paperCore technologies

SiC Epitaxy

TSV

Advanced healthcare
equipment

Rechargeable battery
Applied technology field

New technology field

8Tokyo Electron

Annual Report 2010

MOCVD: Metal Organic Chemical Vapor Deposition
MEMS: Micro Electro Mechanical Systems
SiC: Silicon Carbide
TSV: Through Silicon Via
OLED: Organic Light-Emitting DiodeQ

What do you view as currently the most important issue for Tokyo Electron management, andhow do you plan to address the issue?

A

The most important issue for the Company is how to• We intend to enhance our manufacturing skills, torealize sustainable growth over the long term. To do this,ensure that Tokyo Electron is hard-to-beat by new

we have to build a robust and flexible earnings base that

manufacturers particularly in Asia

can withstand market fluctuations. Tokyo Electron willsoon mark the 50th anniversary of its founding. As we are
fortunately doing business in the semiconductor industry,• In this way, we will continue to introduce productsthat enjoy high profitability and high market share• The new products in new business areas will be

an unusual industry in that persistent growth is possible asdeveloped centering on the use of our core technol-long as technological innovation continues to take place,ogy—production equipment technology—that Tokyo

we continue to put semiconductor technology at theElectron has accumulated over many years

center of our business and pursue the following strategies:• We will respond flexibly to market changes• In existing product segments in which there is a large

By implementing these strategies, I believe thespace for growth, we will concentrate our efforts on­Company will rebuild its earnings capabilities and achievestrengthening our position of leadership

record levels of business performance in the near future.

• We will pursue technological innovations thatenhance value, investing resources to develop
differentiated products

QAFinally, what is your long-term vision for Tokyo Electron?

We believe Tokyo Electron must conduct business as thea company in which the employees are working with vigor

best production equipment supplier, one that helps toand enthusiasm attracts great interest from all the stake-establish a prosperous society through contributing to an

holders and also provides value. Standing firm with ourimproved quality of life for people. As a trusted partner ofmanagement policy which places much importance on

our customers and as a company that contributes to soci-transparency and fairness, we will strive to raise corporate

ety, we will establish ourselves as a company that is full ofvalue by growing the Company, thereby meeting thevision and energy while at the same time fulfilling ourexpectations of our stakeholders and earning their contin-mission which is shared by all our employees. I believe thatued loyalty and support.

Annual Report 2010Tokyo Electron9