Tokyo Electron  Annual Report 2011

Interview With the CEO&Questions
Answers

Hiroshi Takenaka,President & CEO

Q What is Tokyo Electron’s medium- and long-term vision?
ASemiconductors have long been called “the lifeblood of industry.” Today, semiconductors arebuilt into all manner of devices around us, and moreover are essential to social infrastructure
and the enrichment of our daily lives. Semiconductor production equipment (SPE) is used tomanufacture these “lifeblood” semiconductors. As a leading SPE supplier, Tokyo Electron aspires
to remain deeply involved in the work of realizing an inspiring future for all people. In addition,SPE technology has an expansive scope and involves some profound innovations. It is used toproduce the liquid crystal displays (LCD) for almost all televisions today, and can be applied tothe production of organic light-emitting diode (OLED) displays. In addition, it is applied to theproduction of photovoltaic cells (PV), which are attracting interest as a promising means ofharnessing renewable solar energy. Our production equipment technology is very much at theforefront of science and technology. Through these advances, we aim to make a broad contribution to the advancement of society at large.

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Tokyo Electron

Development of Semiconductor Production Equipment Technology
New Technology Fields
OLED Production Equipment
PV Production Equipment
FPD Production Equipment

Semiconductor Production
Equipment Technologies
Equipment
safety design

Testing

Coating/developing

Cleaning

Thermalprocessing

Automation

Material
processing

Design-to-cost

Sensing

Temperature
control

Clean
technology

Flow control

System design

Plasma control

Power control

CO2 reduction
technology

Mechatronics

Q What are your key strategies for expanding the SPE business?
AThe SPE market is expected to see continuing growth driven by technology innovation. First,
we intend to do our utmost to enhance our position in this market. To give you some clear
examples, let’s look at some of our specialized market shares within the SPE market. Tokyo
Electron commands a share of more than 80% of the coater/developer market and more than
60% of the thermal processing system market, but has less than a 30% share of the etchsystem market and less than 20% of the cleaning system market. Etch systems and cleaningsystems are both used in key semiconductor production processes and therefore their markets
offer strong growth prospects going forward. As a result, we intend to spend a relatively
large amount of development and capital expenditures on these two fields, and also on theopening of our new Miyagi plant, in order to ensure that we produce solid results in eachfield. We will also implement efforts
directed at commercializing new technology fields, in addition to bolstering existing product fields.

Manufacturing base for coater/developer and cleaning system at Tokyo Electron Kyushu Limited.
­Cleanroom for process evaluation expanded to strengthen development of cleaning systems, a market
expected to grow going forward.

CELLESTA™ -i
Single Wafer Cleaning System5Tokyo Electron  Annual Report 2011

new SPE-related technology fields are you focusing on?
Q WhichPlease go into more detail.

A

Last year, we launched a new plasma etch system Tactras™ RLSA™ Etch, featuring our proprietary revolutionary breakthrough plasma technology. Leveraging this technology, we are also
considering entry into new film formation and other fields.
Recently, while development aimed at pushing the limitations of scaling, or miniaturization,
has been vigorous, we have been making R&D efforts directed at realizing technologies fordramatically increasing device performance by means ofR&D Expenses in the Past 10 Years

stacking multiple silicon chips. Called 3DI, this chip stack(Billions of Yen)

technology also takes full advantage of various technolo-

80.0

70.6

technology expected to be used in mass production in 2-3years, we are currently working to upgrade and extend

54.1

57.0
49.2

43.9

44.2

40.0

50.1

53.8

60.0

61.0

66.1

gies we have already developed over many years. With theour product lineup.
Additionally, in traditional wafer-test related fields, wehave received strong calls for reducing test costs from20.0customers. In response, we are actively preparing to propose new solutions to address their needs.

002

03

04

05

06

07

08

09

1011

Global R&D and Manufacturing Bases

Tokyo Electron Korea Solution(Hwaseong, Gyeonggi-do)

Process Technology Center*1(Hwaseong, Gyeonggi-do)

TEL Technology Center, America(Albany, New York)SEMATECH(Albany, New York)
Timbre Technologies(Fremont, California)

imec(Lueven, Belgium)

TEL Technology Center, Taiwan(Hsinchu, Taiwan)

Technology Development
Center
Leading Edge Process
Development Center(Nirasaki, Yamanashi)Tokyo Electron Technology
Development Institute(Sendai, Miyagi)

TEL Technology Center,Tsukuba*2(Tsukuba, Ibaraki)*1: Operation is scheduled to begin in late 2011
*2: Operation is scheduled to begin in spring 2012

6

TEL Epion(Billerica, Massachusetts)

Annual Report 2011

Tokyo Electron

Q What kinds of OLED display solutions do you plan to offer?
ACompanies already offer OLED displays based on conventional technologies. However, Tokyo
Electron is currently developing new types of OLED film formation equipment for use in theproduction of large OLED displays for TVs and lighting in the near future. The first type is ourown proprietary evaporation system that has a very unique technology that provides a highlevel of material efficiency. The second type is a film formation system using an inkjet printing
method under joint development with Seiko Epson Corporation, a company which has considerable expertise in industrial inkjet technology. OLED is a future display technology that is lighterand more energy efficient than liquid crystal display (LCD), and has a higher resolution of color.
The market for OLED displays is expected to come into its own in the near future. Based on ourwide range of equipment technology developed through LCD operations, we aim to propose
unique technologies for the next generation of OLED displays.

is intensifying due to the emergence of AsianQ Competition
equipment suppliers. What steps are you taking to expand businessand improve earnings?

AIn recent years, Asian equipment suppliers including those in South Korea have prominently
come to the forefront. We must continue to run ahead of them in terms of technology innovation. Fortunately, the industry as a whole has seen technological innovation continue to evolve
swiftly. We believe that with this foundation Tokyo Electron can continue to provide better value
with its proposals in the future, based on our possession and provision of distinctive technologies that stand out. Moreover, our customers also face relentless competition on a daily basis. If
we can provide our ­high-value-added technologies at the best possible timing, I am confident
that we will be chosen by our customers as a long-term partner.
That is also why we decided to set up an SPE process technology
center in Hwaseong, South Korea.
Accelerating cost reductions has also become an urgent priority
in this process. To this end, we are currently constructing a newplant for FPD production equipment in Kunshan, China.

Ground-breaking ceremony for the new plantat our new subsidiary Tokyo Electron (Kunshan)
Limited in Kunshan, Jiangsu Province, China(January 8, 2011)7

Tokyo Electron  Annual Report 2011

Q What is your policy on returning profits to shareholders?
AWe must constantly maintain and expand technological leadership and capabilities that havea competitive edge. This is Tokyo Electron’s primary source of growth. Therefore, no matter
what conditions we face, the most important factor for ensuring the Company’s growth is toretain the necessary funds for this, and to invest these funds in important development projects, intellectual property acquisitions and so forth. We also believe that doing so will lead toincreased shareholder value.
At the same time, we have carefully asked ourselves what would be the best possible profit
distribution policy—one that would reward shareholders for their support, while maintaining
our financial soundness in a fast-changing market environment. Consequently, we decided
that the total dividend applicable to fiscal 2011 should be raised to ¥114 per share, marking
a large increase from the previous year. This partly reflects our decision to raise the dividend
payout ratio target from 20% to 35%, as well as the improvement in net income, from which
dividends are paid out.
Looking ahead, we will continue striving to enhance shareholder value through soundbusiness expansion, while at the same time working to directly return a greater portion of
earnings to shareholders.

8Annual Report 2011

Tokyo Electron

Response to and Rebuilding After the Great East Japan Earthquake
We wish to express our deepest sympathies and condolences for the victims of the Great East Japan Earthquake. We sincerely hope that the affected areas can realize a quick recovery.

Safety of Employees

Post-earthquake Response

All employees were safe.

Suppliers

Status of Production Facilities
Three of our manufacturing bases in the Tohoku region suffered
minimal damage but have already resumed operation in the firstquarter of FY2012.

We worked quickly to ascertain the status of our 300 or so suppliers in
the affected regions and are taking measures to remedy the instability inthe supply of certain parts.
• We devised workarounds involving adjustments to production processes, temporary adoption of substitute parts, and design changes

Radiation
We are measuring the radiation levels of all equipment and parts
shipped overseas.
Tokyo Electron Tohoku (Oshu, Iwate)
Thermal processing system• Implemented in conformity with International Air Transport
Association (IATA)

Aomori• Operation restarted in late March

Power SupplyAkita

Tokyo Electron Miyagi (Matsushima, Miyagi)
Etch systemIwate• Operation restarted in early May

Tokyo Electron Miyagi (Taiwa, Miyagi—new plant)• Buildings for R&D and administrative functions:
Construction completed in late MayMiyagi• Building for the production line:
Construction scheduled for completion in September

Tokyo Electron Technology Development Institute(Sendai, Miyagi)
RLSA™ plasma etch system• Operation restarted in late MarchYamagata

We intend to reduce power consumption for the coming summer
months by 15% compared to the same period last year. However, weare also implementing steps to ensure that these cuts will not result instoppages in our R&D and production schedules.
• We will install solar power generation systems (2,000 kW), a turbo
chiller, and other equipment• An operation rotation plan will be implemented in the Yamanashi andSendai regions from July to September

Support for the Affected Regions
Fukushima

Monetary Donations
We donated a total of ¥500 million in aid to the recovery effort.

Tohoku region

Customer Support
We sent 100 to 200 field engineers to provide support to our customers
in their efforts to get their facilities back to normal.

Tokyo Electron Tohoku
President & CEO Hiroshi Takenaka visited the plant to provide encouragement to employees
March 25, 20119