40Net sales (¥ Billions)
800

Years of Innovations. . .

700

Phase Four:
Globalization

The history of Tokyo Electron has been the history of the development of the electronics industry.
But through all the variations in its business environment, TEL has always pursued a different path thanothers. Flexibly adapting its business concepts, the Company has led the way in the semiconductor
industry through technological innovation.

600
500

Phase Three:
Manufacturer of Original Products,
Strengthened R&D Capabilities

Phase Two:

400

Import Trading Company with
Manufacturing Capabilities

300

Phase One:
200

Foundation, Specialized Trading
Company with Technical Services

10006364656667686970717273– 1963 71
TEL was established during the dawn of
the semiconductor industry, which mainly
resided in the United States, the center ofsemiconductor technology at that time.
The Company started operations focusedon a new business concept of supplying
Japanese customers with after sales technology services for the electronics products it marketed. In the beginning, inaddition to the import of leading-edge
technology products, such as IC testers,
diffusion furnaces, and electronic components, TEL also exported domesticallymanufactured VCRs, automobile radios,
calculators, and other electronics products. Positioned as a specialty trading
company with technological capabilities,
the Company proceeded to build a business foundation based on achieving ahigh degree of customer satisfaction
through quick and thorough technological services.

Pictures: Founders: Mr. Kubo and Mr. Kodaka, IC tester, Electric Calculators

6Annual Report 2003 — Innovations Ahead

7576

77

78

79

80

81

External Environment:
Mainframe computers are the main
consumer for ICs, but consumer productapplications are expanding.

External Environment:
Initial development stage ofthe semiconductor and IC market

197419– 1972 81
Although the main application for ICs wasmainframe computers, applications weresteadily expanding for such products ashome appliances, calculators, and officeequipment. In response to the diversification of specifications for semiconductor
production equipment, TEL successively
proceeded to develop and manufacture
equipment domestically. The Company’s
import business for electronic components, CAD/CAE systems, board test systems and other products were also
prospering. On the other hand, TEL exited from the calculator and automobile
radio markets, where excessive competition was driving down profitability. During
this period, the Company established aunique position for itself in the market as
an import trading company with manufacturing capabilities.

Pictures: High-pressure oxidation system: UHO-2506, Wafer proberproduction line, Computer peripheral

82

83

84

85

86

87

88

89

90

91

92

93

94

95

External Environment:Applications expand to offices—PCs, workstations, and others.

19– 1981 91
During this phase, Japan’s semiconductor
manufacturers began to emerge as market leaders through their production ofDRAMs. Process technology of semiconductor production had become complicated. TEL expanded its product line upof semiconductor production equipment
by forming joint ventures with leading
overseas equipment manufacturers. As
the technological requirements of semiconductor manufacturers became increasingly sophisticated, the Company
established its own R&D facilities, beginning to collaborate with customers in
product development, pursuing higher
value-added content in its own products.
By further reinforcing its manufacturing
and support services functions, TEL set
the stage for the development of thesemiconductor production equipment
business that forms the core of its current
business portfolio.

Pictures: Central Research Laboratory, Coater/Developer: Clean Track Mark II,Etching System: TE-480969798

9900

0102

External Environment:Applications increase along withthe spread of the Internet.

19– 2092 02
The semiconductor industry entered arapid growth stage as IC applications
shifted to PCs, mobile phones, and otherproducts for the consumer market. Logicchips instead of memory chips became
the main technological driver in theindustry. The foundry business in Taiwan
and semiconductor production in Korea
and the United States expanded sharply.
During this period, TEL made strategic
decision to establish bases around theworld to enable the Company sell directly
to local customers and provide support
services. In Japan, the Company built theadvanced Process Technology Center,seeking to strengthen its overall processdevelopment capabilities. At this point,
TEL had established a dominant positionin the global market as a leading manufacturer of semiconductor production
equipment.

Pictures: Tokyo Electron America (Austin Texas), Opening Ceremony forTokyo Electron America, Inc., New Process Technology CenterTokyo Electron 7