Q3 FY2023 (October 1, 2022 – December 31, 2022)
Financial Announcement – February 9, 2023
Transcript

Moderator: Opening remarks
Now it's time for us to start the Tokyo Electron Financial Announcement for the Third Quarter of the Fiscal
Year Ending on March 31, 2023. Thank you very much for joining us today despite your busy schedule. I
am Koichi Yatsuda of the IR Department, acting as the moderator for today's session.
I would like to introduce today's attendees. Mr. Toshiki Kawai, Representative Director, President & CEO.
(I’m Tony Kawai, nice to meet you everybody.) Next, Mr. Hiroshi Kawamoto, Vice President & GeneralManager, Finance Unit. (I’m Hiroshi Kawamoto. Thank you very much for joining us.)Prior to the presentations, let me explain the flow of today's conference. First of all, Mr. Kawamoto andMr. Kawai will make presentations. After that, until 6:30 p.m. Japan Time, we will take questions from theaudience. This meeting will use two channels on Webex for simultaneous interpretation between
Japanese and English. As we explained in our email, you are kindly requested to use apps, PCs or mobileterminals if you plan to ask questions. But if you are not going to ask questions, you can use telephones.
In addition, since this conference is intended for institutional investors and analysts, we would appreciate
your understanding that we receive questions only from institutional investors and analysts.
We will post the audio contents of this conference in Japanese and English on our website within a coupleof days, so it would be appreciated if you could also visit our website.
Now, Mr. Kawamoto, Vice President and General Manager, will present the consolidated financialsummary.

Q3 FY2023 Consolidated Financial Summary
Hiroshi Kawamoto – Deputy General Manager, Global Business Platform Division, Vice President
and General Manager, Finance Unit
So now, I would like to present the consolidated financial summary of the third quarter.
Financial Summary: Slide 4
In the third quarter, we generated net sales of ¥467.8 billion, a 34.0% decline from the previous quarter.
By segment, SPE net sales were ¥458.8 billion, FPD net sales were ¥8.9 billion, gross profit was ¥203.9billion, and operating income was ¥114.7 billion. Sales were rather high in the second quarter. Therefore,
compared with the previous quarter, sales had declined. Relatively speaking, the manufacturing costs tosales ratio increased, gross profit margin was 43.6%, a decline by 2.7% points from the previous quarter.
Operating profit margin was 24.5%, declining by 8.3% points due to the increase of manufacturingcosts/sales ratio and SG&A/sales ratio.
Financial Performance: Slide 5This is a graphical representation of the financial summary of the previous slide.
Segment Information: Slide 6
This slide shows segment information. For SPE, we generated net sales of ¥458.8 billion and delivereda segment profit margin of 29.5%. Just like the overall company results, since manufacturing costs/sales
ratio and SG&A/sales ratio increased along with the decline of net sales, segment profit margin showeda decline from the previous quarter. For FPD, net sales were ¥8.9 billion. The segment profit margin was
minus 3.7%. As for the composition of net sales in the third quarter, SPE sales accounted for 98%, while
FPD sales accounted for 2%.

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Q3 FY2023 (October 1, 2022 – December 31, 2022)
Financial Announcement – February 9, 2023
Transcript
SPE Division: Sales by Region: Slide 7
This slide shows SPE sales by region. As you can see, SPE sales declined from the previous quarter,
mainly in China, North America and Japan.
SPE Division: New Equipment Sales by Application: Slide 8This slide shows SPE new equipment sales by application. On the right, in the third quarter, from thebottom of this chart, sales from logic manufacturers accounted for 69%, non-volatile memory accountedfor 16%, and DRAM accounted for 15%. The proportion of sales to non-volatile memory manufacturers
declined while that of logic and others showed an increase.
Field Solutions Sales: Slide 9This slide shows Field Solutions sales. In the third quarter, sales amounted to ¥117.5 billion. Sales had
declined from the previous quarter, which is attributed to the decreased sales of used equipment andmodifications and also the drop in parts sales due to the lower utilization of our customers’ fabs. On theother hand, sales of services in Field Solutions remained strong.
Balance Sheet: Slide 10
Next, this slide shows the balance sheet. Total assets were ¥2 trillion, 92.7 billion. Cash and cash
equivalents were ¥387.4 billion. Accounts receivable and contract assets were ¥454.4 billion. Inventories
were ¥632.0 billion, showing an increase from the previous quarter due to strategic procurement andmanufacturing leveling. Liabilities were ¥658.3 billion. Net assets were ¥1 trillion, 434.3 billion. The equity
ratio was 68.0%.
Cash Flow: Slide 11
Now you can see the cash flow. The cash flow from operating activities was ¥53.2 billion. The cash flowfrom investing activities was minus ¥13.8 billion due to the investment in fixed assets. And cash flow fromfinancing activities was minus ¥134.6 billion, primarily due to dividend payments. Free cash flow was¥39.3 billion. This is all about the consolidated financial summary of the third quarter.
Notice of Stock Split: Slide 12
Finally, this slide shows the announcement of the stock split that we announced today. I'd like to briefly
touch upon this issue. On Friday, March 31, 2023, Tokyo Electron will split the shares of common stockwith a proportion of one share into three shares. The purpose of the stock split is to create an environmentthat encourages more investment by lowering the minimum investment amount per unit of investment inorder to expand our investor base. While giving comprehensive consideration to various factors, including
the trends of the stock market, our share price, share distribution and shareholders composition, weintend to pursue an appropriate unit of investment so as to further enhance our corporate value.
As for the dividend, we will pay the year-end dividend, based on the number of shares issued before thestock split, since the effective date of this stock split is April 1, 2023.
Thank you very much. This concludes my presentation.

Moderator: Introduction of the next presentation
Now, Mr. Kawai, our CEO, will present the business environment and financial estimates. Mr. Kawai,please.

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Q3 FY2023 (October 1, 2022 – December 31, 2022)
Financial Announcement – February 9, 2023
Transcript

Business Environment and Financial Estimates
Toshiki Kawai – Representative Director, President & CEO
Good afternoon, I’m Tony Kawai, once again. Now I’d like to talk about the business environment andfinancial estimates.
CY2022 Business Environment (Outlook as of February 2023): Slide 14
First of all, let me start with the business environment.
Driven by progress in the digital shift in society, the WFE market has grown from $65 billion in 2020, to$92 billion in 2021 and about $100 billion in 2022. Though the WFE market is currently under adjustment,
due to the impacts of the macro-economy and geopolitical issues such as inflation, the interest rate,
COVID-19, soaring utility costs and sluggish final demand, we expect that the WFE market will start
recovering from the second half of this year and reach about $80 billion in 2023.
Beyond 2024, the WFE market is expected to enter a stage of further growth, driven by the emergenceof new CPUs and data centers which are likely to be equipped with advanced DRAM “DDR5” and 3DNAND with 300 layers featuring more memory capacity. It is also expected that the data centers built inaround 2017 and 2018 will be replaced by adopting innovative semiconductor devices with higher energy
efficiency. The metaverse is expected to be in full service from 2025 and beyond, the spread of electricvehicles, and the recovery of smartphone demand, are all expected to strongly drive expansion of theWFE market.
FY2023 Q3 Business Progress: Slide 15
Next, this slide shows business progress in the third quarter of the fiscal year ending in March 2023. Asfor SPE, in CY2022, our SPE business generated net sales of ¥2 trillion, 161.1 billion on a calendar year
basis, hitting a record high. Our new equipment sales recorded an annual growth of 22%, outperforming
the WFE market, which grew by 8%. I believe such positive results were achieved by the maximum efforts
we made to address customer demand, supported by our resilient and strong supply chain, despite
lingering procurement uncertainty and disruption of logistics. Penetration of our strategic products andacquisition of PORs in the customers development lines, which leads to our future growth, have been oncourse, which is well aligned with the Mid-term Management Plan.
In SEMICON Japan held last December, we released a new single wafer cleaning system called the“CELLESTATM MS2”. This new equipment is able to simultaneously clean both surfaces of a wafer without
reversing it, which realizes higher productivity and lower running costs. Conventionally, during thecleaning process, pure water or gas is used to protect the wafer surface which is not being cleaned. The“CELLESTA™ MS2” has eliminated such need of water or gas, which also contribute to a lower
environmental footprint. We are determined to strive for the development of technologies to address ourcustomers’ needs.
And we have decided to rebuild our organizational structure in an attempt to promote technologydevelopment for application-specific semiconductor devices which have grown considerably in recent
years and expected to grow further in the future, aiming to expand business opportunities even further.
MAGIC: Slide 16
Applications leveraging such application-specific semiconductor devices include the Metaverse,
Autonomous mobility, Green energy, IoT and information and Communications. Our company calls theseapplications the “MAGIC” market in short, and we'll place more focus on these areas. Key elements in
the MAGIC market include semiconductors such as power devices, CMOS image sensors and RF,devices embedded into semiconductors such as waveguide, micro-LED and silicon photonics, and alsodisplays. For the evolution of these key elements, a broad range of technological innovation is essential.
Reorganization to Further Expand Business Opportunities: Slide 17
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Q3 FY2023 (October 1, 2022 – December 31, 2022)
Financial Announcement – February 9, 2023
Transcript
Leveraging the leading-edge technologies we have developed so far, as well as our experience basedon a wealth of installed base, we will enhance our responsive capability. In the domains of “MAGIC”,
displays play an extremely important role as an interface. In order to enhance our technological innovation
capabilities and seamless customer responsiveness by leveraging our knowhow for optical devices that
we have cultivated through FPD manufacturing, commencing April 1, 2023, we will merge the Field
Solutions Business Unit and FPD Business Unit to newly establish a “Diverse Systems and Solutions”
Business Unit or DSS BU for further business expansion.
By efficiently investing resources in the “MAGIC” market where significant growth is expected, we will
maximize business opportunities.
FPD Business: Slide 18
As for the FPD business, capital investment in FPD fabrication equipment for the TFT array process is
expected to decline by 30 to 40% in CY2023, as a round of a large amount of investments in LCD andOLED was completed. As for the future FPD business, we'll focus on high value-added areas such asetching.
For the inkjet printing system, we have suspended the development project by taking account of its growthpotential. For the inkjet printing system, our technologies are advantageous particularly in large-sized
OLED, and we have been evaluating the technologies together with leading FPD customers over the past
few years. Along with difficulties caused by the spread of COVID-19, however, the need for IT mobile
displays, rather than the need for large-sized TVs, has grown recently, and accordingly our customers
have revised their product strategy. Consequently, our customers are shifting their focus of capital
investment to micro- LED, micro-OLED and IT OLED. This micro-LED is one of the devices in the “MAGIC”
domain that I explained before.
Based on these backgrounds, we have decided to reallocate our resources to those areas with faster
growth potential so that we can maximize profits. As I said earlier, the Field Solutions Business Unit andFPD Business Unit will be merged in FY2024, and accordingly, we will not disclose financial performance
specific to the FPD segment because those two businesses will operate together.
FY2023 Financial Estimates: Slide 20
Next, I will present the financial estimates for the fiscal year ending in March 2023. In November 2022,
we revised the FY2023 financial estimate. This time, we scrutinized the results of the third quarter andestimates of the fourth quarter again, and we're going to revise the financial estimate upward by ¥70billion. On a full year basis, we expect net sales of ¥2 trillion, 170.0 billion, gross profit of ¥946.0 billion,
operating income of ¥580.0 billion, and net income attributable to owners of parent of ¥433.0 billion.
FY2023 SPE Division New Equipment Sales Forecast: Slide 21
This slide shows the SPE new equipment sales forecast in the fourth quarter. Compared with the thirdquarter, there is little change in application mix, and slight growth is expected in sales. As I said earlier,
SPE new equipment sales in CY2022, from January through December, were ¥1 trillion, 689.6 billion,
growing by about 22% on a year-on-year basis. On a fiscal year basis, we also expect about 11% growth.
In CY2023, we will work hard, aiming to outperform the market again.
FY2023 R&D Expenses, Capex Plan: Slide 22
This shows our plan for R&D expenses and CAPEX. The plan remains unchanged. As we previously
announced, for the next five years, we plan to invest more than ¥1 trillion in R&D and spend more than¥400 billion on capital investment, mainly in evaluation tools. To achieve the Mid-term Management Plan,
we will continue proactive R&D investment and capital investment.
FY2023 Dividend Forecast: Slide 23
My last slide shows the dividend forecast. For interim dividend, we paid ¥857, which is a record high
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Q3 FY2023 (October 1, 2022 – December 31, 2022)
Financial Announcement – February 9, 2023
Transcriptinterim dividend. Along with the revision of our financial estimates, the year-end dividend is expected tobe ¥531.
As I said in the previous meeting, while celebrating our 60th anniversary this year, we are planning acommemorative dividend of ¥200 per share at the end of this fiscal year, with our sincere gratitude to theshareholders who have warmly supported our growth.
This concludes my presentation. Thank you very much for your attention today.

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