Message from the Chairman

Dedicated to Further Innovations

Tetsuro Higashi
Chairman of the Board

Thanks to the support of our stakeholders, we are preparing tocelebrate the 40th anniversary of Tokyo Electron (TEL)’s founding. Over the past 40 years, TEL has changed and grown alongwith the development of the electronics industry. Particularlyin the latter part of the 1990s, our business expanded rapidly
with globalization proceeding at a blazing pace driven by theso-called information technology (IT) revolution. By the time it
hit its peak in 2000, the electronics market had grown to a substantial size.

Based on this view, TEL has committed itself to the following
two actions and intends to push forward with them aggressively.

Amid the emergence of new business models such as thefoundry business and the massive globalization trend, TEL has
achieved an extremely high growth rate while also developing
an infrastructure of networks and human resources to support
its expansion drive in global markets. It is also fair to say that,were it not for this rapid development of globalization, wewould not have developed our current broad business scopeand high competitiveness.

• For real success, the new generation of TEL employees willbuild our future by carrying out the above actions by crystallizing and redirecting their energy, under new top managementwith the intention to create a new company. TEL has a tradition that all employees accept generation change and work
together to accomplish new goals. We will rely on this corporate culture to move us into the next phase of our business.

Structural Reforms for Further Innovation
Surging market growth as well as overestimated demand forecasts and expectations all led to the IT bubble burst and thecurrent period of adjustment. Even in light of this, there has
been no change in our conviction that the electronics industry
and its core component, the semiconductor industry, will continue to advance in the medium- to long-term and still has
high growth potential. However, looking at demand for digitalconsumer products, which are expected to replace personal
computers (PCs) as the drivers of growth in semiconductor
applications, it is difficult to see how they will be able to cover
the drop in demand caused by the slump in the PC and communications devices market in the short term. Consequently,
we view strategies premised on the continuation of the highgrowth rates of the past as being risky at this time.

2Annual Report 2003 — Innovations Ahead• Discarding non-performing assets at the end of the fiscal
year ended March 31, 2003 and undertaking substantial
structural reform in this fiscal year, we are building quick andefficient but strong operations in all aspects of our business—research and development (R&D), manufacturing,sales, and service.

Following the general shareholders’ meeting in June, Mr.
Kiyoshi Sato assumes the position of President &CEO. He is anexcellent choice to be our new leader. He brings extensive
experience in Japan and overseas as well as energetic vigor tobear on our restructuring process and on our pursuit of maximum corporate value. As Chairman of the Board and representative director, I will be focusing my energies ondetermining basic business polices, the creation of mediumto long-term business strategies and supporting the new executive officers through activities of customer, industry andinvestor relations. Through these activities, I intend to pressforward with the further development of TEL and achieving
greater shareholder satisfaction. In this new role, I look forward to your continued support.
I will leave to Mr. Sato the reporting of TEL’s performance inthe past fiscal year, its perspectives for the current fiscal year,
and a summary of the reforms being undertaken.