Chapter 1

About Tokyo Electron

CEO’s Message

Toshiki Kawai
Representative Director,
President & CEOTokyo Electron’s 60th Anniversary
On November 11, 2023, Tokyo Electron will celebrate 60 years
since its founding in 1963. From that time, we have been able tocontribute to the development of the semiconductor industry
and achieve the level of growth that we have entirely thanks tothe support we have received from all our stakeholders. I wish
to express my deepest appreciation.
Until now, we have strived to create strong next-generation
products and to provide the Best Technical Service, specializingin the semiconductor business. While prioritizing the building oftrust and reliability with all our stakeholders, we aim to practice
our Corporate Philosophy of “We strive to contribute to thedevelopment of a dream-inspiring society through our leadingedge technologies and reliable service and support,”
endeavoring to expand medium- to long-term profit and tocontinuously enhance our corporate value.
These 60 years have seen spectacular technologicalinnovation in semiconductors, and at the same time, we haveinitiated innovation and grown by staying true to our venturespirit. The uses for semiconductors expanded to computers,
televisions and then to mobile phones, and the emergence of
the Internet led to the connection of billions of devices, as we
witness the shift from selling products to selling value. With thearrival of the DX era, where big data drives society,semiconductors have become indispensable, with persistenttechnological demands for semiconductors with larger capacity,
higher speed, superior reliability and lower power consumption.
The current semiconductor market is reaching a period ofadjustment, due to concerns of continued inflation, geopoliticalrisks and accompanying macro-economic deceleration andother factors such as inventory control of semiconductors, witha focus on memory. But demand will gradually recover, and is
expected to grow considerably from 2024 onwards. The global
data traffic is increasing at a compounded annual growth rate of
26%* due to the spread of various applications, improved dataprocessing capabilities and other factors, and is forecast toreach 10 times its current level in 10 years time. With investment
in data centers, the recovery of demand for computers and* A compounded annual growth rate of 26%: Omdia’s projection for 2020-2030

3TOKYO ELECTRON Integrated Report 2023

smartphones, the spread of EVs and autonomous driving andthe use of generative AI, the semiconductor market is forecast
to grow to twice its current size and be worth over US$1 trillion
in 2030. Along with the advancement of technology throughfurther scaling and higher multi-layering of semiconductors
used in logic, DRAM, NAND and so on, the semiconductor
production equipment market, in which we operate, is also
expected to expand.
Wafer Fab Equipment Market

MobilephonesApproximately
US$100 billion

Datacenters

PCs

1990

2000

2010

2020

2030

2040

Source: TechInsights Manufacturing Analysis Inc. (1990-2022)

TSV Aimed at Sustainable Corporate Value Enhancement
With the 60th anniversary of Tokyo Electron approaching, lastyear we formulated a new Vision to become “A company filledwith dreams and vitality that contributes to technologicalinnovation in semiconductors.” This new Vision is based on theidea of CSV (Creating Shared Value). The concept behind CSV is
that, by using their unique resources and expertise to resolve
social issues, companies can realize sustainable growth throughthe creation of social and economic value. The world is aiming
for the coexistence of digitalization and decarbonization forpreservation of the global environment in order to build astrong and resilient society in which economic activities do notstop under any circumstances, and technological innovation insemiconductors is essential for this. We are expanding ourbusiness activities based on our TSV (TEL’s Shared Value), our
CSV, aiming for sustainable corporate value enhancement byleveraging the expertise we have cultivated as an industry
leader, to drive semiconductor technological innovation.
As we implement TSV, in our Medium-term Management
Plan we set fiscal 2027 financial targets aimed at further
growth—an operating margin of 35% or more and ROE of 30%
or more with net sales of 3 trillion yen or more. We are awarethat such financial targets are unique even for the Tokyo Stock
Exchange Prime Market, and will strive to ensure we canachieve them. We consider profit to be an important measureof value in our products and services, and are therefore aiming
for a world-class operating income of over 1 trillion yen,through creating high-value-added technologies that world has
never seen and only we can accomplish.
In addition, we endeavor to implement appropriate balance
sheet management and to focus on producing returns forshareholders by setting a high-level payout ratio of 50%.

Leveraging Our Strengths
We consider the following to be our strengths: (1) being theworld’s only manufacturer with products in deposition, coater/developer, etch and cleaning, the four sequential key processes
necessary for semiconductor scaling, (2) a 100% share in EUV
lithography coater/developer, which are necessary forsemiconductor evolution, (3) our product lines being strongly
positioned in their respective segments, all of which having
achieved first or second place in market share, (4) technicalservice and marketing developed based on relationships ofabsolute trust with customers, built through the highest
number of installations in the world (approximately 88,000
units) and (5) approximately 22,000 patents owned, the largest
number in the industry globally. In order to leverage and further
develop these strengths, we are planning 1 trillion yen or more
in R&D investment and 400 billion yen or more in capital
investment over five years.
Products are our lifeline. Moving forward, we will continuously
produce “only one” and “number one” products needed in the
future by customers in a timely manner.
Net Zero Initiatives through E-COMPASS
Through our business activities, we are expanding E-COMPASS,
focused on the environment, and will work with our customers
and partner companies to promote the technologicalinnovation in semiconductors and to reduce environmental
impact across the entire supply chain, mainly from thefollowing three perspectives.
Pursuing higher performance and lower power
consumption in semiconductors
Achieving both the process performance and environmental
performance of equipment
Reduction of CO2 emissions in all business activities
We have set net zero, the reduction of greenhouse gas
actual emissions, as a long-term environmental goal, and are
implementing and accelerating our E-COMPASS initiatives to beable to realize net zero for Scope 1 and 2 emissions1 by 2040,
and for Scope 3 emissions2 by 2050.
1	Scope 1 and 2: Emissions from the use of energy such as electricity in our own business activities
2 Scope 3: Emissions from the use and disposal of equipment sold, purchase of materials, distribution, etc.

Our Corporate Growth Is Enabled by People, and Our
Employees Both Create and Fulfill Company Values
Without a doubt, it is people who will achieve this. Based on
our belief that “our corporate growth is enabled by people, andour employees both create and fulfill company values,” weconduct management and appropriate initiatives focused on
employee motivation so they can fully exercise theircapabilities, centered on the following five points.

The Five Points and Main Activities for Motivation-oriented Management

1 Awareness that our company and work contributes to society
Realization of our Vision based on TSV
2 Dreams and expectations of the Company’s future o achieve net sales of 3 trillion yen or more, operating marginTof 35% or more, and ROE of 30% or more
3 Opportunities to take on challenges
1 trillion yen or more in R&D investment over five years
4 Fair evaluations that recognize employee efforts and globallycompetitive rewards
Performance-linked compensation
5 Workplace with an open atmosphere and positive communication
 onvening employee meetings and round-table discussions
Cwith employees globally

As one pillar of our management, we are also focusing on
initiatives for diversity, equity and inclusion, in an effort toenhance 3G diversity (encompassing Global, Gender andGeneration aspects).
Going forward, with the expectation of expanding
applications for semiconductors in society and development offurther innovation, it is important to nurture the students,
researchers and other human resources who will lead futuretechnological innovation. We are continuing efforts to boost
human resource development in the semiconductor industry
through the promotion of a program of industry-academiagovernment collaboration that includes collaboration with
universities in Japan and abroad.
Aiming to Be a Company Filled with Dreams and Vitality
We look towards a prosperous future made possible bysemiconductors, their ongoing evolution and the significant
expansion of the semiconductor production equipment market
that supports this. Tokyo Electron will make even greater
contributions to the technological innovation insemiconductors, as the industry leader. As we mark the 60th
anniversary of our company’s founding, we will continue
tackling challenges for further growth and evolving, whilevaluing trust and reliability. We will aim to be “a company filledwith dreams and vitality” so as to be cherished and deeply
trusted by all stakeholders and so that our employees can fully
exercise their motivation and capabilities.
We look forward to your continued support and patronage.

Representative Director,
President & CEO
TOKYO ELECTRON Integrated Report 2023

4

Chapter 1
About Tokyo Electron

Corporate Principles System
Tokyo Electron has repeatedly revolutionized technology in a
rapidly changing industry, continuing to grow together withthe times. In 2013 we refined our Management Policies, which
was established at 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 Value, from a

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 thefoundation for its corporate activities.

medium- to long-term perspective.

Management Policies
The Management Policies highlight the management
values that Tokyo Electron regards as essential topractice our Corporate Philosophy. They express
the logic that underscores our eight general rules ofmanagement.

MissionCorporate
Philosophy/
Management
Policies

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

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

Scope of Business
The TEL Group leads markets byproviding high-quality products inleading-edge technology fields with afocus on electronics.

Employees
The TEL Group’s employees both create andfulfill company values, performing their workwith creativity, a sense of responsibility, anda commitment to teamwork.

Growth Philosophy
We will tirelessly take on the challengesof technological innovation to achieve
continuous growth through businessexpansion and market creation.

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

Based on our Corporate Philosophy and Management
Policies, the Vision describes Tokyo Electron’s
medium- to long-term business aspirations.

TEL Values
Based on the idea that “Our employees both create andfulfill company values,” TEL Values clearly describe themindset of each employee and code of conduct basedon the corporate culture that we have cherished since
our founding.

5TOKYO ELECTRON Integrated Report 2023

Social Responsibility
Feeling a strong sense of corporatesocial responsibility, we strive to gain
the esteem of society and to be acompany where our employees areproud to work.

Tokyo Electron pursues technological innovation in semiconductors that supports the sustainable development of the world.
We aim for medium- to long-term profit expansion and continuous corporate value enhancement by utilizing our expertise to continuously
create high value-added leading-edge equipment and technical services.
Our corporate growth is enabled by people, and our employees both create and fulfill company values. We work to realize this Vision throughengagement with our stakeholders.

Pride

Value
TEL Values

Safety, Health, and the Environment
The TEL Group gives the highest
consideration to the safety and healthof every person connected with ourbusiness activities as well as to theglobal environment.

A company filled with dreams and vitality that contributes totechnological innovation in semiconductors
VisionVisionVisionWe strive to contribute to the development ofa dream-inspiring society through our leading-edge
technologies and reliable service and support.

We take pride in providing highvalue products and services.
We offer our customers cuttingedge technological products, alongwith the highest level of quality andtechnical service, in the pursuit of
total customer satisfaction.
We consider profit to be an
important measure of value in our
products and services.

We accept the challenge of going
Challenge beyond what others are doing inpursuing our goal of becoming
number one globally.
We view changes as opportunities,
and respond to them flexibly andpositively.
We are tolerant of failure, andconsider it important to learn fromthe process and results.

We will keep ownership in mind
Ownership as we think things through, andengage in thorough implementationin order to achieve our goals.
We always have an awareness ofproblems, and tackle challenges
with enthusiasm and a sense of
responsibility.
We make decisions quickly, and dowhat we consider to be the best
course of action.
We respect each other’s
Teamwork individuality and we place a highpriority on teamwork.
We create a workplace with anopen atmosphere and positive
communication.
We establish relationships of trustwith our business partners in orderto facilitate mutual growth.

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

We haveestablished the
TEL Values, andwe will continue
to develop themaccordingly in the
future.

TOKYO ELECTRON Integrated Report 2023

6

Chapter 1
About Tokyo Electron

Company Overview
Tokyo Electron operates worldwide as a leading company in semiconductor production equipment industry. By providing the Best
Products, 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
through our business.

Sales by Region (Consolidated)

Number of Employees by Region (Consolidated)(Unit: Billions of yen)Southeast Asia, and Others

121.6(5.5%)

Number of Sites (As of April 1, 2023)■ Head Of f ice ■ Branch, Of f ice (including Field Service), Sales Of f ice(Unit: People)

China

Europe

Japan

527.4

711

9,325

(23.9%)(4.1 %)

Europe

184.2

2,321
(13.5%)(8.3%)TEL Magnetic Solutions
Tokyo Electron Europe

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

TEL Solar Services

2,209.0

Japan
TEL Manufacturing and Engineeringof America
Tokyo Electron Korea
TEL Technology Center,
AmericaTokyo Electron India
Tokyo Electron Taiwan

239.9

billion yen(10.9%)(Fiscal 2023)

17,204

432.6(Fiscal 2023)

peopleSouth Korea

Asia

358.7

(15.6%)

Tokyo Electron U.S. Holdings
Tokyo Electron America

Taiwan(19.6%)

North America

344.3

TEL Venture CapitalTokyo Electron Israel(54.2%)

North America

4,847(1 6.2%)(28.2%)

Tokyo Electron (Malaysia)
Tokyo Electron Singapore* Fractions smaller than 100 million yen are truncated.

Tokyo Electron
Technology Solutions
Tokyo Electron Miyagi

Japan:

6 companies at 27 sites
20 companies at 56 sites in 17 countries and regions

Semiconductor Manufacturing Process and Our Main ProductsTokyo Electron (World Headquarters)

Overseas:

Tokyo Electron FE
Tokyo Electron BP

Worldwide total:

26 companies* at 83 sites in 18 countries and regions (consolidated)Tokyo Electron Kyushu■ Wafer Process (Front-end) ■ Assembly and Test Process (Back-end)

Lithography

Deposition

Cleaning

Etching(Photoresist coating, Development)* Group companies in the process of being wound up are not shown on the map.

History

1960sTransition of TypicalApplications of
Semiconductors

1980sMainframe
ComputerSingle Chip
Microprocessor

Founded as technical specialized
trading company

1963

1978

Tokyo Electron
Laboratories, Inc.
renamed Tokyo
Electron Ltd.

Shifting to a fullscale manufacturer

1980

Listed on the Second
Section of the Tokyo
Stock ExchangeTokyo 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 of diffusion
furnaces

7

TOKYO ELECTRON Integrated Report 2023

Listed on the First
Section of the Tokyo
Stock Exchange

Accelerating
globalization

1990s

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

Export ofsemiconductor
production equipment
begins2006“TEL Values” formulated as code of
conduct

Established “TEL UNIVERSITY” tostrengthen human resource
development

1999

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

Establishment of Tokyo Electron
Corporate Governance Guidelines
Re-emergence as the New TEL(Vision, Medium-term Management
Plan formulated and new Corporate
Logo created)

2019

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

Coater/Developer
CLEAN TRACK ™
LITHIUS Pro ™ Z

Plasma Etch
Tactras™

Plasma Etch
Episode ™ ULSingle Wafer
Cleaning
CELLESTA™-

Photoresist

Photoresist coating

Exposure

Development

Etching

Completed
Transistor
BeforeWiringAshing/Cleaning

Isolation Formation/Gate Formation

Began publishingintegrated
reports

Gate Electrode

TOKYO ELECTRONINTEGRATEDREPORT 2021

Interconnect
formation

Cover Image“Digital × Green”

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.

™

Silicon nitride f ilm

2021

PR59-313

Testing

Examples ofsemiconductor
product
applications

Packaging/Inspection

2022

Listed on thePrime Marketof the Tokyo
Stock
Exchange

2015

NT333

Wafer
Repetition Oxide/Nitride f ilm deposition

2007

Tokyo Electron (TEL)
marks a major moveinto development andmarketing of FPD
production equipment
Started direct sales
and support systems
overseas

Silicon dioxide f ilm

Big Data

Aspiration toward innovationand new growth

1990

1994

1986

Mobile Phone* Atomic Layer Deposition

Tokyo Electron Ltd.

1984
1964

Personal
Computer

2020sDigital
ConsumerElectronics

ALD*

TOKYO ELECTRON INTEGRATED REPORT 2021

Tokyo Electron
Laboratories, Inc. isestablished withcapital from Tokyo
Broadcasting System,
Inc.

2000s-

ThermalSingle Wafer
Processing
Deposition
TELINDY PLUS™ Trias ⁺™

Formulated the new Vision
and Medium-termManagement Plan
“Technology Enabling Life”
formulated as corporate
message

Photo,
Movie input

Single Wafer
Deposition
Trias ⁺™

Metal
f ilm

Intermetal
dielectric f ilm

Plasma Etch
Tactras™ /Episode ™ UL

Wafer ProberPrexa™ /Cellcia™

Contact
Formation

Wafer/Dicing
Frame Prober
WDF ™ 12DP+

Completed
Semiconductor
Packaging

Inspection

Packaging/Assembly

WorkingmemoryMetal f ilm

2023

60th anniversary of thefoundation

Wafer Bonder/Debonder
Synapse ™ V/
Synapse ™ Z PlusInterconnect
Formation

Wafer Probe
Testing

Completed
Integrated
Circuit

Wafer Bonding/Debonding

Data
processing
Storage memory

TOKYO ELECTRON Integrated Report 2023

8

Chapter 1
About Tokyo Electron

Highlights of Key Indicators forContinuous Corporate Value Enhancement
At Tokyo Electron, policy decisions and various judgments are made for 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)
Gross prof it margin (%)

41.2
1,278.2

40.1

Operating Income and Operating Margin
2,003.8

40.4
1,399.1

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

2,209.0

45.5

599.2

44.6
24.3

1,127.2

21.0

29.9

22.9

R&D Expenses(Billions of yen)

Patents Owned4(Patents)

191.1

617.7

158.2

28.0

113.9

120.2

2019.32020.3136.6

17,473

18,137

18,692

19,572

2019.32020.32021.32022.321,645

320.6

310.5
237.2

2019.32020.32021.32023.32022.32019.3Due to the expansion of the semiconductor production equipment market, weachieved record-breaking net sales. However, the gross profit margin decreased
compared to the previous year due to the soaring cost of components and inflation.

2020.32021.32022.32023.3

By reliably meeting the growing demand for semiconductor production equipment,
our net sales increased, and we achieved record-breaking operating income.
However, the operating margin decreased compared to the previous year due tofactors such as increased R&D expenses for growth.

2021.32022.32023.3

To continuously create high value-added next-generation products, we made an
R&D investment of 191.1 billion yen in fiscal 2023. We plan to invest over 1 trillion yen
over the five years until fiscal 2027.

2023.3No.1 in the semiconductor production equipment industry with 21,645 patents
owned as of March 31, 2023. We built a competitive intellectual property portfolio
in terms of both quantity and quality, maintaining a competitive advantage in theintellectual property field on a global level.
4	The figures for fiscal 2019 to 2022 are based on our database, and the figure for fiscal 2023 isbased on LexisNexis®PatentSight® database.

Net Income Attributable to Owners of Parent and ROE1
Net income attributable to owners of parent (Billions of yen)
ROE (%)
437.0

30.1
248.2

26.5
21.8

37.2

Free Cash Flow2(Billions of yen)

471.5

349.4

Percentage of Respondents Who Selected “Very Satisfied” or“Satisfied” in the Customer Satisfaction Survey5
(%)
100.0
100.0
96.7
84.4

32.3

93.3

0.27

217.7

199.5

242.9

Workplace Incidents per 200,000 Work Hours (TCIR6)

0.20

0.30

0.33

0.23

149.5

185.2

82.6

2019.32020.32021.32022.32023.32019.3

With the increase in operating income, net income attributable to owners of parent
also reached a record high. We maintained an ROE of over 30%, one of our Mediumterm Management Plan goals.
1	ROE = Net income attributable to owners of parent/Average total equity × 100

Net Income per Share3(Yen)

935.952020.32021.32022.32023.32019.3

Free cash flow increased from the previous fiscal year due to an increase in net sales,
despite the increase in procurement volume and inventory to respond quickly tomarket growth2020.32021.32022.32023.3The percentage of respondents who gave evaluations of “Very Satisfied” or “Satisfied”
reached 100% in fiscal 2023 continuing from the previous year. Striving to further
improve customer satisfaction, a key theme since our founding, we aim to be thesole strategic partner for our customers.

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

5	For each question, average score is calculated for all customers who responded.

Cash Dividends per Share3

Installation of Renewable Energy at Plants and Offices

(Yen)

570

1,007.82

2019.32020.32021.32022.32023.3In fiscal 2023, we maintained an industry-leading position among semiconductor
production equipment manufacturers with 0.33. With “Safety First” as our slogan,
we are committed to promoting thorough safety awareness and continuous
improvement activities towards achieving our Medium-term Management Plan goals.
6	TCIR: Total Case Incident Rate

(%)

91

Employee Retention Rates7 (Japan)

(%)

98.6

99.0

99.0

99.0

98.9

2019.32020.32021.32022.32023.3467
60

504.532019.3520.73252

390.192020.32021.32022.32023.3

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

2019.3

TOKYO ELECTRON Integrated Report 2023

2020.32021.32022.32023.3

Based on our shareholder return policy, 50% of the net income attributable toowners of parent was distributed as dividends. Including our 60th commemorative
dividend, cash dividends per share reached a record high.

3	A 3-for-1 stock split was conducted on April 1, 2023.
We calculated the “net income per share” and “cash dividends per share” assuming this stock split was implemented from fiscal 2019.

9

260
196

2

2

2

2019.32020.32021.32022.32023.3As of fiscal 2023, we completed 91% of global installation (100% for Japan). Due inpart to energy-saving activities, we reduced total CO2 emissions from our plants andoffices by 76% compared to fiscal 2019, achieving the goal of a 70% reduction by
fiscal 2031 ahead of schedule.

Recognizing that our employees both create and fulfill company values, ourcontinuous efforts to further improve employee engagement allowed us to maintaina high retention rate of 98.9% in fiscal 2023.
7	Calculated using data on turnover rate

TOKYO ELECTRON Integrated Report 2023

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