TOKYO ELECTRON ANNUAL REPORT 2013

PAGE

13CONTENTSCONTENTS

Financial Highlights

Business Overview

Top Message

Special Feature

Review of Operations
and Business Outlook

Corporate GovernanceCorporate CitizenshipIntellectual Property

Financial Section

Corporate Data

Review of Operations and Business Outlook

Review of Operations and Business Outlook

SALES BY SEGMENT

SHARE OF NET SALES

Semiconductor Production Equipment

511.3

392.0

Net Sales¥ 392.0 billion

262.4

325.4

150

477.9

600

300

78.8%

009

101112

13

FPD/PV Production Equipment(Billions of yen)

50

4.1%

69.9

66.7

71.4

88.1

10075

Net Sales¥ 20.2 billion

20.2

2500910111213During fiscal 2013, global capital
investment in semiconductor equipment remained subdued, influenced
by the sluggish economy. Due to aworsening DRAM supply-demandbalance caused by slowing shipments of PCs as well as weaker than
expected demand for NAND flash
memory, investment to increase production capabilities in memory manufacturing by Tokyo Electron’scustomers was restrained. However,demand for logic chips used in
mobile devices, servers and otherapplications was strong, leading tofirm logic-related investment.

• Segment net sales were down 18.0% year on
year to ¥392.0 billion.

In flat panel displays (FPD), capital
investment in large panels was put off
in fiscal 2013, due to weakened
demand for flat panel TVs in developed countries. Investment was limited mainly to small- and medium-sizedhigh-definition panels for use inmobile devices, falling approximately
70% as a result.
Demand for photovoltaic panels is
rapidly expanding worldwide. As
uncompetitive production lines released
since 2008 face elimination, 2012 isthought to be the bottom point, with rising investment going forward.

• Segment net sales were down 71.2% year onyear to ¥20.2 billion (of which sales of FPD production equipment accounted for nearly 100%).

Electronic Components and Computer Networks(Billions of yen)

17.0%
84.7

90.2

75

84.9

84.5

94.2

100

Net Sales¥ 84.7 billion

50

25009

10111213

BUSINESS OVERVIEW

BUSINESS OUTLOOKThe technological innovation sought for semiconductors is becoming increasingly advanced(Billions of yen)

450

BUSINESS ENVIRONMENT

Demand for both consumer andindustrial electronic components wasweak in fiscal 2013. Private capital IT
investment continued to face harshconditions though the cloud computing market, including data centers,
showed underlying notes of expansion.

• Sales fell 51% in Japan and 47% in South Korea
due to weak memory-related investment.
• Sales rose 40% in Taiwan and 2% in the U.S. on
the back of solid logic-related investment.
• Tokyo Electron achieved a record high 89%
market share of coater/developers.
• Tokyo Electron secured multiple approvals from
customers in the key area of etching and cleaning systems for new manufacturing lines.
• Tokyo Electron introduced new ALD systems
and metallization systems.

and diverse as semiconductor demand continues to expand, propelled by the full-fledged
spread of such mobile devices as smartphones and tablets and the rapid development ofcloud computing, which enables enormous data traffic.
SPE plays an increasingly important role in realizing the advanced technological innovationand needed volume expansion that will drive capital investment in the semiconductor industry.
By aggressively introducing new products, Tokyo Electron will take advantage of the shift
to new technologies to expand its business. In coater/developers, an area in which theCompany already commands a large market share, the Company will increase productivity
and introduce products for extreme ultraviolet lithography. In deposition systems, Tokyo
Electron aims to increase revenues with semi-batch ALD systems and metallization systems.
In the key business areas of etching and cleaning systems, the Company will work to expand
its market share with etching systems featuring low damage and high selectivity, as well as
single wafer cleaning systems for advanced logic chips and dry cleaning systems. With regard
to wafer probers, the Company plans to expand its served available market by introducing
new products that will help to reduce customers’ production costs. Additionally, in the waferlevel packaging field, which is expected to grow significantly, the Company aims to expand
sales by taking advantage of its strong product lineup, enhanced by the electrochemical
deposition systems acquired in fiscal 2013 with TEL NEXX.

• Sales by region were 47% domestic and 53%
overseas.
• Around 85% of FPD production equipment sales
came from sales of equipment for generation six(Gen6) or below small- and medium-sized panels.
• Tokyo Electron released an ICP etch system for
Gen8 panels, responding to demand for higher
definition panels.

The market of small- and medium-sized panels for mobile devices such as smartphones andtablets will remain firm. Capital investment related to large-sized panels will resume in China. In
thin film transistor (TFT) processes, the use of low-temperature polysilicon (LTPS) and indium
gallium zinc oxide (IGZO) is advancing, replacing the use of conventional amorphous silicon.
As the successor to liquid crystal displays, OLED displays with higher definition and lower
power consumption are already being used in mobile devices, and development aimed atmanufacturing large-sized OLED displays for TVs has been accelerating. As such technological innovation advances, Tokyo Electron will pursue growth in this business by introducing
competitive products for TFT process and entering the new market of OLED production
equipment. In addition, the Company will ramp up manufacturing at the Kunshan Plant in
China, increasing responsiveness to customers and reducing costs.
In photovoltaic panel production equipment, which is expected to become a business pillar in the medium- to long-term, Tokyo Electron will use the sophisticated thin-film silicon photovoltaic panel production equipment of Oerlikon Solar, acquired in fiscal 2013, as a base

• The Kunshan Plant in China began repair andmanufacturing operations of FPD etch systems.

while strengthening development in order to realize high conversion efficiency, the key to low-

• Segment net sales were down 0.2% year onyear, to ¥84.7 billion.

In the electronic components business, market growth in the Asia region is forecast to contin-• In the electronic components business, domestic demand for consumer and industrial electronics fell, causing domestic sales to decrease
approximately 10%. However, sales in the Asia
region, including China, rose, causing overallsales to decrease only 0.7% year on year.
• Sales in the computer networks businessincreased 2.2% year on year due to firm sales of
product and maintenance services.

cost power generation.

ue. In the computer networks business, investment in data centers is also expected to continue, reflecting the spread of cloud computing.
With these market trends in mind, Tokyo Electron will work to expand segment sales not
only through existing businesses and securing trade rights, but also by promoting sales tooverseas customers, and through overseas sales of the Company’s in-house inrevium™
brand. In addition to reinforcing its direct sales system for cloud computing and data centers,
Tokyo Electron will strive to introduce new high-value-added products and provide optimalsolutions.