Interim Financial Briefing for
the Fiscal Year Ending
March 31, 2021
October 27, 2020

Copyright © Tokyo Electron Device LTD. All Rights Reserved.

AgendaFinancial Report
Vice President Jun Ninomiya

Forecast for the Fiscal Year Ending March 31, 2021
and Medium-Term Management Plan VISION 2025
President & Representative Director Atsushi Tokushige
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1

Financial Report

Vice President Jun Ninomiya

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LTD. All
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2

Summary of Interim Financial Results for the
Fiscal Year Ending March 31, 2021

Sales were down and income was up compared toforecasts for the first half of the fiscal year
Net sales
Ordinary income
Net income attributable toowners of parent (2Q)

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3

4.8％ decrease
14.7％ increase
17.6% increaseSummary of Financial Results: Comparison with
Prior YearFY2020Interim

FY2021
InterimChange(Million yen)

FY2021
1st Half Forecast

65,213

61,901▲3,311

Cost of sales

55,824

53,126▲2,698Gross profit

9,389

8,775

▲613

Selling, general &administrative expenses

8,021

7,653

▲368

Operating income

1,367

1,122

▲244

Non-operating income
Non-operating expenses

90
117

187
48

96
▲69

Ordinary income

1,340

1,261

▲78

1,100

Interim net income

864

823

▲41

700

No. of employees

1,229

1,250

21

Net sales

65,000* Interim net income is net income attributable to owners of parent for 2Q
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4

Summary of Financial Results: Change in Net
Sales
FY2020Interim net sales

EC Business(Distribution)

EC Business(PB Business)

CN Business▲¥1.4 bill.

▲¥1.4 bill.

▲¥500 mill.

¥65.2
billionFY2021
Interim net sales¥61.9
billion* Amounts of change
are rounded off

In the segment categories, the PB Business is included in the EC Business.
PB Business is an abbreviation of “Private Brand Business;” the title was changed from In-House Brand Business, which
was used in the past.
The PB Business includes Tokyo Electron Device Nagasaki Limited (TED Nagasaki) and FAST CORPORATION (FAST).
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5

Sales and Income by Segment••

EC Business: Sales and income were down due to impact from COVID-19 even thoughcancellation of agency agreement is covered by expansion in new customer trade
rightsCN Business: Sales were down due to cancellation of agency agreement but income
was up due to growth of other businesses(Million yen)
FY2020 Interim

FY2021 Interim

Net Sales

Segment
IncomeNet Sales

ChangeSegment
IncomeChangeElectronic Components(EC) Business

54,282444

51,475▲2,806

221▲223

Computer Networks(CN) Business

10,930895

10,426

▲504

1,040

145

Total

65,213

1,340

61,901▲3,311

1,261▲78* Segment income is ordinary income.
* In the segment categories, the PB Business is included in the EC Business.
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Segment Information: EC Business
Sales Component Ratios by Product Category•••

General purpose ICs: Sales were up in industrial equipment and down in automotive
equipment
Micro processors: Sales were up in industrial equipment and communications base stations
Optical components: Sales were down in industrial equipment and automotive equipment
due to cancellation of agency agreement
Memory ICs

General purpose ICs

Micro processors

Specialized ICs

FY2020interim

27％

19%

12%

FY2021interim29％

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Custom ICs
Opticalcomponents
Software, circuit boards

3 10％ 4％％

10% 5％ 4 2

25%

％％

7

25％

25％

Segment Information: EC Business
Sales Component Ratios by Application••

Industrial equipment: Sales were up due to expansion of trade rights even though
there was impact from cancellation of agency agreement
Automotive equipment and computers and peripherals: Sales were down due toimpact from COVID-19

FY2020interimIndustrial equipment

Automotive equipment

43%

24%

FY2021interimCopyright © Tokyo Electron Device LTD. All Rights Reserved.

51%

18%

8

Communications
equipment
Consumer
appliances andelectronics
Computers and peripherals

6 4

23%

18%

％ ％

7

％

6

％

Consolidated Overseas Subsidiaries: Net Sales̶
EC Business•

Automotive equipment and computers and peripherals: Sales were sluggish

FY2020Interim

FY2021
Interim

Consolidated overseas
subsidiaries net sales(million yen)

14,406

13,123

Consolidated overseas
subsidiaries sales ratio

26.5%

25.5%

Consolidated overseas
subsidiaries ($1M)

132

122

Exchange rate (yen)108.60106.93Copyright © Tokyo Electron Device LTD. All Rights Reserved.

9

ChangeRate of
Change▲1,283

▲8.9%

▲9

▲7.5%

PB Business: Net Sales̶EC Business•••inrevium: Sales were sluggish in contracted design and mass production services
due to impact from COVID-19
TED Nagasaki: Sales for semiconductor manufacturing equipment remained firm
FAST: Sales were sluggish due to impact from COVID-19(Million yen)

FY2020Interim

FY2021
Interim

PB business net
sales

5,346

3,904

Net sales ratio

9.9%

7.6%

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ChangeRate of
Change▲1,441▲27.0%

Segment Information: CN Business
Sales Component Ratios by Product Category••

Network-related products: Sales for communications carriers and data centers were firm
Storage-related products: Sales were down due to cancellation of agency agreement

Network-Related Products

Storage-Related Products

FY2020interim51%

39%

FY2021interim54%

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34%

11

Software, etc.

10%

12%

Segment Information: CN Business
Sales Component Ratios by Sales Format••

Sales to system integrators were down due to cancellation of agency agreement
Maintenance services were strong

Sales to end-users

Sales to system integrators

Services

FY2020interim

28%

41%

31%

FY2021interim31%

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31%

12

38%

Balance Sheet
Assets••

Notes and accounts receivable decreased asa result of lower net sales
Inventories increased due to expansion of
trade rights

76,53981,0645,220

4,492
34,743•

Interest-bearing liabilities increased as aresult of the increase in inventories

81,064(Million yen)

9,254

Notes and accounts
payable22,534

Interest-bearing
liabilities

20,08821,812Other liabilities

27,141

27,463

Net assets

2020.3.31

2020.9.30

76,539(Million yen)
Cash & deposits

9,982
31,195

Notes and accounts
receivable

19,32728,445Inventories

7,171
7,870

8,396
7,806

Other current assets

2020.3.31

2020.9.30

22,2610Liabilities & Net Assets

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Non-current assets

130Statement of Cash Flows(Million yen)2020.3.31
Balance of
CashOperating
C/F▲1,794

Investment
C/F
▲290

2020.9.30
Balanceof Cash

4,939

4,218

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Exchange
Financial differences,
C/F
etc.
2,818
▲11

14

Changes in Orders Received••

EC Business: Expect improvement after bottoming in 1Q FY2021 with contributions
from expansion of trade rights from 2Q
CN Business: Trend of firm orders with large orders for research agencies in 2Q
EC Bus.
(Million yen)

39,754
31,275
4,591

26,6830

1Q
FY201934,070

7,424

4,716

38,05331,4786,186

29,354

2Q

33,290

8,265

4,932

6,841

8,436

29,282

7,668

5,059

32,3303Q

32,63637,03036,19325,291

26,44827,704

4Q

1Q
FY20202Q

29,7883Q

27,756

4Q

24,223

1Q
FY2021

29,362

2Q

FAST is included in orders received starting with the 2nd quarter of FY2019
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15

Forecast for the Fiscal Year Ending
March 31, 2021 and Medium-Term
Management Plan VISION 2025
President & Representative Director
Atsushi Tokushige
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16

Forecast for the Fiscal YearEnding March 31, 2021

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Assumptions of Business Forecast for 2nd Half of
the Fiscal Year Ending March 31, 2021
Companywide

 Although the spread of COVID-19 infections has yet to peak,economic activities are gradually going back to normal
 It is necessary to continue paying attention to the relationshipbetween the United States and China

EC Business Automotive and industrial equipment markets will be on arecovery track Sales will be sluggish for computers and peripherals
 There will be growth in cloud business Completed capturing new customer trade rights which willcontribute to sales in second half

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Assumptions of Business Forecast for 2nd Half of
the Fiscal Year Ending March 31, 2021
PB Business Contracted design and mass production services for medical
equipment will be sluggish
 Sales for semiconductor manufacturing equipment will be firm
 Sales related to image processing will be sluggish while flat panel
display inspection business will recover

CN Business  Increase in data communications volumes will result in trend of
expansion in IT investments

 Security products will grow due to expansion of teleworking
 Business with public educational institutions will enter atransitional period and sales for research agencies will grow Operational and maintenance services will expand

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Forecast of Financial Results for the Fiscal YearEnding March 31, 2021
• Full year forecast has been kept unchanged
FY2020(Million yen)

FY2021YoY Change

Full Year

1st Half
Actual

2nd Half
Forecast

Full Year
Forecast

Net sales

135,394

61,901

76,098138,000

2,605

1.9%

EC Business

110,138

51,47563,224

114,700

4,561

4.1%

CN Business

25,255

10,426

12,87323,300▲1,955▲7.7%

Ordinary income(income ratio)

3,573

1,261

2,838

526

14.7%

823

1,876

411

18.0%

Net income(income ratio)(2.6%)

2,288(1.7%)

4,100(3.0%)

2,700(2.0%)

ChangeRate of
Change* Net income is net income attributable to owners of parent
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Forecast of Financial Results: Changes in Net
Sales
FY2021Net Sales
Apr 28 Forecast

EC Business(Distribution)

EC Business(PB Business)

CN Business＋¥1.0 bill.

▲¥1.9 bill.

＋¥900 mill.

¥138.0 bill.

FY2021Net Sales
Oct 26 Forecast¥138.0 bill.

* Amounts of change are rounded off

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21

Measures for the Fiscal Year Ending March 31,
2021: EC Business
Net Sales

Measures for 2nd Half
(Million yen)

119,660
60,006110,138 114,700

 Promote design activities by new
customers (automotive & industrial
equipment) Pursue highly efficient operations

55,85563,224 2nd Half Promote cloud (fee-based) business
59,6530

FY201954,28251,475 1st Half

FY2020

FY2021(plan)

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 Develop own products using
products being handled

22

Measures for the Fiscal Year Ending March 31,
2021: EC Business
Promotion of Cloud (Fee Based) Business
Microsoft Azure

Customers

 Public cloud supporting acceleration ofdigitalization

No. of sales partners(companies)440

 Stock-based business170

 Cloud distributor of CSP program
Expansion of sales partners
Sales expansion support for business of sales
partners and customers0

2016/ 2017/ 2017/ 2018/ 2018/ 2019/ 2019/ 2020/ 2020/
Oct
Apr
Oct
Apr
Oct
Apr
Oct
Apr
Oct

Net sales increased 172% YoY

Secure high profitability andachieve continuous growth
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23* Cloud Solution Provider (CSP) program
Microsoftʼs format for selling Azure throughpartners

Measures for the Fiscal Year Ending March 31,
2021: PB Business (EC Business)
Net Sales

Measures for 2nd Half
(Million yen) inrevium (TED)
Reinforce contracted design and mass
production services for the healthcare andpharmaceutical fields

10,211
5,890
4,321

4,321

10,972
5,626

Promote sales of private brand products

10,104 TED Nagasaki
Expand business for semiconductor
manufacturing equipment

6,200 2nd Half

5,346

Promote sales of computer telephony products
5,346

3,904 1st Half FAST
Expand business for flat panel display inspection
systems

0
FY2019FY2020

FY2021(plan)

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Promote development of vision robots
24

Measures for the Fiscal Year Ending March 31,
2021: PB Business (EC Business)
Focus Products of PB Business
TED Nagasaki: Computer telephonyproducts

FAST: Flat panel display inspection
systems

CTBX-724

FV-pixellence Equipment for building systems integrating
telephone/fax with computers Equipment for automatic lighting inspection offlat panel displays

 Respond to demand for system renewal including
analog communications

 Improve categorization accuracy by combining
image processing and AI technologies

 Implementation through personnel safety
confirmation systems, systems for receiving
orders through fax, etc.

 Contribute to reducing manhours for visualinspection by humans

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25

Measures for the Fiscal Year Ending March 31,
2021: CN Business
Net Sales

Measures for 2nd Half
(Million yen)

25,255
21,34014,325
12,229

9,111

10,93023,300

FY2020 Expand technical service businessand maintenance business

12,873 2nd Half

10,4260
FY2019

 Reinforce sales for end-users

FY2021(plan)

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1st Half Promote sales of security products Reinforce marketing of AI products
 Expand business for research
agencies
26

Measures for the Fiscal Year Ending March 31,
2021: CN Business
Reinforce Sales for End-Users
Increase in data
communications
volumes Spread of teleworking

Expansion of investments in data
centers and communications
infrastructure
Network products Increase in
consumption by
those staying at
home

Operational &maintenanceservices Expansion of 5G
services
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All-flash storage

27

Measures for the Fiscal Year Ending March 31,
2021: CN Business
Promote Sales of Security Products
Acceleration in implementation
due to impact of COVID-19

Urgent need for security
countermeasures
Cloud security

 Corporate use of cloudservices Intranet access throughvirtual environments

Endpoint security

 Reinforcement of endpoint
security

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28

SOC services

Dividends Per ShareFY2020

FY2021

Interim¥40¥40

Year-End¥50¥68 (planned)(yen)

Dividend Payout Ratio

93
60
62.0
0

FY2017108 (planned)

90

66
40
41.7
FY2018

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40.3

40.1

40.1 (%)

FY2019FY2020

FY202129

 Target of 40% consolidated
payout ratio Payout of stable andcontinuous dividends
0.0%Medium-Term Management Plan
VISION 2025

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30

VISION2020 Medium-Term Management Plan
Numerical targets for the fiscal year ending March 31, 2021
Net sales: ¥200 bill.; Ordinary income ratio: At least 3.5%; ROE: 15%
Net sales (¥100 mill.)
Ordinary income ratio

9.5%

ROE

3.2%

6.8%
4.2%

4.3%
1,598

1,116

1.2%

8.8%

10.0%

1,178

1.4%

1,318

1.0%

1.7%

1,410

2.2%

1,353

1,380

2.6%

3.0%

0

0.0%
FY2015FY2016FY2017FY2018FY2019FY2020

FY2021(planned)* ROE for FY2021 is an estimated value based on forecast results
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31

BUSINESS ENVIRONMENT

Society 5.0 to Arrive
Amid Slow Economic Growth

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32

Digital Transformation Technologies Needed byHighly Efficient Smart Society
AI

Storage networks

Self-driving systems

Acceleration in development of AI andservices using AI

Efficient management and use of data

Improved safety and efficient traffic

Collaborative robot
systems

Measurement systems

Next-generation
manufacturing systems

Securing of labor and better productivity

Automation and better quality

Increase facility utilization and small-lot
production of diverse products

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33

OUR MISSIONDRIVING
DIGITAL
TRANSFORMATION
Providing products and services
that can achieve digitaltransformation,
thus contributing to the sustainable
development of a highly efficient
smart society

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34

OUR VISION

To become a manufacturer with technology
trading company functions
Evolving technology
trading company functions

The kind of manufacturer
we want to be Business model that will generate
profits from data, service, andstock businesses Manufacturing systemmanufacturer
 Original design manufacturer(ODM)

 Maintaining and expanding ofcustomer base that contributes
toward growth of business as amanufacturer

 Design development division
based on providing solutions to
issues Highly efficient smart factories

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Our Vision
Evolving Technical Trading Firm Function

Shift to data business, service business, and stockbusiness
 Ultra-high-speed deep learning system

 Provision of consulting for building systems andmaintenance services
 Plan to provide deep learning resources as feebased service

Cerebras Systemsʼ CS-1
Launched in December 2019
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WSE, a 21.5 cm squarelarge semiconductor
36

Our Vision
Vision as a Manufacturer
A manufacturing system manufacturer that fully utilizes data science,
image processing and robotics in manufacturing goods
Unique vision
recognition
processing

Scan object
with irregularshape

Robot control

Macro inspection system RAYSENS

3D vision robot system TriMath

Launched in October 2019

Launched in June 2020
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37

Our Vision
Vision as a Manufacturer
A healthcare and pharmaceutical original design manufacturer(ODM) based on skills acquired through design and mass production
serviceSpecimen testing equipment (product image)TED Nagasaki* ODM: Original Design Manufacturing
Designs and produces products under clientʼs brandCopyright © Tokyo Electron Device LTD. All Rights Reserved.

38

Financial Model
Pursuing Sustainable Growth with
Profit Growth Outpacing Revenue GrowthFiscal 2025

¥200.0 billion ±10%
＞5 ％
＞15 %

 Net sales
 Ordinary income ratio ROE

Percentage of
total sales

Ordinary income ratio

EC Business

70 %

＞ 2%

PB Business

10 %

＞10 %

CN Business

20 %

＞13 %

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39

Impact of COVID-19

Countermeasures needed by a withCOVID-19 and post-COVID-19 society
Automated

RemoteNoncontact

Same as the requirements for Society 5.0
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40

Cautionary Notes Regarding this Document
The forward-looking projections in this document were developed based on
information available at this time. Please note that the Companyʼs actual future
results may differ from those indicated in this document due to various factors thathave direct and indirect impacts on the Companyʼs results.
If any material changes are made, the Company will announce them at that time.
The company names, product names, service names, and logos used in thisdocument are the trademarks or registered trademarks of their respective holders.
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41

Supplementary Materials

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DeviceDevice
LTD. All
RightsReserved.
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All Rights
Reserved.

42

EC Business: Sales Component Ratios by ProductCategory
Custom ICs
Memory ICs
General purpose ICs

FY2020interim27%

FY2021interim29%

Product

Micro Processors Specialized ICs

19%

Rate of
Change12%25%2.2% automotive decreased

Micro processors

22.9% automotive increased

Memory ICs

Industrial equipment increased;

25%

5% 4%2%25%

Main Suppliers
TI, NXP

Industrial equipment, base stations, and

NXP, TI, Intel, Cypress (including
Spansion)PC, projectors, MFP, and consumer

TI, NXP, Pixelworks, Excelitas,
Cypress, inrevium▲25.7% appliances and electronics decreased
29.0% Automotive increased
Cancellation of agency agreement;
industrial equipment and automotive
decreased

Opticalcomponents▲56.8%

Custom ICs▲32.2% Industrial equipment decreased

Software andcircuit boards▲5.4% business increased

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4%

3% 10%
10%

Software and circuit boards

Main Causes

General purpose
ICs

Specialized ICs

Opticalcomponents

POS decreased; FAST decreased; cloud43

Cypress (including Spansion)
Broadcom (Avago Technologies)
Lattice, Socionext, inrevium
Microsoft, Western Digital, PFU,Intel, inrevium

EC Business: Sales Composition Ratios by ApplicationCommunications Devices
Industrial Equipment

Automotive Equipment

43%

24%

FY2020interim
FY2021interim
Application
Industrial
equipment

51%
Rate of
Change12.1%

6%

TED Trends

Car navigation systems, car audio equipment, auto
body-related products

Decrease in specialized ICs, general purpose
ICs, and optical components; increase in
micro processors and memory ICs due toexpansion of trade rights

Computers andperipherals▲26.1% equipment, storage, PCs and peripheral devices,

Communications
Devices7%

Increase in general purpose ICs and microprocessors due to expansion of trade rights;
decrease in optical components due tocancellation of agency agreement▲27.9%

Multifunctional printers, projectors, office

11.6%

18%

6% 4%

Medical equipment, broadcasting equipment,
surveillance cameras, FA equipment, measuring
equipment, industrial robots, machine tools,
semiconductor production equipment inverters

Automotive
equipment

Consumer
Devices23%

18%
Main Uses

Computers and Consumer
Peripheral Devices Devices

POS terminals
Digital cameras, digital video cameras,
TVs/DVD/AV equipment, home gaming consoles,
remote controls, major home appliances
Smart phones, routers, transmission equipment,

34.7% base stations

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44

Decrease in specialized ICs due to decreasein PCs and storage; decrease in software
due to decrease in POS
Increase in general purpose ICs for gaming
devices
Increase in micro processors forcommunications base stations

CN Business: Sales Composition Ratios by Product Type
Network-Related Products

Storage-Related Products

FY2020interim

Software,
other

51%

39%

10%

FY2021interim

54%

34%

12%

Product

Rate of
ChangeMain Causes

Network-Related
Products

Network equipment for communications
1.8% carriers and data centers were firm
Maintenance services were strong

Storage-Related
Products

SAN switches for system integrators
decreased due to cancellation of agency▲17.8%
agreement
Flash storage for data centers increased

Software, other

14.8% Security products increased

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45

Main Suppliers
Arista Networks
Extreme Networks
F5 Networks
Pure Storage
Broadcom
DELL EMC

Nutanix
Netskope

Product Categories
Category
General purpose ICs
Micro processors
Specialized ICs

EC
Business

Memory ICs
Optical components
Custom ICs
Software and circuitboardsCN
Business

Main Products

Functions

Analog ICs, logic ICs

ICs used in common in various applications

CPUs, DSPs

Brains of electronic devices, calculation and control
functions

Image processing ICs
Communications and network
ICs
SRAM, FRAM, MRAM
Flash memory

Specialized ICs made for specific applications
Memory ICs for specific ICs. Readable/writable ICs
and read-only ICs are available

LEDs, photo couplers

Electronic components used to convert electricity
into light

ASIC, PLD

Made according to customer specs

Software, boards,
Power supplies, connectors

Software embedded in industrial equipment forenterprises and products (circuit boards) equippedwith ICs, power supplies, connectors and othercomponents on printed-wiring assembles

Network-related
products

Network load distribution devices
Security related devices

Storage-related
products

SAN switches
Flash storage

Connect to and store large volumes of data at highspeed

Software, etc.

Virtualization platforms

Database management, cloud environment
management

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46

Distribute Internet connection loads, bolster
network security