Q1 FY2023 (April 1, 2022 – June 30, 2022)
Financial Announcement – Aug 8, 2022
Transcript

Moderator: Opening remarks
Now it's time for us to start the Tokyo Electron Financial Announcement for the First Quarter of the Fiscal
Year Ending on March 31, 2023. Thank you very much for joining us today despite your very 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 andCEO. (I’m Tony Kawai, nice to meet you everybody.) Next, Mr. Hiroshi Kawamoto, Deputy GeneralManager, Global Business Platform Division, Vice President and General Manager, Finance Unit. (I’mHiroshi Kawamoto. Nice to meet you, everybody.)
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 6:00 o’clock Japan Time, we will have a question-andanswer session, where we will take questions from the audience. This meeting will use two channels onWebex for simultaneous interpretation between Japanese and English. As we explained in our email, you
are kindly requested to use apps, PCs or mobile terminals if you plan to ask questions. But if you are notgoing to ask questions, you can use telephones. In addition, since this conference is intended forinstitutional 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.

Q1 FY2023 Consolidated Financial Summary
Hiroshi Kawamoto – Deputy General Manager, Global Business Platform Division, Vice President
and General Manager, Finance Unit
Good afternoon. I am Hiroshi Kawamoto from the Finance Unit. This is the first time for me to attend thefinancial announcement. I’m very glad to meet you. Now I would like to present the consolidated financialsummary of the first quarter of the fiscal year ending in March 2023.
Financial Summary: Slide 4In the first quarter, we generated net sales of 473.6 billion yen, a 16% decline from the previous quarter.
By segment, SPE net sales were ¥464.0 billion and FPD net sales were ¥9.6 billion. Gross profit margin
was 42.3% and operating margin was 24.8%. Net sales decreased on the quarter-on-quarter basis partly
because recognition of some revenue was pulled forward to the previous fiscal year and partly becausesome shipments were pushed out and their revenue recognition was shifted to the second quarter. But
we are making steady progress in line with the financial estimates for the fiscal year.
Profit margin also declined from the previous quarter due to several reasons including a decline in sales,
our ongoing active R&D investment, and the special bonus paid to our employees to reward their efforts
in achieving the previous Medium-term Management Plan ahead of the target year. In line with thefinancial estimates for this fiscal year, both net sales and profits are expected to increase toward thesecond half of this fiscal year.

Financial Performance: Slide 5This is a graphical representation of the financial summary that I showed you in the previous slide.
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Q1 FY2023 (April 1, 2022 – June 30, 2022)
Financial Announcement – Aug 8, 2022
Transcript
Segment Information: Slide 6
This slide shows segment information. For SPE, we generated net sales of ¥464.0 billion and achieveda segment profit margin of 28.8%. Due to the impact of the sales decline as well as product mix and otherfactors, the profit margin also dropped. For FPD, net sales were ¥9.6 billion and the segment profit margin
was minus 6.4%. Partly because of the disruption in logistics triggered by a factor such as the lockdown,some revenue recognition was pushed out which resulted in a decline of net sales and a negative
segment profit margin in the first quarter. But we are making steady progress to achieve the financial
estimates for this fiscal year. For the composition of net sales in the first quarter, SPE sales accounted
for 98%, while FPD sales accounted for 2%.
SPE Division: Sales by Region: Slide 7
This slide shows SPE sales by region. As you can see, for this first quarter, SPE sales declined in allregions. In particular, sales to memory manufacturers in Korea and China decreased. In China, like in theprevious quarter, local Chinese customers accounted for a sizable proportion.

SPE Division: New Equipment Sales by Application: Slide 8This slide shows SPE new equipment sales by application. In the first quarter, on the right-hand side,from the bottom of this chart, sales to logic manufacturers accounted for 64%, non-volatile memory
accounted for 20%, and DRAM accounted for 16%. As sales to DRAM manufacturers declined from theprevious quarter, the proportion of sales to logic manufacturers increased against sales to memory
manufacturers.
Field Solutions Sales: Slide 9This slide shows Field Solutions sales. In the first quarter, sales amounted to 109.5 billion yen, declining
on the quarter-on-quarter basis due to the decrease of modifications. However, you can see some steadyprogress. The parts business progressed steadily due to the high utilization ratio of our customers’ fabs.
Balance Sheet: Slide 10
This slide shows the balance sheet. For assets, total assets were ¥1 trillion, 846.9 billion. On the top,
cash and cash equivalents decreased from the previous quarter to ¥314.6 billion. This is mainly due tothe payment of dividends and taxes in this first quarter. Accounts receivable and contract assets were¥426.1 billion. Inventories were ¥557.2 billion, showing a significant rise from the previous quarterbecause of the increase of inventory of work in process and finished goods whose revenues are expected
to be recognized in the second quarter onward. Regarding liabilities and net assets, liabilities were ¥532.0billion, net assets were ¥1 trillion, 314.8 billion. Net assets were negative on a net basis due to dividend
payments to shareholders and other factors, although net income was recorded. The equity ratio was70.4%, almost equivalent to the previous quarter.
Cash Flow: Slide 11
My last slide shows cash flow. The cash flow from operating activities was ¥69.9 billion. The cash flowfrom investing activities was minus ¥16.6 billion. The cash flow from financing activities was minus ¥119.1billion. The free cash flow was ¥53.3 billion. This concludes my presentation about the consolidated
financial summary.

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Q1 FY2023 (April 1, 2022 – June 30, 2022)
Financial Announcement – Aug 8, 2022
Transcript

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

Business Environment and Financial Estimates
Toshiki Kawai – Representative Director, President & CEO
Good afternoon. Once again, I’m Tony Kawai. Thank you so much for joining us despite your very busy
schedules. Now I’d like to make a presentation about the business environment and financial estimates.
CY2022 Business Environment (Outlook as of August 2022): Slide 13
Let me start with the business environment. In the financial announcement in May, I said that the WFE
market was expected to grow by about 20%, but this time we have revised the growth rate to 5 to 15%
on a year-on-year basis. We have come up with this revision by holistically considering various factors
such as increasing interest rates that address inflation, the zero-COVID policy, the temporary decline inappetite for buying PCs and smartphones, supply constraints, disruptions in logistics and the wild
fluctuations in exchange rates. This is the result of overall consideration of the situation. On the otherhand, due to expectations in semiconductor technology innovation driven by the progress of the digital
shift in society, and the realization of a decarbonization society, our company’s outlook remains
unchanged for mid- to long-term growth of our industry.
For the FPD production equipment market (TFT array process), there is no change. A slight increase isexpected in the investment on a year-on-year basis.
CY2022 WFE Market by Application: Slide 14
Next, I'd like to talk about the WFE market outlook by application. As shown in the slide, we have revised
our outlook. For logic and foundry, we have revised the expected WFE spending growth to 10 to 20% on
a year-on-year basis, and for DRAM we currently expect WEF spending will decrease by about 5% fromthe previous year. For non-volatile memory there's no change in our outlook. WFE spending is expected
to grow by about 10% on a year-on-year basis. This environment is changing day by day, but in eachapplication, technology innovation never stops, but makes steady progress. Working together with ourcustomers and partner companies, we are striving to develop leading-edge semiconductor technologies.
FY2023 Q1 Business Progress: Slide 15
This slide shows business progress in the first quarter of the fiscal year ending in March 2023. In June
2022 we established the new Medium-term Management Plan. As the new financial model, we have setup goals to achieve net sales of ¥3 trillion or more, operating margin of 35% or more, and a ROE of 30%
or more by the fiscal year ending in March 2027.
Aiming to further enhance our corporate value, we have developed a new vision. The new vision is “Acompany filled with dreams and vitality that contributes to technological innovation in semiconductors”.
Since semiconductor devices have become increasingly important in society, as a leading company thatdelivers SPE, we are determined to meet the customers’ technological needs and provide leading-edge
products and services aiming to create world class profit, specifically operating income of ¥1 trillion ormore, and operating margin of 35% or more. In parallel, toward the global shared value of achieving both“digital and green”, and digitalization and decarbonization, we will contribute to addressing social
challenges by pursuing semiconductor technology innovation.
We have set the mid- and long- term environmental goals toward the realization of carbon neutral, that is
net zero GHG emissions, to be achieved by the year 2050. We will strive to achieve carbon neutral
according to scopes 1 and 2 by 2040, and eventually realize carbon neutral in line with scope 3 by 2050.
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Q1 FY2023 (April 1, 2022 – June 30, 2022)
Financial Announcement – Aug 8, 2022
Transcript
In order to realize the Medium-term Management Plan goals, we are planning to invest ¥1 trillion or morein our R&D activities in the five years to come.
At present there are various uncertainties, but I understand the expectations of our company are growing
and accordingly, we expected to play an increasingly important role. We will pursue both short-term andlonger-term profit in parallel, and we will make every effort to continually enhance our corporate value.
FY2023 Financial Estimates: Slide 16, 17
Next, I will present the financial estimates for the fiscal year ending in March 2023. As I said earlier, bytaking into account the impacts of the macro economy, we have revised our outlook for the WFE market.
But our customers investment plans are only being adjusted in a minor way at present. Therefore, wehave left financial estimates unchanged but will take a close look at the market environment from now on.
FY2023 SPE Division New Equipment Sales Forecast: Slide 18
This slide shows the SPE new equipment sales forecast in the fiscal year ending in March 2023. Again,
the sales forecast remains unchanged both in the first and second-half of this fiscal year: ¥850 billion in
the first half and ¥1 trillion in the second half of this fiscal year. On the right, you can see the quarterly
breakdown of the sales forecast for the first half of this fiscal year. In the first quarter, the shipment timingof some products was shifted but there is no change in our financial estimates. In the second quarter, weexpect record-high quarterly net sales.
FY2023 R&D Expenses, Capex Plan: Slide 19
This shows our plan for R&D expenses and CAPEX. The plan remains unchanged. To achieve our new
Medium-term Management Plan, we will continue making active R&D investments and capital
investments.
FY2023 Dividend Forecast: Slide 20
My last slide shows the dividend forecast which also remains unchanged. Based on the financial
estimates for this fiscal year and a payout ratio of 50%, we plan to pay full year dividends per share of¥1,678, which is expected to set a new record.
Thank you very much for your attention today.

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