TOKYO ELECTRON SUSTAINABILITY REPORT 2021
TOKYO ELECTRON SUSTAINABILITY REPORT 2021

TOKYO
TOKYOELECTRONELECTRONSUSTAINABILITYSUSTAINABILITYREPORTREPORT2021
2021

Centaurea cyanus (Germany)
The cover photo shows flowers of the countries and regions in which we do business

AkasakaBiz
Tower,
3-13-1
Akasaka
5-chome,AkasakaBiz
Tower,
Akasaka
5-chome,Minato-ku,
Tokyo
107-6325,
Japan
Minato-ku,
Tokyo
107-6325,
Japan
Tel:
+81-3-5561-7000
Tel:+81-3-5561-7000
www.tel.com
www.tel.com
TEL
is aistrademark
or orregisteredtrademark
of of
Tokyo
Electron
Limited
in in
Japan
and
other
countries.
TEL
a trademark
registeredtrademark
Tokyo
Electron
Limited
Japan
and
other
countries.

PR59-205
PR59-205

Contents
Editorial Policy
This report aims to communicate to all stakeholders the responsibilities and roles that Tokyo Electron has in society
and the various activities it implements toward value creation. It describes global initiatives aimed at developing andresolving issues for industry and society. In fiscal year 2021, following a review of our material issues, we settled on thefour areas of product competitiveness, customer responsiveness, higher productivity, and management foundation,
which supports these other areas. The report clarifies priority themes, short- and medium-term goals, and SDGs
initiatives for each of the material issues. Data sets are included at the end of the report, with an accompanying thirdparty assurance report attached for those items that are considered to be of particularly high importance.
We remain committed to understanding all of our stakeholders' demands and disclosing information timely andtransparently. For more detailed information, please consult our official website.
URL

Editorial Policy ..............................................................................................................................................................................

1

Contents ..........................................................................................................................................................................................

2Company Overview ....................................................................................................................................................................

3

CEO’s Message ..............................................................................................................................................................................

5

Tokyo Electron's CSR ..................................................................................................................................................................

7

Identifying Material Issues ......................................................................................................................................................

9

CSR Goals and Results ............................................................................................................................................................... 11
Value Creation Model ................................................................................................................................................................ 13

www.tel.com/csr/

Scope of Disclosure

Scopeconsolidated companies, including the Group companies), with the
exception of some domestic (Japan-exclusive) content.
Reference Guidelines

Update Rate

This report and related data cover the entire Tokyo Electron Group (28Global Reporting Initiative (GRI): Sustainability reporting standards
Environmental Reporting Guideline 2018, Ministry of the Environment,
Government of Japan

Product
CompetitivenessTackling Technological Innovation .................................................................................... 19

Website:www.tel.com/csr/

Customer
Sustainability
ReportResponsivenessInformation Volume

Higher Productivity

Published Date

About Customer Responsiveness ..................................................................................... 21
Solutions that Create Value for Customers ................................................................. 22
Initiatives for Field Solutions ................................................................................................ 23
Ensuring Safety for Customers ........................................................................................... 25
Improvement of Customer Satisfaction ....................................................................... 26
About Higher Productivity .................................................................................................... 27
Promotion of Improved Productivity ............................................................................. 28
Productivity Improvement in the Value Chain .......................................................... 29

July 2021 (Next report: July 2022)
Period Covered

Fiscal year 2021 (April 1, 2020 to March 31, 2021), some content also covers fiscal year 2022

Management
Foundation

Contact

Akasaka Biz Tower 3-1 Akasaka 5-chome, Minato-ku, Tokyo 107-6325, JapanCSR Operations Dept., Tokyo Electron Limited
Tel: +81-3-5561-7402
URL

About Product Competitiveness ....................................................................................... 15
Research and Development ................................................................................................. 16

Inquiry Point URL: www.tel.com/contactus/

Tokyo Electron’s Logo
Tokyo Electron’s logo was created as a symbol for our next stage of growth,
based on our corporate philosophy and vision.
This simple design represents our reliability and the engaging presence webring to a competitive industry. The green square at the center of the logo
signifies the core of innovation supporting development in industry; thetranslucent blue expresses our leading-edge advanced technology.
We strive to contribute to the development of a dream-inspiring society
through our leading-edge technology and reliable service and support.

About Management Foundation ...................................................................................... 33
Corporate Governance ............................................................................................................ 34
Risk Management ...................................................................................................................... 37
Compliance .................................................................................................................................... 40
Human Resources ...................................................................................................................... 42
Diversity and Inclusion ............................................................................................................ 42
TEL Values ....................................................................................................................................... 43
Employee Growth ...................................................................................................................... 43
Work-life Balance ........................................................................................................................ 44
Respect for Human Rights .................................................................................................... 45
Health and Safety ...................................................................................................................... 46
Environment ................................................................................................................................. 48
Supply Chain Management .................................................................................................. 54

TEL FOR GOOD (Social Contribution Activities) ............................................................................................................ 55
Performance Summary

Social ................................................................................................................................................. 57
Environment ................................................................................................................................. 60

Independent Practitioner's Assurance .............................................................................................................................. 63
Corporate Profile ......................................................................................................................................................................... 64

1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

2

Company Overview(Unit:
Billionsyen)(Unit:
Billions
ofofyen)Tokyo Electron operates worldwide as a leading company in semiconductor and flat panel display (FPD) production equipment. By
providing the Best Products and Best Technical Service, we are aiming for medium- to long-term profit expansion and continuous
corporate value enhancement. We are also practicing our Corporate Philosophy by contributing to developing a sustainable society
through our business.

Branch,Branch,OfficeOffice(including(including
Field Field
Service),
Service),
SalesSales
OfficeOffice

TokyoElectron
ElectronKorea
Korea
Tokyo

Overseas:
Worldwide total:

7
21
28

TELManufacturing
Manufacturingand
and
TEL
EngineeringofofAmerica
AmericaEngineering
TEL Manufacturing
TEL Manufacturing
and andEngineeringof America
Engineeringof America
TEL Manufacturing
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Manufacturing
and and
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Engineeringof America
ofAmerica
Center,America
Center,America
TEL Technology
TEL Technology
Center,America
Center,America
TELVenture
VentureCapital
CapitalTEL
TEL Technology
TEL Technology
Center,Center,America
America
TEL
VentureCapital
Tokyo
ElectronU.S.
Holdings
Tokyo Electron U.S. Holdings
TEL Venture CapitalTokyoElectron
ElectronAmerica
AmericaTokyo
TokyoElectron
U.S. Holdings
TEL Venture
TEL Venture
CapitalCapital
Tokyo
Electron
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Electron
AmericaTokyoTokyo
Electron
AmericaTokyo ElectronTokyo Electron
U.S. Holdings
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Tokyo ElectronTokyo Electron
America
AmericaTokyoElectron
ElectronIndia
India
Tokyo

companies atcompanies at

TokyoElectron
ElectronTaiwan
TaiwanElectronTokyoTokyo
Electron
India India Tokyo
TokyoElectron
Electron
Tokyo
Tokyo
ElectronTaiwan
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ElectronTaiwan(Malaysia)(Malaysia)
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TaiwanTaiwan(Malaysia)(Malaysia)
Tokyo
Electron
Tokyo
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Singapore(Malaysia)(Malaysia)
Singapore
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Tokyo
Singapore
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Solutions
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Headquarters)Tokyo
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MiyagiMiyagi
TokyoElectron(WorldHeadquarters)
Tokyo
Electron(WorldHeadquarters)
TokyoElectron
ElectronFE
FE
sites
Tokyo

26
50
76

companies atsites insites in

17
18

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chipPersonal
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ComputerComputerElectronics
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1990s
1990s
1990s

2006
2006
2006
2007
2007
2007
2007
2007
2007

2015
20152015

1964
1964
1964
1964
19641964

1968
1968
1968
1968
19681968

3

1984
1984
1984
1984
19841984

1986
1986
1986
1986
19861986

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

1990
1990
1990
1990
1990
1990
1994
1994
1994
1994
19941994
1999
1999
1999
1999
19991999

2015
2015
2015
2015
20152015

2019
2019
2019
2019
2019
2019

WaferProcess
Process(Front-end)(Front-end)
Wafer
Wafer
Process
Assembly
andTestTest(Front-end)
Process(Back-end)(Back-end)
AssemblyandProcess
Wafer
Process(Front-end)
Assembly
Test
Process(Back-end)
Assembly
and and
Test
Process(Back-end)
Wafer
Wafer
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Process(Front-end)(Front-end)

Lithography
Lithography(Photoresistcoating,coating,
Development)(Photoresist
Development)
Lithography
Lithography(Photoresist
coating,
Development)(Photoresist
coating,
Development)
Lithography
Lithography(Photoresist(Photoresist
coating,
coating,
Development)
Development)

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Etching

Cleaning
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Cleaning
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Cleaning
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Etching
Etching

Coater/Developer
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Wafer
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1970s
1980s
1960s
1990s
2000s
2010s 2020s
2020s
1970s
1980s
1960s
1990s
2000s
2010s
1970s 1980s
1980s 1990s
1960s 1970s
1990s 2000s
2000s 2010s
2010s 2020s
2020s
1960s
1970s 1980s
1980s 1990s
1960s
1960s 1970s
1990s 2000s
2000s 2010s
2010s 2020s
2020s

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* Fractions
smallerthanmillion
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* Fractions
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Assembly
Assembly
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Deposition

countries and regions

History

specialized
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Deposition
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Mainframe
Foundedas
astechnicaltechnicalComputer
FoundedComputer

Japan
Japan
Number of Employees by Region (Consolidated)(Unit: People)(Unit: People)(28.5%)(28.5%)(3.7%)(3.7%)
63.5
63.5
North
North
America
1,796 America
1,796
63.5
63.5
North
North
America
America(12.4%)(12.4%)
152.0(10.9%)(10.9%)
152.0
1,796
1,796
North
North
America
America(12.4%)
152.0(10.9%)(12.4%)
152.0 (10.9%)
1,796
1,796
(12.4%)(12.4%)
152.0
152.0(10.9%)(10.9%)
JapanJapan
billionyenyenpeoplebillionpeopleJapanbillionyenpeople(fiscalyear
yearended
endedMarch
March
31,2021)2021)(fiscalyear
yearended
endedMarch
March
2021)
(fiscal31,(fiscal31,31,2021)
Japanbillionyenpeople197.5(14.1%)(14.1%)
197.5
ended
March
31,
2021)
ended
March
31, people
2021)
Japan
Japan(14.1%)(fiscal(fiscal
year year
ended
March
31, 2021)(fiscal(fiscal
year year
ended
March
31,people
2021)
billionbillion
yen
yen
197.5
197.5 (14.1%)
Asia
SouthKorea
Korea
Asia
South
(fiscal(fiscal
year ended
year ended
MarchMarch
31, 2021)
31, 2021)(fiscal(fiscal
year ended
year ended
MarchMarch
31, 2021)
31, 2021)
197.5
197.5
(14.1%)(14.1%)
TaiwanTaiwanSouth
Korea
Asia Asia
South
Korea
3,846
285.2
3,846
285.2
TaiwanTaiwan
Asia
Asia
South
South
KoreaKorea (26.6%)
249.7(17.9%)
249.7(17.9%)(26.6%)(20.4%)(20.4%)
3,846
285.2
3,846
285.2
TaiwanTaiwan249.7(17.9%)(26.6%)(20.4%)
249.7(17.9%)(20.4%)
3,846
3,846
285.2
285.2 (26.6%)* Fractionssmaller
smallerthan
than100
100million
millionyen
yenarearetruncated.
truncated.
* Fractions
249.7
249.7
(17.9%)(17.9%)(26.6%)(26.6%)(20.4%)(20.4%)

Repetition

Japan:

52.4(3.7%)
52.4(3.7%)Southeast
Southeast
Asia, andAsia,Others
and Others
52.4(3.7%)
EuropeEurope52.4(3.7%)
Europe52.4
52.4(3.7%)(3.7%)
Europe63.5(4.5%)
63.5(4.5%)

Repetition
Repetition
Repetition
Repetition
Repetition

ElectronTokyoTokyo
Electron
KoreaKorea

Tokyo ElectronTokyo Electron
Korea Korea
TEL Magnetic
SolutionsTokyo Electron (Shanghai)
TEL
Magnetic
SolutionsTokyo
Electron
Europe Tokyo Electron (Shanghai)
Tokyo
Electron
EuropeTokyoElectron
Electron(Shanghai)
LogisticCenter
CenterTokyo(Shanghai)
Logistic
Electron(Shanghai)TokyoTokyo
Electron(Shanghai)
TEL
Magnetic
TEL
Magnetic
Solutions
SolutionsTokyo
Electron
EuropeTokyoElectron
Electron(Kunshan)Tokyo
Electron
Europe(Kunshan)
TEL
SolarServices
Services Tokyo
TEL
Solar
Electron(Shanghai)
Logistic
CenterTokyoTokyo
Electron(Shanghai)
Logistic
CenterTokyo Electron
Tokyo
Electron(Shanghai)(Shanghai)Electron(Kunshan)Tokyo
Electron
Tokyo
Electron
EuropeEuropeTEL
Solar
ServicesTokyoTokyo
Electron(Kunshan)
TEL Solar
ServicesTokyo ElectronTokyo Electron(Shanghai)(Shanghai)
Logistic
Logistic
CenterCenterTokyoElectron
ElectronIsrael
IsraelTokyo
Tokyo ElectronTokyo Electron(Kunshan)(Kunshan)
TEL Solar
TELServices
Solar Services
Tokyo ElectronTokyo Electron
Israel Israel

People)(Unit: (Unit:
People)EuropeEurope1,399.1
1,399.1
1,399.1
1,399.1
1,399.1
1,399.1

Headoffice
officeHead
Head
office(including
Branch,Office(includingField
FieldService),
Service),Sales
SalesOffice
OfficeBranch,OfficeHeadofficeBranch,Office(including
Service),
OfficeBranch,Office(including
FieldField
Service),
SalesSales
OfficeHeadHead
officeoffice

TELMagnetic
MagneticSolutions
Solutions
TEL(Unit:
People)(Unit:
People)(Unit: Billions(Unit:
Billionsof yen) of yen) Europe
China
EuropeChina

EuropeEurope(4.5%)(4.5%)
NorthAmerica
America
North
North
America(4.5%)(4.5%)
North
America

Number of Sites (As of March 31, 2021)

ElectronTokyoTokyo
ElectronIsraelIsrael

Billions(Unit: (Unit:
Billionsof yen)of yen)
China
China

SoutheastAsia,
andOthers
OthersSoutheast
andSales
byAsia,Region(Consolidated)
Southeastand Others
Southeast
Asia,Asia,and Others

Oxide/Nitride
film deposition
Oxide/Nitride
film deposition
Wafer Wafer

Photoresist
coating Exposure
Exposure
Photoresist
coating

Oxide/Nitride
Oxide/Nitride
film deposition
film deposition

Interconnectformation
formation
Interconnect
Interconnect
formation
Interconnect
formation
Interconnect
Interconnect
formationformation

Development
Development

Etching
Etching

Photoresist
Photoresist
coating
coating
Exposure
Exposure
Development
Development
Isolation
Formation/Gate
Formation
Isolation
Formation/Gate
Formation
Isolation
Formation/Gate
Formation
Isolation
Formation/Gate
Formation
Testing
Testing
Isolation
Isolation
Formation/Gate
Formation/Gate
Formation
Formation
Testing
Testing

Testing
Testing

Ashing/Cleaning
Ashing/CleaningGate
GateElectrode
Electrode

Packaging/Inspection
Packaging/Inspection
Packaging/Inspection
Packaging/Inspection

Electrode
GateGate
Electrode
Gate Electrode
Gate Electrode

Packaging/Inspection
Packaging/Inspection

Wafer
ProberSingleWafer
Deposition Plasma
PlasmaEtch
System
Wafer
ProberSingleWafer
Deposition
Etch
System
TMTM
TMTM
TMTM
PrecioSystem Wafer Deposition
Tactras/ Episode
PrecioSystemTactras/ EpisodeULUL
XLXL
PlasmaEtch System
WaferWafer
ProberProberSingleSingle
Deposition Plasma
Etch System+ TM
TM+WaferTriasSystem
Trias
TM
TM
TM
Tactras/ EpisodeTM
TM
TM
PrecioPrecio
SystemTactras/ Episode
UL UL
XL XL
Wafer Prober
Wafer ProberSingleWafer
SingleDeposition
Wafer Deposition
PlasmaPlasma
Etch System
Etch System
+ TM
+ TM
Trias Trias
TM
TM
TM
PrecioTMPrecio
SystemSystemTactrasTactras/ Episode/ Episode
UL TM ULXL TM XLIntermetal
Metal
film
Intermetal
Metal
film
+ TM
+ TM
Triasdielectric
Trias film
film
Intermetal
Metalfilm
film dielectric
Metal
Intermetal
MetalMetal
film film
dielectric
dielectric
film film
MetalMetal
film film
IntermetalIntermetal
Metal film
Metal film
dielectric
film film
Metal film
Metal film dielectric

Wafer
Bonder/Debonder
Wafer/Dicing
Frame
Wafer
Bonder/Debonder
Wafer/Dicing
Frame
Completed
Completed
TMTM
SynapseProberSynapseProber
V/V/
Semiconductor
Semiconductor
Wafer
Bonder/Debonder
Wafer/Dicing
TM
TM
Completed
TMTM
Wafer
Bonder/Debonder
Wafer/Dicing
FrameFrame
WDF
Synapse
Plus
12DP+
WDF
Synapse
ZZ
Plus
12DP+
Completed
TM
Packaging
Packaging
SynapseV/
TM V/
SynapseProberProber
Semiconductor
TM
Semiconductor
TM Z Plus
WDF
Synapse
12DP+
TM
Wafer
Bonder/Debonder
Wafer
Bonder/Debonder
Wafer/Dicing
Wafer/Dicing
Frame
Frame
TM
Completed
Completed
WDF 12DP+
Synapse Z Plus
Packaging
Packaging
TM V/
TM V/
SynapseSynapse
Prober Prober
Semiconductor
Semiconductor
TM Z Plus
TM Z Plus
WDFTM WDF
SynapseSynapse
12DP+TM 12DP+

Packaging
PackagingInterconnect
Interconnect
CompletedIntegrated
Integrated
Completed
WaferProbe
ProbeTesting
Testing
Wafer
Formation
Formation
Circuit Integrated
CircuitInterconnect
Completed
Interconnect
Completed
Integrated
Contact
Formation
Wafer
Probe
Testing
Contact
Formation
Wafer
Probe
Testing
Formation
Circuit
Formation
CircuitInterconnect
Interconnect
Completed
Completed
Integrated
Integrated
Contact
Contact
Formation
Formation
WaferWafer
ProbeProbe
Testing
Testing
Formation
Formation
CircuitCircuitContactFormation
Formation
Contact

Ashing/Cleaning
Ashing/Cleaning

Etching
Etching

WaferBonding/
Bonding/
Wafer
Debonding
Debonding
Bonding/
WaferWafer
Bonding/
Debonding
DebondingWaferWafer
Bonding/
Bonding/
Debonding
DebondingInspection
Inspection
Inspection
Inspection
Inspection
Inspection

Packaging/
Packaging/
Assembly
Assembly
Packaging/
Packaging/
Assembly
Assembly
Packaging/
Packaging/
Assembly
Assembly

FPD Production Equipment

FPDCoater/Developer
Coater/Developer
FPD
TM
Exceliner
Exceliner
FPD TM
Coater/Developer
FPD
Coater/Developer

TM
TM
Exceliner
Exceliner
FPD Coater/Developer
FPD Coater/Developer
TM
Exceliner
ExcelinerTM

FPDPlasma
PlasmaEtch/Ash
Etch/AshSystem
SystemFPD
TMTM
Impressio
Impressio
FPD Plasma
Etch/Ash
SystemFPD
PlasmaEtch/Ash
SystemTM
TM
Impressio
Impressio
FPD Plasma
FPD Plasma
Etch/Ash
Etch/Ash
SystemSystemTM
Impressio
Impressio TM

FPDPlasma
PlasmaEtch/Ash
Etch/AshSystem
SystemFPD
BetelexBetelexFPDTMTM
PlasmaEtch/Ash
SystemFPD
PlasmaEtch/Ash
SystemTM
TM
BetelexBetelexFPD Plasma
FPD Plasma
Etch/Ash
Etch/Ash
SystemSystemTM
BetelexBetelexTM

InkjetPrinting
PrintingSystem
Systemfor
for
Inkjetmanufacturing
OLED
display
manufacturing
OLED
display
InkjetPrinting
Systemfor
InkjetPrinting
System
for
TMTM
Elius
Elius
manufacturing
OLED
display
manufacturing
OLED
display
InkjetInkjet
Printing
Printing
SystemSystemfor for
TM
TM
Elius
Elius
manufacturing
manufacturing
OLED OLED
display
display
TM
TM
Elius EliusTOKYO ELECTRON SUSTAINABILITY REPORT 202 1

4

CEO’sMessageOur pursuit of sustainability is the practice of our Corporate Philosophy, and we undertake a diverse range ofcompany-wide measures through our business.
As the social importance of semiconductors and displays increases, the key issues that we need to strengthen(i.e., material issues) based on a strong management foundation of safety, quality, compliance, governance andrisk management underpinning our business activities are product competitiveness (being the first to identify
leading-edge technological trends and changing needs), continuously creating next-generation products withthe overwhelming added value and performance that future customers will require, and being the sole
strategic partner based on our extensive track record and customer responsiveness, as well as higher
productivity based on the continual improvement of operational efficiency. As a result of these efforts, we willfurther reinforce earnings power.
To address environmental issues, our technologies contribute to enhancing the performance and reducing thepower consumption of semiconductor devices and displays, and in December 2020, we revised our mediumterm environmental goals for fiscal year 2031. Our goals are to reduce CO2 emissions per wafer by 30%
compared with fiscal year 2019 and to reduce total CO2 emissions from plants and offices by 70% comparedwith fiscal year 2019 by using 100% renewable energy and implementing other measures. In addition to theseindustry-leading goals, we launched E-COMPASS (Environmental Co-Creation by Material, Process andSubcomponent Solutions) as a new initiative in June of this year. We believe that continuously implementing
global environmental preservation measures throughout the entire supply chain will strengthen productcompetitiveness and lead to the provision of added value to customers. Through these measures, we will
perform our social roles for achieving decarbonization.
To promote the sustainability management expected of us by global society, we signed the United Nations
Global Compact and joined the Responsible Business Alliance (RBA). Through these international initiatives, weare actively addressing environmental issues and human rights issues as well.

I would like to express my sincere gratitude to all stakeholders for your continued support and patronage.
The previous year saw the global spread of COVID-19 and frequent natural disasters arising from climatechange, including torrential rains in Japan and hurricanes and cold spells in North America. In addition, there
were geopolitical issues such as trade friction as well as various human rights issues that occurred worldwide.
It became a year carved in history as one that had a major impact on society and the lives of people.
On the other hand, it was also a year when digital transformation (DX) made progress in our daily lives and all
kinds of industries, and the importance of semiconductors, which are essential for information andcommunication technology (ICT), became prominent. Applications expanded for the displays that link people
and data, and additional advances in technological innovation were made.

Regarding corporate governance that underpins our business activities, we strive to create highly effective
structure that can achieve sustainable growth while considering our corporate culture and the uniquecharacteristics of our business so that we can adequately perform management decision-making andsupervisory functions.
Moving forward, to properly fulfill our mission and responsibilities, we will aim to remain a truly excellent global
company that is loved and highly trusted by all stakeholders by promoting sustainability-focused management
and contributing to addressing issues of industry and society as well as their development.
Your continued support and patronage are very much appreciated by all of us at Tokyo Electron.

As a result of the spread of the IoT, AI, 5G and other technologies, we are transitioning to a data society at an
unprecedented pace. As efforts to solve global environmental problems progress, the balancing of “digital andgreen” is now a major trend around the world.
Toshiki Kawai
Under the circumstances, Tokyo Electron seeks to leverage our expertise developed as a globally leading
company and as a manufacturer of semiconductor and flat panel display production equipment and use all of
our management resources, including the employees who are the source of value creation, in order tocontribute to the realization of the social issue of the compatibility of digitalization and greening as well as ashared value. We strive to practice our Corporate Philosophy, ”We strive to contribute to the development of a
dream-inspiring society through our leading-edge technologies and reliable service and support” while
increasing medium- to long-term profit expansion and continuous corporate value enhancement.

5

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Representative Director, President & CEOTokyo Electron Limited

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

6

Tokyo Electron’s CSRTokyo Electron’s Corporate Philosophy

We strive to contribute to the development of a
dream-inspiring society through our leading-edge
technologies and reliable service and support.
CSR Policy
The CSR operations of Tokyo Electron are initiatives that realize our Corporate Philosophy. We pursue sustainable
operations from the viewpoints of corporate governance, legal and regulatory compliance and business ethics while
creating new value through our products and services. Based on these efforts, we implement CSR activities to help
address social issues. We will continue to pursue CSR activities to build stakeholder trust, improve corporate value and,by doing so, promote the growth of a sustainable and dream-inspiring society.

Sustainable Operations
Material Issues

Through Business Activities

1
The United Nations
Global Compact (UNGC):An initiative proposed tocorporations by then UN
Secretary-General Kofi
Annan at the 1999 World
Economic Forum. We
signed onto the Compact
in 2013.

Initiatives for Sustainable Development Goals (SDGs)

Contribution to
the Solution ofSocial Problems

Creation of New Value

Advancementof Dream-inspiring Society
Improvementof Corporate
Value

Reinvest
Distribute toShareholders andEmployees
Pay Taxes

The SDGs are a universal set of goals to achieve by 2030, which wereunanimously adopted by the United Nations Sustainable Development
Summit in 2015. We conduct activities on a company-wide basis, and for each
CSR fiscal year and medium-term goal, and each material issue, we clarified
the SDGs it is working toward through business.
Additionally, starting in fiscal year 2021, we have been on a regular basis
holding SDGs workshops where employees working in a variety of fields cometogether and discuss various suggestions for contributing to the achievementof SDGs through business.

Tokyo Electron Supports the SDGs

Participation in Global Initiatives
We signed onto the United Nations Global Compact (UNGC1) and support its Ten Principles in the four areas of Human
Rights, Labour, Environment, and Anti-Corruption, to realize sound globalization and a sustainable society.
Additionally, as a corporate member of the Responsible Business Alliance (RBA2), we promote sustainability in our
supply chain by abiding by the RBA Code of Conduct comprised of five framework sections (Labor, Environment,
Health and Safety, Ethics and Management Systems).
In addition, we have expressed our approval of the recommendations offered by the Task Force on Climate-related
Financial Disclosures (TCFD3) and are pursuing initiatives based on the framework of governance, strategy, risk
management, indicators and targets relating to the risks and opportunities that climate change presents to ourbusiness.

Distributionof Profit

CSR-oriented Operations

CSR Promotion Framework
We implement sustainability management, integrating it with our business strategy from a medium- to long-term
perspective of corporate value enhancement. Three groups have been established to promote CSR activities.
The CSR Management Council, the highest decision-making body regarding CSR, conducts discussions on the policy
for the entire company, and important projects. Based on this, the CSR Global Committee discusses CSR target setting
and progress management regarding activities for achieving CSR targets, along with promoting global projects, andshares best practices. At the CSR Monthly Meeting, information on CSR activities is shared with representatives fromeach division, and collaborative systems are built to tackle cross-division themes.
We are also working to further strengthen our CSR structure by appointing CSR managers at the company
headquarters as well as the Group companies in Japan and overseas companies to be in charge of understanding CSR
policy and goals and promoting activities.

Conference Name

Participants

CSR Management Council







CSR Global Committee

CSR Monthly Meeting







Chairman of the Board
Representative Director, President & CEO
Corporate Directors and Managers
Chief CSR Promotion Director
Heads of related departments
CSR managers of the Group companies in Japan andoverseas companies
Person in charge of CSR at each division

Function

Decide company-wide CSR policy
Discuss important matters

UN Global Compact

Responsible Business Alliance

Task Force on Climate-related Financial Disclosures

Evaluation from Third-Party Institutions
Our CSR activities have received high appraisals from evaluation organizations around the world. We have continued to be
selected as a constituent stock under leading global ESG investment indices, including the DJSI4 Asia Pacific Index,
FTSE4Good Index5 and MSCI World ESG Leaders Indexes6, and in 2021, we were also rated as a low-risk company in
Sustainalytics’ ESG Risk Ratings7.
8

Meeting Frequency

DJSI Asia Pacific 2020

FTSE4Good Index

MSCI World ESG Leaders Indexes

Sustainalytics’ ESG Risk Ratings

Twice annually

Financial Model in the Medium-Term Management Plan










Manage progress of activities for achieving CSR goals
Implement global projects
Share best practices
Share information on CSR activities
Discuss cross-division CSR initiatives

In addition to these groups, once a year we invite all employees to submit
examples of CSR in the workplace, toward issue resolution andadvancement of industry and society, and practice of our Corporate
Philosophy. Outstanding initiatives are awarded the CSR Promotion Awardby the Representative Director, President & CEO.

Twice annually

Monthly

In addition to pursuing sustainable operations in line with its CSR policy, we are also striving for medium- to long-term
profits and ongoing corporate value enhancement by creating new value through business and helping in the
resolution of issues and development of industry and society. In May 2019, against a backdrop of market growth forsemiconductor and flat panel display production equipment, we formulated the Medium-term Management Plan andset goals in the associated financial model of net sales of 2 trillion yen, an operating margin of 30% or higher and ROE9of at least 30% by March 2024. We have also set two goals for generating and returning appropriate profits toshareholders in the event of changes in the macro-economy or in the semiconductor supply-demand balance.
FY2021 Actual/Financial Model in the Medium-Term Management Plan
FY2021 (Actual)
Net Sales

Financial Model (By FY 2024)

1,399.1 billion yen

1,500 billion yen

1,700 billion yen

2,000 billion yen

Operating Margin

22.9%

26.5%

28.0%

>30.0%

ROE

26.5%>30.0%

2
RBA: An international
initiative promoting
supply chain
sustainability focused on
the electronics industry.
We have been a member
since 2015.
3
TCFD: Task Force on
Climate-related Financial
Disclosures. We haveexpressed approval of therecommendations since
2020.
4
DJSI: Dow Jones
Sustainability Indices. An
ESG (environmental, socialand governance)
investment index. The Asia
Pacific covers companies
in that region.
5
FTSE4Good Index: An
index related toenvironmental
performance andcorporate social
responsibility
6
MSCI World ESG Leaders
Indexes: Companies thathave high ESG
performance are selectedfrom the MSCI Global
Sustainability Index, an
ESG investment index
developed by MSCI
7
Sustainalytics’ ESG Risk
Ratings: An ESG risk
assessment for
institutional investors by
Sustainalytics in the
Netherlands. The rating isbased on a company’s
exposure to industryspecific material ESG risks
and how well those risks
are being managed.
Copyright ©2021
Sustainalytics. All rights
reserved. This article
contains information
developed by
Sustainalytics (www.
sustainalytics.com). Suchinformation and data areproprietary of
Sustainalytics and/or its
third party suppliers (Third
Party Data) and areprovided for informational
purposes only. They do notconstitute an endorsementof any product or project,
nor an investment advice
and are not warranted tobe complete, timely,
accurate or suitable for aparticular purpose. Theiruse is subject to conditions
available at https://www.
sustainalytics.com/
legal-disclaimers.
8
Please check the link forthe logo’s disclaimer.
https://www.tel.com/csr/
review/
9
ROE: Return On Equity

CSR Promotion Award Certificate

7TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

8

Identifying Material Issues
Tokyo Electron identifies important and priority material issues (key issues) to be addressed for the medium- tolong-term enhancement of corporate value by examining both social and business environments, evaluating risks andopportunities and holding active dialogues with stakeholders.

Stakeholder Engagement
We examined the opinions and requests obtained through dialogue and engagement opportunities with stakeholders.
Stakeholders

Main Engagement Opportunities

Shareholders/investors

Issues AwarenessSocial Issues
While society is currently being affected in many ways by the COVID-19 pandemic, humans are also faced with various
issues, such as abnormal climate conditions and natural disasters, human rights issues, conflicts between nations andcyber-attacks. Mitigating climate change and eliminating inequality in human rights in particular are pressing issues forthe global community, and there are strong calls for further action, not just by international organizations, andnational governments, but also by the private sector.
While participating in global initiatives such as the United Nations Global Compact and RBA and keeping an eye onsocietal trends, and considering recommendations from third party organizations, we also examine social issues that
may impact our business activities.
Business Environment
With the spread of IoT, AI, 5G and other technologies, a data-centric age has arrived and the implementation of digitaltransformation and information and communication technology (ICT) is accelerating. This further increases theimportance of the semiconductor industry as a social infrastructure. Along with innovations in semiconductor
technologies to achieve larger capacity, higher speed, higher reliability and lower power consumption, the market for
semiconductor wafer fab equipment (WFE*), in which we conduct our business, is forecast to continue expanding.
New evolutions are also required in Flat Panel Display (FPDs), which act as the interface between people and ICT,and further technical innovations are occurring. In the future, as organic EL displays become widespread, panel size
increases, and design improvements that take advantage of enhanced characteristics such as high resolution, lowpower consumption, thinner profile and flexibility, are expected to further expand the application fields.
Taking actions to preserve the global environment has become an urgent issue, and initiatives toward
decarbonization are accelerating on a global scale under international frameworks such as the SDGs and Paris
Agreement. As the transition to a digital and green society progresses, the roles played by semiconductors and FPDs
will increase even further in the future.
At the same time, the importance of corporate governance, which fundamentally supports the medium- to longterm growth of corporations, is also increasing. Further strengthening of measures is essential to ensure safety andquality, as well as compliance and risk management.
Risks and Opportunities
We examined the risks and opportunities closely related to sustainable business development in consideration of social
issues and social/business environments such as the SDGs.
Main Potential Risks


EnvironmentHuman rights

Supply chain
management

GovernanceCompliance
Evolution oftechnology
Information
security

9













If we fail to comply with laws and regulations, industry codes ofconduct, or in-house policy, product competitiveness and social
credibility will decline, and the cost of correcting the problem will
increase business costs.
If we fail to comply with laws and regulations, industry codesof conduct, or in-house policy, social credibility and employee
engagement will decline.
If a natural disaster occurs, or it becomes impossible to continue
business transactions with suppliers, events such as delivery delays
and contractual non-performance will harm business continuity.
If sustainability-related issues such as the environment and humanrights become more serious, operations will stagnate.
If management’s monitoring or supervising function declines,
management risk will increase, and business activities will stagnate.
If an ethical or compliance violation occurs, we will lose social
credibility and suffer economic loss.
If the development of leading-edge technologies is delayed, we willlose business opportunities.
If confidential information is leaked, social credibility will decline, andcompensation for damages be required.
If a cyber-attack or natural disaster occurs, our business will stagnate.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

CustomerSuppliersEmployees





Local
communities
Governments/
associations*
WFE: Wafer Fab
Equipment. The
semiconductor
production process isdivided into front-end
production, in which
circuits are formed on
wafers and inspected,
and back-end
production, in which
wafers are cut into
chips, assembled andinspected again. WFE
refers to the production
equipment used in
front-end production
and in wafer-levelpackaging production.











Technology conference
Customer satisfaction survey
Joint development













Promote environmental management, improve the environmental
performance of our company’s manufacturing equipment, createbusiness opportunities and provide technologies that will help reduce
the power consumption of semiconductors
Create a workplace environment that respects employee diversity
and enables all employees to demonstrate their full capabilities,
improve employee turnover rate and promote health management
Establish a sustainable production system, further increase business
operations efficiency, improve business continuity through enhanced
business continuity plans, strengthen competitiveness in the supply
chain and build trusted relationships with customers and suppliers











Community contribution activities
Tours of plants and offices
Environmental debriefing









Industry group activities
Collaboration with various initiativesMedium- to long-term growth scenario and associated measures
Further initiatives for governanceCapital policy, including shareholder return
Understand diverse application needs and suggest solutions to satisfy them
Maximize equipment performance and productivity
Comprehensive and optimal solutions

1
IR roadshows: IR
activities presented
directly to shareholders
and investors
2
STQA: Supplier Total
Quality Assessment

Share high-quality information related to production and technology
trends in a timely manner
Improve our company’s operation by complying with the expected quality
standards
Share the management policy further
Provide medium- to long-term career development opportunities for
employees
Create work environment in which diverse human resources can thrive
Coexistence of the company with communities
Promotion of environment conservation
Human resource development and innovation
Create new values through innovation
Initiatives targeted at climate change, human rights, etc.
Building of sounder supply chains

Identifying Material Issues
We have ascertained the social issues and business environment, considered the risks and opportunities andexamined the opinions and requests of all stakeholders. We have reassessed material issues from the perspectivesof developing a sustainable society and enhancing medium- to long-term corporate value.
As a result, we decided to leave Product Competitiveness, Customer Responsiveness, and Higher Productivity
unchanged, which are items already identified for enhancement in the Medium-term Management Plan as material
issues. We also reexamined the significance and activities related to People and Workplaces, which had previously
been defined as a material issue through fiscal year 2021, and decided to integrate it into Management Foundation.
The material issues were decided at the CSR Management Council, attended by Chairman of the Board,
Representative Director, and President & CEO, and corporate directors involved in CSR.

Material Issues

Identified Material Issues
Material issues

Medium-term Goals

Product
competitiveness

Create strong next-generation products

Customer
responsiveness

Be the sole strategic partner

Priority Themes








Higherproductivity

Continually improve operational
efficiency











Importance to businessManagementfoundation

Build a strong managementfoundation for underpinning ourbusiness activities











Operate healthy corporate activities by complying with laws andregulations, industry codes of conduct, corporate ethics, and other rules

Build a rock-solid information infrastructure by strengthening
information security, and improve information literacyEnhance corporate value on a medium- to long-term basis, gain
stakeholders’ trust and increase social credibility

Create ground-breaking innovations, strengthen competitive
superiority and contribute to industry and societal issue resolution
and growth

Employee meeting
Global engagement survey
Career interest survey (Japan)

OpportunitiesProduction update briefing
TEL Partners Day
STQA2 audit

Importance to society

Social Trends



Key Opinions and Requests

Earnings release conference, Medium-term Management Plan
briefing, non-financial briefing (IR Day)
IR conference, IR road show¹, individual IR interview
Shareholders' Meeting

Tackling technological innovation
Solutions that create value forcustomers
Improvement of customer satisfaction
Continuous improvement of business
operations
Quality management
Improvement of customer
productivity/yield
Diversity and inclusion
Career development
Work-life balance
Health and safety
GovernanceRisk management
Compliance
Environmental contribution of
products
Environmental management
Supply chain management

Annual Goals for Each Material Issue
Reflecting on the priority themes in each material issue, we verified the results against the goals for fiscal year 2021
and set annual goals for fiscal year 2022. In setting each goal, we have clearly identified the corporate director
responsible for achieving it, and we are working on various activities aimed at further enhancing our corporate value
and contributing to the achievement of SDGs.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

10

CSR Goals and Results

1 ERP: Enterprise Resource Planning 2 CRM: Customer Relationship Management 3 PLM: Product Lifecycle Management 4 Shift Left: Refer to p.17 and p.31
5 Senior specialists were included in the 2.0% figure in fiscal year 2019 6 An indication of the risk of lifestyle diseases in years, based on the results of health checkups 7 SR: Shareholder Relations
8 Per-unit basis: Calculated using complex weighting of the number of developed evaluation machines, units produced, floor area, and labor-hours for each district
9 Per-unit basis: Calculated based on floor area and labor-hours, etc. for each district 10 BCP: Business Continuity Plan 11 For each question, average score is calculated for all customers who responded
12 The ratio of females majoring in science or engineering in the case of engineers

FY2021

FY202 2

Material Issues

Priority Themes

Annual Goals


Product
competitivenessTackling
technologicalinnovationEnvironmental
contribution of
products

Customer
responsiveness

Solutions thatcreate value forcustomers
Improvement ofcustomersatisfaction











Continuous
improvement ofbusiness operations

Ensure that 20% or more (three-year moving average) of all
equipment models are new products for next-generation
technologies
Maintain the previous year’s global patent application rate (±10%)
Reduce per-wafer emissions of CO2 by 20% by fiscal year 2025
(compared with fiscal year 2014)
Increase Tokyo Electron's value to customers

ResultsPriority Themes

Product
competitivenessTackling technologicalinnovation

Annual Goals

Maintained the previous year's rate
(Achieved 79.8% in fiscal year 2020 and 74.3% in fiscal year 2021)

Orders and sales both increased significantly from the previous fiscal year, driven by
demand for smartphones and servers
Increased by 19.6% from previous fiscal year

Achieve evaluations of “Very Satisfied” or “Satisfied” for 100% of
customer satisfaction survey responses



96.7% (achieved in 29 out of 30 questions)

Solutions that create
value for customersExpanded CRM to multiple overseas subsidiaries
Expanded PLM to multiple domestic manufacturing sites in Japan
Almost completed preparations for adopting ERPHigher productivity

Improvement ofcustomerproductivity/yield

Diversity andinclusionCareerdevelopment
People andworkplaces
Work-life balance

Check the impact of important non-conformance items on otherequipment and thoroughly implement recurrence prevention
measures
Promote Shift Left4 (front-loading) activities for quality(1) Increase engineer time for high-value work in upstream
processes, and(2) implement medium- to long-term action plans to continue toenhance quality assurance activities
Double the percentage of female managers and experts (with sameroles and responsibilities as managers) by fiscal year 2022 from 2.0%5
in fiscal year 2019Improvement ofcustomer satisfactionHigherproductivity

Finished revising new QA-BOX operation rules
Started regular meetings with the heads of all BU quality assurance divisions
Implemented progress management for QA-BOX submissions



Quality management

Improvement ofcustomer productivity/yield(1) Completed each company's individual/common activity plans
Each company is currently carrying out individual activities as planned
Common activities:
Formulated activity policy based on best practices
Agreed on activity policy with the heads of each quality assurance division(2) Formulated medium- to long-term plans
Formulated plans, started activities

Diversity and inclusion(1) Increased number of leader training participants year-on-year change: 104%
(Japan)(2) Increased number of external web based training courses taken year-on-yearchange: 158% (Japan)(3) Increased number of participants of career training for senior employees
year-on-year change: 149% (Japan)

Reach at least 70% take-up rate of annual paid leave

62.5% (Japan)

Reduce gap between health age6 and actual age by 1.5 points by fiscal
year 2021 (as compared with fiscal year 2018)

Reduced gap by 0.21 points (Japan)Career development

Work-life balance

Continue to improve on issues identified in evaluations of theeffectiveness of the Board of DirectorsRisk managementComplianceManagementfoundation







Environmental
management

Achieve 100% recognition among employees concerning internal
hotline
Revise Code of Ethics, conduct basic annual training, and achievepledge rate of 100%
Conduct a compliance awareness survey
Reduce energy consumption by 1% from the fiscal year 2020 level(per-unit basis8) at each plant or office

Achieved 0.27
Revised Board of Directors Regulations and established the Business Execution
Meeting to improve the effectiveness of the Board of Directors
Revised the Affiliated Companies Management Regulations from the perspective ofstrengthening group governance. Confirmed status of operations based on theregulations with each division
Implemented SR7 activities with institutional investors with an eye to Shareholders'Meeting proposals and ESG-related issues
Held discussions at off-site meetings on medium- to long-term strategies(1) Conducted assessments using checklists at overseas and domestic groupcompanies, identified risks and examined countermeasures(2) Established the Risk Management Committee and held meetings (Mar. 2021)









Recognition of internal hotline: 68%
Code of Ethics education and pledge rate: 98.8%
Awareness survey (Trial survey planned for fiscal year 2022)

GovernanceManagementfoundation

Risk managementCompliance

Environmental
contribution of
productsSupply chain
management


Maintain water consumption (per-unit basis9) at plants and offices at
the fiscal year 2012 level in Japan and at individual base year levels
overseas
Implement supply chain CSR assessments for the following
percentages of suppliers
Material suppliers: Covering at least 80% of our procurement spend
Logistics suppliers: 100% of customs-related operators
Staffing suppliers: 100% of employment agencies and contracting
companies (internal contractors)
Implement supply chain BCP10 assessments for the following
percentages of suppliers
Material suppliers: Covering at least 80% of our procurement spend

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Achieved 10 of 13 goals

Environmental
management









Achieve evaluations of “Very Satisfied” or “Satisfied” for 100% of customer satisfaction survey responses11

Target a 10% improvement in operational efficiency as a medium- to long-term goal, achieve
centralized data management through adoption of a new ERP system, and build a business foundation
where employees can focus even more on higher value work
(1) Adopt ERP at headquarters(2) Prepare to adopt ERP at manufacturing sites in Japan and overseas subsidiaries
Constantly pursue
higher management
efficiency

Check the impact of important common issues and thoroughly implement measures to prevent
recurrence of similar faults
Verify the effects of strengthening the quality information environment

Promote Shift Left (front-loading) activities for quality
Identify risks and thoroughly implement countermeasures from the initial development stage (thoroughprevention)

Implement initiatives to make the ratio of females in management positions equal to the ratio of
females in the company over the medium term
Implement initiatives to make the ratio of female recruits equal to or greater than the general ratio of
females12 in each region
Create an organizational system where even those from outside of Japan can take on corporate roles
through the use of technology and shared global human resources systems

Foster a culture of learning and development in the workplace through(1) Leader development programs(2) Provision of personalized global learning opportunities(3) Support for career development throughout working life

Reach at least 70% take-up rate of annual paid leave

Increase the percentage of employees receiving specific health guidance to 60% (figures based on the
results of medical checkups up to the end of fiscal year 2024)
Reduce the number of workplace injuries per 200,000 work hours
Target: TCIR (the total case incident rate) is less than 0.5

Continue to improve on issues identified in evaluations of the effectiveness of the Board of Directors

Promote an integrated risk management system throughout our Group(1) Ongoing rollout of CSA(2) Unified classification and response to risks to the entire Group(3) Launch of internal education program
Roll out in Japan in fiscal year 2022 and overseas in fiscal year 2023

Build a strong
managementfoundation forunderpinning ourbusiness activities

Continuous cultivation of a compliance culture(1) Provide Code of Ethics training and achieve a pledge rate of 100%(2) Implement and improve a compliance survey(3) Achieve 100% recognition of the internal hotline among employees

Reduce per-wafer emissions of CO2 by 30% (by fiscal year 2031, compared with fiscal year 2019)
Reduce the amount of the use of wooden packaging materials by 50% (packaging for semiconductor
production equipment, fiscal year 2024)

Achieved goal at 1 of 11 plants or offices






11

Promote an integrated risk management system throughout ourGroup,(1) Adopt Control Self Assessment (CSA), and(2) establish and operate a risk management committee

Health and safetyGovernance

2.5%(Reference) Percentage of female managers: 2.2% (Japan), 5.2% (global)

Foster a culture of learning and development in the workplacethrough(1) Leader development programs,(2) provision of personalized global learning opportunities, and(3) support for career development throughout working life

Reduce the number of workplace injuries per 200,000 work hours.
Target: TCIR (the total case incident rate) is less than 0.5.



Health and safety







Increase Tokyo Electron’s value to customers
Increase sales-in-field solutions business by 5% or more from the fiscal year 2021 level
Be the sole strategic
partner

Quality
management

Create strong
next-generation
products

Ensure that 20% or more (three-year moving average) of all equipment models are new products fornext-generation technologies
Maintain the previous year’s global patent application rate (±10%)

Customer
responsivenessContinuous
improvement ofbusiness operations


Relevant SDGs

Reduced by 16% in fiscal year 2021 as compared with fiscal year 2014

Medium-term Goals

23.6%

Increase sales-in-field solutions business by 5% or more from thefiscal year 2020 level

Target a 10% improvement in operational efficiency as a medium- tolong-term goal, achieve centralized data management throughadoption of a new ERP1 system, and build a business foundation
where employees can focus even more on high-value work
(1) Expand implementation of CRM2 and PLM3, and(2) adopt new ERP during fiscal year 2021

Material Issues

Percentage of suppliers at which supply chain CSR assessments were implemented
Material suppliers: Achieved 80% or more of our procurement spend
Logistics suppliers: Achieved 100% of customs-related operators
Staffing suppliers: Achieved 100% of employment agencies and contracting
companies (internal contractors)
Percentage of suppliers at which supply chain BCP assessments were implemented
Material suppliers: Achieved 80% or more of our procurement spendSupply chain
management
Reduce total CO2 emissions at plants and offices by 70% (by fiscal year 2031, compared with fiscal year
2019)
Adopt 100% renewable energies at plants and offices (by fiscal year 2031)
Reduce energy consumption by 1% from the fiscal year 2021 level (per-unit basis) at each plant or office
Maintain water consumption (per-unit basis) at each plant and office at the fiscal year 2012 level inJapan and at individual base year levels overseas

Implement supply chain CSR assessments for the following percentages of suppliers
Material suppliers: Covering at least 80% of our procurement spend
Logistics suppliers: 100% of customs-related operators
Staffing suppliers: 100% of employment agencies and contracting companies (internal contractors)
Implement supply chain BCP assessments for the following percentages of suppliers
Material suppliers: Covering at least 80% of our procurement spend

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

12

Value Creation Model
We will make the most of the capital we own and continue to provide new value that contributes to the resolution of issues anddevelopment of industry and society through our business activities in research and development, procurement and manufacturing,sales and installation and maintenance services in our value chain.

INPUT (investment capital)

OUTPUT (value created through business activities)

fiscal year 2021

Financial capital
Net assets
Equity ratio

1,399.1 billion yen
22.9%
242.9 billion yen
26.5%
121.9 billion yen (payout ratio: 50%)

Net sales

1,024.5 billion yen
71.1 ％

Corporate Philosophy

Operating margin
Net income
ROE

Manufactured capital

9

Management Policies

Manufacturing sites total(6 in Japan and 3 overseas)
Manufacturing-related capital investment, such as
new plant buildings and manufacturing equipment

Total annual dividend

Cumulative number of equipment installations Approximately(annual shipment volume of approximately 4,000 units)

Many years of know-how and proven performance inmanufacturing operations

Safety-first operation (TCIR*)

Financial capital■ Returning generated profit to stakeholders■ Building a solid financial foundation■ Continuing proactive investment for growth

Manufactured capital■ Contributing to customers’ product manufacturing and theContributing to customers’ productivity enhancement

Production capacity and capabilities that can respond toincreases in demand

OUTCOME (value provided to industry and society)

76,000 units

High-quality and high-reliability products incorporating leading-edge technologies

TEL Values

Vertical transfer system, from development tomass production

fiscal year 2021

growth of semiconductor and FPD markets through the Best
Products■ Contributing to customers’ fab utilization rate and yield
improvement through the Best Technical Service

0.27* TCIR: Total Case Incident Rate. The number of workplace incidents per 200,000 work hours.

Observing equipment delivery and installation schedules

Intellectual capital

12 total (6 in Japan and 6 overseas)
R&D investment 136.6 billion yen
R&D sites

Broad-ranging knowledge and technological capabilities
in semiconductor and flat panel display (FPD)
manufacturing processes

Installation and
Maintenance Services
Support the stable operationof equipment and provide
prompt and accurate
high-value-added service

Customer needs and equipment-related dataobtained from installed equipment baseContinuously strengthening
research and development tocreate innovative and unique
technologies in a timely manner

Sales
Propose optimal solutions
as the sole strategic partner

Human capital

14,479Proportion of engineers 66.9%
Number of employees

Intellectual capital
Innovative and unique technologies■ Providing leading-edge technologies to contribute to technologicalinnovation and manufacturing in semiconductors and FPDs

Building a product portfolio with technical superiority
Number of patents owned

18,692

Semiconductor production equipment

Product lineup with No. or■ Operating a fair and sound business that respects intellectual

1 2 market share

Value Chain

Infrastructure for promoting digital transformation(enterprise system/database/talents and skills)

Research andDevelopment

Procurement andManufacturing
Efficiently manufacturinghigh-quality products
backed by a sustainablesupply chain

2.5%
17 years and 4 months (Japan)
Average service years
Improvement in engagement score 12 points (compared to fiscal year 2016)
Turnover rate

Improvement in desire for growth and demonstration of the challenging spirit inemployees, who both create and fulfill company values

property rights■ Providing new value to industry and society throughtechnological innovation

Human capital■ Creating fulfilling workplace environments that motivate

employees■ Improving value provided to stakeholders by cultivating

employees with a high level of engagement■ Building a sustainable operation

Personnel able to perform globally
Employee skill upgrade programs and humanresource development

Social and relationship capitalThe driving forces behind
our company

Solid cooperative working relationships with
suppliers

Energy consumption
Water consumption

13

Abundant technological capabilities

94,640 kL
1,397 kmTOKYO ELECTRON SUSTAINABILITY REPORT 202 1

3

96.7％
23.1%
136

Creating employment opportunities in and paying taxes to local municipalities andnations where we carry out business activities

Social and relationship capital■ Maintaining soundness and strengthening

competitiveness throughout the entire supply chain■ Contributing to customer value creation by providing

the Best Products and Best Technical Service■ Contributing to the revitalization of and sustainable

development in local communities

cultivated as an industry leader

Trust from customers
based on our reliable technical services

Natural capital

Rate of improvement after supply chain CSR assessment
Number of TEL FOR GOOD programs

Foundation for business activities in local communities
Relationship of mutual trust with customers built
through many years of performance records

Percentage of respondents who selected “Very Satisfied”
or “Satisfied” in the customer satisfaction survey

Challenging spirit of our employees,
who are capable of flexibly and rapidly adapting to changes in the environment

Per-wafer CO2 emissions
Renewable energy consumption
Energy consumption at plants andoffices per net sales
Waste material recycling rate

16% reduction (compared to fiscal year 2014)
7,763 MWh
10％ reduction (compared to fiscal year 2020)
98.8%

Natural capital■ Implementing products and business activities that have a low

environmental impact and help to preserve the global
environment■ Providing technologies that help customers manufacture
semiconductors and FPDs that have a low environmental impact

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

14

Research and Development

Product
CompetitivenessResearch and Development for the Future
Digital technology is becoming an increasingly familiar part of people’s lives, such as online education and medical
services, remote work, and the emergence of various services utilizing AI. The evolution of IT applications and thediversification of services are expected to continue. As a support for the evolution of such digital technology,
semiconductors will become increasingly necessary in the future, and more advanced and diversified technologies
will be required for semiconductor manufacturing. At Tokyo Electron, we discuss the role we should play for the
future on a daily basis, and are working company-wide on research and development with an eye on futuretechnology markets.
Market Heading toward Diversification

Customization

Moore's Law

Multifunctionality

Improved performance through transistor integrationOS

Medium-term Goals

Create Strong Next-generation Products

With semiconductors and flat panel displays becoming increasingly important as social infrastructure due to the progression ofdigital transformation and the expanded implementation of information and communication technologies, there is a demandfor highly advantageous equipment that responds to diversifying needs. Tokyo Electron creates the best, high-value-added
equipment with innovative technology in a timely manner through the development of product marketing and the global
promotion of research and development with an eye on future generations. We also continuously strive to reduce theenvironmental impact of our equipment. By providing technology that contributes to the development of devices with evenlower power consumption, we endeavor to preserve the global environment. We contribute to the development of industry
and society through innovative technologies and environmental initiatives.

Main activities
Research and development
Research and development for the future, Development system, Shift Left, Product marketing, Collaboration
with consortiums and academia, Intellectual property management

Tackling technological innovation
Research and development for next-generation computing, Promoting digital transformation (DX),Support for evolving displays

CPU + Memory

Communication systems

Mobility systems

Healthcare systems

Robotic systems

AI systems

PC/mobile
systems

Applications increase as manufacturing technologies diversify

Hyper-mass
Pursuit of ultra-efficient productivity

Development System
In the ever-diversifying area of semiconductor production technology, we have built a system to bring high-valueadded products into the market in a timely fashion, promoting technology development and technology innovation
for the next generations with collaboration between our Development & Production Group and Business Group. We
share technology roadmaps spanning multiple generations for the future with our customers, and work with relevant
divisions across the company in converting that technology to equipment in anticipation of their needs.
Specifically, the Corporate Innovation Division, which is headed by the Representative Director, President & CEO,along with the development divisions of the manufacturing sites in Japan and the marketing departments of business
units, are leading efforts to enhance process integration capabilities based on our wide lineup of semiconductor
production equipment and to promote and develop digital transformation1 using AI technology. In January 2020, weestablished TEL Manufacturing and Engineering of America to optimize development and manufacturing functions
and improve operational efficiency not only in Japan but in the U.S. as well. Since then, the company has been pushingahead with activities.
Furthermore, with regard to environment, health and safety (EHS), which is becoming increasingly important associetal demands escalate, the EHS Council, which oversees our entire company, is playing a pivotal role in promoting
the review and formulation of basic policies. Each of our manufacturing sites in Japan are also actively working tocreate a development system that is mindful of the environment, health and safety.
Development & Production Group
Corporate Innovation Division

SDGs initiatives

Development & Production 1st Division
Representative
■

■

15

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Create innovative technologies by promoting innovation to help develop a sustainable
society
Contribute to the reduction of environmental impact throughout the company byproviding products and services that are conscious of the environment

Director,
President &Overseas Subsidiaries

1
Digital transformation:
Refer to p. 19

2
CSS: Composed of Vice
President and General
Managers of Tokyo
Electron, Presidents
from overseas
subsidiaries

Development & Production 2nd Division
Development & Production 3rd DivisionCEO

Development & Production 4th DivisionCorporate Senior Staff (CSS2)

EHS, Quality, Procurement, Production Technology

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

16

Product Competitiveness

Shift Left
We are focused on advancing the Shift Left approach, investing resources (including technology, personnel and money) into theearly processes of product development. Together with customers who conduct research with a vision beyond even the next
generation and who aim to accelerate the speed of development further, we have created a technology road map, and areengaged in developing the various technologies required for its realization.
In fiscal year 2021, responding to the ongoing customer need for production equipment to take up less space, we succeeded in
improving equipment efficiency per unit area by maximizing the use of clean rooms and providing more productive equipment.
We also established new goals and strengthened our efforts to meet the environmental demands of customers for equipment.
Through promoting the Shift Left approach, we are endeavoring to understand customer needs at an earlier stage and tostrengthen feedback from front-line service engineers, and by reflecting the information obtained through this in the developmentof technology, we can propose superior products that contribute to maximizing yield for customer devices and capacity utilizationof their mass production line equipment. We also promote on-site collaboration for early delivery of evaluation units at customers’
plants and research and development laboratories, shortening the period between technology development and the conversion tomass production equipment and maximizing efficiency.
Shift Left

■
■
■

■

■

Joint development of technology roadmaps spanning multiple generations
Promotion of early engagement
Maximization of yield for customer devices and equipment operating rate from early stages of mass production,
and also reduction of environmental impact
Promotion of improvement in work efficiency and per person productivity, and further increase in investments
into human resources and development
Increase in equipment efficiency per unit area by achieving higher productivity and using less space

Product Marketing
We are promoting effective product development by having our sales departments and product marketing departments
appropriately play their respective roles. Our sales departments are responsible for building relationships of trust with customers
and ensuring that products and services are provided through business to the customers they serve. Meanwhile, our productmarketing departments plan and manage product strategies that meet the future needs of customers in target markets, such as
development planning to increase the value of customer products, services and the examination of value-adding mechanisms.
They also consider the commercialization of technology and the addition of functions based on the seeds of our development
divisions, and formulate strategies for collaborating with partner companies and consortiums.
Our sales departments and product marketing departments work together in developing product marketing activities that
contribute to customers’ products by anticipating market needs, and in doing so, help improve our product competitiveness andpromote our Shift Left approach.
Involvement in Product Development by Sales Departments and Product Marketing Departments

Led by sales
Expansion ofexisting products &CIP1 technology

Promotion & hearings■■

Survey & analysis (technology
and collaboration)

Product promotion
Collection of next necessary
technological information

Development of new
products/functions■

Fine-tuning of responses according tochanging circumstances■

Projects uniquely plannedby the development
division are examined andcommercialized andassessed if there is value infunctionalization

Future needs/seeds analysis

Target segment & plansetting■

Setting of target market

Led by productmarketing
New products &sharedtechnologies

Collaboration with Consortiums and Academia
We are enhancing our own research and development capabilities through collaboration with international anddomestic consortiums which allows us to further our development of leading-edge technologies. Specifically, we arefocusing on collaboration in a wide range of areas, from development to market launch of rapidly evolving
technologies and applications. This is achieved through participation in a global research hub developing nextgeneration AI hardware, by cooperating with BRIDG2, a not-for-profit, public-private partnership located in the U.S.
state of Florida, by strengthening collaboration in the field of EUV3 at imec and by accelerating our research in thefront-end and back-end fields4 at TTCA5.
We are also working on various collaborations with academia, including major universities in Japan. In particular, weare promoting collaboration in a wide range of fields with the National Institute of Advanced Industrial Science and

17TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Technology (AIST)—one of Japan’s largest public research institutions—including the MRAM1-related research that wehave been working on for some time. In the field of semiconductor development, which is becoming increasingly
diverse, we will further strengthen our own research and development by leveraging AIST’s world-leading research
environment and world-class research staff.
Consortiums
Tokyo Electron Development Sites

1
MRAM:
Magnetoresistive
Random-Access
MemoryU.S.

(as of April 1, 2021)

Korea

TEL Technology Center, America

TEL Technology Center Korea

TEL Manufacturing andEngineering of America

Ireland

TEL Magnetic Solutions
1
CIP: Continuous
Improvement Program
2
BRIDG: BRIDG is a
not-for-profit,
public-private
partnership specializing
in advanced system
integration,
microelectronics
fabrication, III-V
materials deposition for
sensors, optoelectronics
and high-speedtransistors. BRIDG
offers production
process technologies,
research anddevelopment
capabilities and 200
mm microelectronics
fabrication geared
toward systemminiaturization, device
integration, hardware
security and productdevelopment key toaerospace/defense andthe IoT/AI revolution.
Supported by OsceolaCounty, University ofCentral Florida, Florida
High Tech Corridor
Council and others,
BRIDG provides thephysical foundry
infrastructure andcollaborative process toconnect challenges andopportunities withsolutions; “Bridging theInnovation
Development Gap”
makingcommercialization
possible.
3
EUV: Extreme
Ultraviolet. Refers toultraviolet radiation(ultraviolet rays) in the
wavelength range
1–100 nm.
4
Front-end/Back-end
fields: In the fabricationof semiconductor
devices, the first half of
the upstream process iscalled “front-end-ofline” (FEOL) processing(substrate) and thesecond half is called“back-end-of-line”(BEOL) processing(wiring).
5
TTCA: TEL Technology
Center, America, LLC.
Our research anddevelopment center in
the U.S.

FranceBelgiumJapan
National Institute of Advanced
Industrial Science and Technology

imec

CEA-Leti

Tokyo Electron Miyagi
Singapore

CNSE
BRIDG

Tokyo Electron Technology Solutions

IME

Tokyo Electron Kyushu
TaiwanTEL Technology Center, Taiwan

Initiatives in Japan
Since 2018, we have been conducting a joint research selection program with universities with the aim of discoveringand collaborating on advanced element technologies in relation to semiconductors. Over the past three years, 16
topics have been chosen for joint research. Although applicants are free to propose any research topics, we adopt
those proposals that match our technological abilities needs and which are expected to help develop our technologicaland planning capabilities and contribute to the future development of our business areas through the creative
perspectives and ideas only possible in academia.
Technical advisors selected from our development divisions and business units (BUs) are in charge of selecting
topics, with subsequent joint research activities managed by a secretariat. Technical advisors strive to generate
research results by promoting technical assessment with the university, and at the end of the research period, where
outcomes are found to be effective, the topics are considered by our BUs for ongoing research.
In addition to promoting the development of a wide range of semiconductor-related technology and devices, weare promoting the selection program in an effort to contribute to the evolution of science and technology and therevitalization of research activities at universities.

Intellectual Property Management

Cumulative number of

Our fundamental tenet for intellectual property (IP) is to protect our
technology inventors
intellectual assets and contribute to increasing corporate revenue throughthe support of our business activity.
In our uniquely evolving industry, we have increased the global
investment in research and development, including industry-academia
collaborative initiatives that synergistically grow our business. We establish regional IP offices, as well as corporate
headquarters, to locate IP personnel at research, development, and production sites worldwide. Those IP personnel
assess each project from various angles, including R&D and marketing perspectives, building IP portfolios aligned withtechnology, and product strategies in an effort to boost competitiveness.
We sustained our worldwide advantage in the IP strength again in calendar year 2020. 1,180 inventions were created inJapan, and 120 were created in other countries. We have maintained a global patent application rate2 of approximately
70% for the tenth consecutive year and achieved high patent approval rates (85% in Japan and 87% in the United States).
The number of joint patent applications in collaboration with partner companies, universities and other research
institutes around the world has reached 25, with 13 companies and 8 organizations in the last two years.
To increase IP awareness, we have continuously educated our engineers, who are the foundation of our R&D
strategy, and in total, around 4,370 engineers have become inventors. Additionally, because we often handle highly
confidential information, including technological information of our customers and collaborative partners, we havealso focused on confidential information management education.

4,370

2
Global patentapplication rate:
Percentage of
inventions filed as apatent application in
multiple countries

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

18

Product CompetitivenessTackling Technological Innovation
Global demand for semiconductors has been increasing in recent years, and the production volume of semiconductors
is expected to continue increasing. Under such circumstances, reducing the power consumption of semiconductors
has become a major issue. We recognize this issue as an energy supply risk in the market, and are working for asolution.
Modern computing is not necessarily optimized for power efficiency. The mainstream solution to this problem thesedays is to optimize the architecture, placing memory devices closer to logic devices (arithmetic circuits), resulting in aconsiderable reduction in power consumption. One of the technologies that make this “optimization of architecture”
possible is 3D system integration. Also called “heterogeneous integration1”, 3D system integration technology is one
that combines and packages different materials such as silicon and non-silicon elements, CPUs2 and DRAMs3. Specificcombinations applying this technology are expected to reduce power consumption to between 1/100th and 1/1000thof conventional architecture.
Furthermore, the development of resistive analog neuro devices4 and nonvolatile resistive random access memory5that simulate the human brain is essential to the evolution of AI technology, and our film deposition technology iscontributing to this.
Realizing next-generation computing requires the development of AI chipsets with even faster processing andgreater energy efficiency. By taking maximum advantage of a wide range of technologies and various techniques, we
are working to create high-value-added products that meet the next-generation need of bringing computers closer tothe human brain. To this end, we are expanding further the technological areas in which we can contribute, such as
developing new materials and boosting the performance of chipsets through 3D system integration, and we are rollingout initiatives aimed at optimizing the power efficiency of semiconductors and realizing next-generation computing.

1
Heterogeneous
Integration: Packaging
that unites different
kinds of chips
2
CPU: Central Processing
Unit. A semiconductor
chip that serves as thebrain of a computer.
3
DRAM: Dynamic
Random Access
Memory. A type ofsemiconductor memory
used in the mainstorage unit of acomputer or as alarge-capacity working
memory of otherelectronic devices.
4
Resistive Analog Neuro
Device: Electronic
devices capable ofcontinuously changing
resistance5
Nonvolatile Resistive
Random Accessmemory: Random
access Memory thatuses nonvolatile
resistive memory
elements

Furthermore, we are also systematically recruiting and training
human resources to utilize data science1 in our business. In November
2020, we relocated our Sapporo office, a software development site,and established TEL Digital Design Square as our home base for DX
activities. In addition to installing leading-edge facilities and adopting a
hot-desking system to develop software technology, we will put effort
into recruiting and training data scientists, data analysts and otherhuman resources necessary for DX to utilize data science in ourbusiness.
Based on the belief that utilizing digital technology can contribute to
everything from accelerating the speed of development, improving
productivity and quality and enhancing business efficiency toreforming workstyles, we are working on greater DX promotion.

6
HVM: High Volume
Manufacturing

Image of DX Usage
Development of applications that contribute to corporate value creation using DX infrastructure
Product Life Cycle
DesignPrototype

Profit

HVM6

SupportModification

A Increased Profit

Application

D Extension of Lifetime Value
B Accelerated Market Launch
Time

C Reduced Development Costs

Data
Applicationand UseConstruction of Skill, Culture and Data Application and Use Platform DX Infrastructure

DX Infrastructure
Skill
Improvement

Awareness andCulture Creation

Environment Creation(Governance and Data Infrastructure)

We are also proceeding with the practical application of TELeMetrics™, which remotely connects our company withour customers’ manufacturing site, thereby enabling remote maintenance, as well as remote support for equipmentusing AR7 smart glasses and material searches utilizing AI.

19

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

2.00

In the adjustment of film stress2 (target value: -100 to 0 MPa)
using plasma-enhanced atomic layer deposition (PE-ALD3), we
used AI-based machine learning to consolidate and analyze past
test data and optimize the process in order to overcome theinability of the previous method to achieve film stressrequirements using engineers. As a result, we were able to not only
resolve this issue but also contribute to reducing wafer
consumption. By making use of AI as a member of the teamwithout being bound to conventional thinking and practices,
engineers will be able to perform work with high added value.

Target stress(-100MPa)2
Film stress: Stresscaused by different
rates of expansion, etc.
between the thin film
and substrate

1.50

1.00

0.50

0.00

Engineer

-600

-500

Machine Learning

-400

-300

-200

Stress (MPa)

-100

0

Comparison of process exploration results of a film stress (target
value: -100 to 0 MPa) using a 300 mm plasma-enhanced atomic
layer deposition (PE-ALD) system, conducted by a human engineer

DX promotion, which is making waves across the global industrial world, is also becoming more prominent in thesemiconductor and flat panel display (FPD) production equipment industries. Having positioned DX as an important partof the solution to the demand for further miniaturization and multi-layering, in January 2021, we formulated the TEL DX
Vision of “a global company where all employees drive enterprise value creation sustainably through activities such as
value addition and efficiency improvements by leveraging digital technology”. The two key objectives of this are tocontribute to customers’ value creation in a range of settings from development to mass production and to raise capitalefficiency in a range of settings from the product planning stage to maintenance. We will achieve these two objectives byresolving high-level problems via a cycle of monitoring, analysis and prediction, control and autonomy.

Cost

TEL Digital Design Square■ Example Initiative

Promoting Digital Transformation (DX)

Planning

1
Data science: The
approach of using data
to extract new scientificand socially beneficial
knowledge

Growth rate (Å/cycle)

Research and Development for Next-Generation Computing

7
AR: Augmented Reality.
Wearing smart glasses
to link with the realworld and obtain an
augmented reality
output based on
information about
objects in the real world.

Support for Evolving Displays

and machine learning respectively.

With the evolution of communications technology such as IoT and 5G,
further performance improvements are also expected for displays thatproject all kinds of information into the real world. In addition to higher
image quality and lower power consumption, there is also a growing
need for built-in sensors and greater flexibility of design. Organic Light
Emitting Diode (OLED) displays, which are used widely in smartphones
and televisions, are expected to expand to a wide range of applications,
including IT and automotive, because of their high image quality anddesign qualities. Foldable displays, in particular, are predicted to further
expand the potential of information devices. Along with the growing demand for such high-performance displays,
control technology for defective modes and stable performance are becoming more important than ever for FPD
production equipment. Furthermore, as the number of manufacturing processes increases, so too does the need touse energy and materials more efficiently in order to successfully reduce environmental impact.
Our product lineup includes the Impressio™ and the Betelex™ FPD etch/ash systems, the Exceliner™ FPD coater/developer and the Elius™ inkjet printing system for manufacturing OLED displays. Impressio and Betelex use PICP™4, aplasma module with improved energy efficiency, reducing power consumption by up to 20%, and achieving precise
processing and stability in mass production. We have also released PICP™ Pro, a new plasma module for highdefinition displays which achieves both yield improvements and mass production stability by reducing the generationof particles. The Exceliner, equipped with our original Air Floating Coater, permits higher throughput while maintaining
excellent film uniformity and saving chemical costs. The Elius inkjet printing system can significantly reduce theamount of OLED materials used in the manufacturing process compared to conventional vapor deposition methods,
and is also suited to production on large substrates. We are proceeding with development and sales of the Elius seriesahead of the imminent era of large, high-definition OLED.
We will continue contributing to the further development of diverse display products, tackling effective
technological innovation based on market needs such as improving productivity and yield and using energy andmaterials more efficiently.

3
PE-ALD: Plasma
Enhanced Atomic Layer
Deposition. Atomic
layer deposition (ALD)
is a thin-film deposition
technology that uses
continuous vaporphase chemical
reactions. PE-ALD is amethod of applying
plasma to activate areaction on thesubstrate.

4
PICP™: Original plasma
module developed by
Tokyo Electron which
produces extremely
uniform high-density
plasma on panel
substrates

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

20

Solutions that Create Value for Customers

Customer
ResponsivenessMedium-term Goals

Systems for Creating Value for Customers

Be the Sole Strategic PartnerTokyo Electron helps customers manufacture cutting-edge devices by maintaining an accurate and timely grasp on
customer needs and providing innovative technologies for future generations. As a production equipment company with adiverse product range, we propose optimal solutions contributing to value creation for customers.
Making full use of state-of-the-art AI and digital technologies, we also provide high-value-added maintenance services that
support the stable operation of equipment. We strive to further enhance customer satisfaction, which is a key management
theme we have tackled since our founding, aiming to be the sole strategic partner for customers.

The semiconductor market has been expanding significantly, driven by the acceleration of IoT, the global launch ofcommercial 5G services and the growth of device-to-device communication such as the automated driving of cars.
In fiscal year 2021, faced with various regulations around the world as a consequence of the spread of COVID-19,
including curfews, restrictions on travel and isolation measures, Tokyo Electron aggressively worked to maintainactive communication throughout all the Group companies so that we could continue to develop our business whilestrengthening cooperation with our global business sites. We also expanded the use of remote tools and strived tofurther strengthen our systems to provide customers with seamless high-value-added solutions, not only in sales
activities but also in service support.
Since 2018, we have worked to further strengthen our customer responsiveness through two divisions: our
Account Sales Division, which leads to new technology development based on the needs of traditional customers ofmajor semiconductor manufacturers for next-generation leading-edge technology such as memory, logic andfoundry; and our Global Sales Division, which responds to the needs of more than 100 customers in Japan andoverseas who deal in communication devices and image sensors for the IoT market as well as power devices andother products. By building stronger, close collaborative relationships with each business unit and, moreover, withoverseas subsidiaries, our respective sales divisions quickly provide customers with the technology, support andsolutions they need.
We accurately grasp the issues and requirements of our customers in their product development andmanufacturing operations, and provide this as feedback to our main development and manufacturing sites in atimely manner. To this end, we are working to further improve the level of our engineers involved in equipment
installation and maintenance, who act as a frontline link between our customers and us. We are also building a globalorganization and developing proactive, flexible operations in order to respond quickly and accurately to customer
needs as markets change.
In addition, we are working to build globally unified systems and structures in order to further enhance andstabilize the quality of our service support activities. The Global Service Committee, a regular gathering of service
leaders from relevant domestic departments and overseas subsidiaries, enhances information sharing and in-house
coordination related to improving the technical skills and interpersonal skills of our more than 4,000 field engineers
worldwide, the localization of startups and improving work efficiency using the work-time management system. At
our Total Support Centers (TSCs1), we operate our TELeMetrics™2 remote maintenance service, and provide
customers with high-value-added services by utilizing our wealth of knowledge and range of tools to propose
customized solutions for the various challenges they face.

1
TSC: Total Support
Center. Refer to p. 23
2
TELeMetricsTM: Refer to p.
24

Main activities
Solutions that create value for customers

Ensuring safety for customers

Systems for creating value for customers, Proposing customer
solutions leveraging a broad portfolio of products

Providing information to customers,
Global expansion of training forcustomers, Safe design of equipment

Initiatives for field solutions

Improvement of customer
satisfaction

Field solutions business, Advanced logistics, Total Support
Center, Knowledge management, Remote support system,
Upgrading engineers’ skills

Customer satisfaction survey

SDGs initiatives

21

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1■

Contribute to customer innovation generation and value creation through the proposal of
optimal solutions and innovative technologies■

Ensure a sustainable form of production and consumption throughout product life cycles
by considering safety and the environment■

Support the stable operation of various generations of equipment while further improving
productivity and promoting reuse and recycling

GlobalSales
Customers

Service
Support

Overseas
Subsidiaries

Account
Sales

Development &Manufacturing

Proposing Customer Solutions Leveraging a Broad Portfolio of Products
In a market where applications for semiconductors are ever-expanding, in order to meet the needs of production sites,such as improved yield and improved equipment efficiency per-unit area through enhanced productivity and smaller
footprints, we are practicing product development initiated from the customer perspective.
Two of our divisions work closely together in turning that perspective into products. Specifically, our Account Sales
Division identifies customer demands for next-generation technology and beyond, and based on these, our Corporate
Innovation Division reviews the requirements and converts them into actual, tangible products.
In addition to developing leading-edge technologies, we are also continuously improving the performance of ourmass production equipment, so that we can proactively respond to the needs of our customers spanning multiple
generations. In proposing solutions to customers, we leverage a broad portfolio of equipment, including those used in
the series of key patterning processes requiring advanced technical abilities, such as deposition, coating/development,
etching and cleaning. Through optimal solutions that incorporate systems and software in addition to production
equipment, we seek to optimize the production process. We strive to develop products that help strengthen ourcustomers’ competitiveness by achieving a balance between faster and better-quality semiconductor production.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

22

Customer ResponsivenessInitiatives for Field Solutions
Knowledge Management

Field Solutions BusinessIn the area of semiconductors, as improvements are made in the performance of CPUs1 and memory, as advances are
made in miniaturization for mass production and as transistors used in autonomous driving systems and VR2/AR
become increasingly integrated, demand is increasing across a wide range of fields, such as medical treatment, finance,transportation and manufacturing. To meet this demand, it is becoming extremely important for our customers to
improve the utilization rate of their equipment.
We are working to further strengthen our field solutions business with the aim of ensuring that shipped equipment canoperate stably in the market over a long period. We are engaged in promoting knowledge management in field service,continuously improving our field engineers’ skills, and strengthening our global support system through Total Support
Centers (TSCs). Furthermore, in order to comply with various regulations due to COVID-19, including restrictions on
overseas travel and isolation measures when traveling internationally, we will help to maximize our customers’ business
operations by proceeding to develop remote maintenance support and educational tools.

1
CPU: Central Processing
Unit. A typicalcomponent of acomputer, alongsidememory and hard disks.
2
VR: Virtual Reality.
Technology that createsa virtual world
resembling reality in acomputer.

Advanced Logistics
As demand grows for semiconductors in a wide range of industries, we
are working hard to further strengthen our logistics to secure a stablesupply of equipment and parts, not only in response to the spread of
COVID-19 and unseasonably bad weather, but also from theperspective of our business continuity plan.
As part of building systems that enable us to provide customers witha continuous supply of equipment and parts, in March 2021, we began
operation of our second logistics center in Japan, a 6,000 m2 facility
located in Funabashi City, Chiba Prefecture.
The center will be operated using third party logistics (3PL3), whereby
both physical distribution and warehouse operations are outsourced to a single company, and in the future, in addition toconsidering expansion of the facility to cope with increased shipments, we will aim for an efficient and flexible logistics
system capable of responding to change. The full-scale operation of this new logistics center will enable us to provide ourcustomers in Japan with a more stable supply of equipment and parts. In the future, to further strengthen our response
to overseas customers, we will continue to build our logistics, including the expansion of facilities.

3
3PL: Third-Party
Logistics. Arrangement
whereby not only
physical distribution
but also warehouse
operations areoutsourced as a
package.

We promote knowledge management1 throughout the entire Group so that we can deliver high-quality service swiftly
to our customers. In the area of field service, we have built Service CRM2 so that we can create a database andcentrally manage customer equipment support and incident histories. Service CRM began operating in Japan in fiscal
year 2020 and is currently being rolled out globally.
In addition, by taking advantage of knowledge management tools such as Equipment Records and Knowledge
Search, comprehensive searches can be performed on multiple systems, helping to reduce the amount of time spent
on work. Equipment Records enables batch searches of equipment work histories based on equipment serial numbers,
including past repair information for customers and parts replacement histories. Knowledge Search, which wasrevamped in October 2020, enables users to enter keywords of equipment-related problems to carry out batchsearches of files and documents saved in the database based on past trouble information. In fiscal year 2022, we areworking on making the tools multilingual so that, in addition to Japanese and English, they can also support Korean
and Chinese. Not only by increasing the number of languages supported to improve the work efficiency of our globally
active field engineers, but also by promoting efforts to manage the various systems throughout the entire Group using
One Platform3, we will strive to further improve our customer responsiveness.
Knowledge Management Tools

2
Service CRM: Service
Customer RelationshipManagement
3
One Platform: An
initiative to manage
information using astandardized databaseand system. Refer toContinuous
Improvement of
Business Operations on
p. 28.

Multi Database
Trouble Information

Equipment Records

WisdomComprehensive Search of
Equipment History
Serial Number Axis

Service CRM

Knowledge SearchComprehensive Search of
Equipment History
Trouble Axis

Parts Order History
Overseas Report

BKM
Serial Number Search

Symptom Search

Best Known Method
Trouble Shooting Manual

Total Support Center

Remote Support System

Having established Total Support Centers (TSCs) in Japan, the United States, China and Europe, we will support
overseas subsidiaries through our global network centered around Japan.
At each TSC, dedicated representatives maintain and utilize a database of information about customers’ equipment
and examples of similar incidents. The TSCs also employ TELeMetricsTM to perform remote maintenance. In fiscal year
2021, we established a system where TSCs around the world support each other, taking advantage of time differencesin each region. These initiatives have enabled us to respond to inquiries and problems from customers around theworld with greater speed and precision than ever before.

We promote remote support using TELeMetricsTM to minimize any downtime of production equipment, to detect
abnormal operation before any major defect occurs and to support the stable operation of equipment.
With the growing need to support field engineers remotely due to travel restrictions and various state regulations as
a consequence of the spread of COVID-19, we worked on developing an advanced remote support system whereby
audio and video from a customer’s manufacturing site can be shared in real time and the confidentiality of information
can be better enhanced.
Starting in fiscal year 2021, we have also been working to enhance the convenience and quality of remote support
by adding our own unique features to our existing smart glasses4 system, including information protection, restricted
image transmission and phone translation.

Total Support Center

1
Knowledge
Management:
Management approachto promote internal
company sharing of
tacit knowledge held byindividuals to
encourage innovationand to improve overall
productivity

4
Smart glasses: Worn likean ordinary pair ofglasses, smart glasses
can display images anddigital information
through the glasses

Unique Features Added by Tokyo Electron
Information
Protection
Security feature forprotecting informationin case of loss or theft

Restricted Image
Transmission
Information security
feature whereby only
necessary images are
sent

Phone
Translation

Dangerous Area
Function

Feature that converts
voice to text anddisplays a translation(multilingual support)

Function that warns thewearer whenapproaching a preset
dangerous area

Support from a Global Network of TSCs
Using smart glasses (image)

23

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

24

Customer ResponsivenessImprovement of Customer Satisfaction
Upgrading Engineers’ Skills

Customer Satisfaction Survey

At our training operations center established in 2019 to enhance the training structure and globalization of fieldengineers, a group-wide common skills management system has been established that meets the standards of
SEMATECH (a U.S. consortium for the joint development of semiconductors). The system helps us to deploy the mostsuitable human resources to provide customers with service based on an objective understanding of the skills of ourengineers.
In fiscal year 2021, we began providing education for expert engineers to improve the skills of engineers at ouroverseas subsidiaries. The education includes training programs that enable technical support engineers from overseas
to learn advanced development skills in a practical manner at our manufacturing sites in Japan. Furthermore,established in fiscal year 2021, our Global Data Engineering Team is also rolling out a program designed to train fieldengineers as data analysts specializing in Digital Transformation1.

1
Digital Transformation:
Refer to p. 19

Ensuring Safety for Customers
Providing Information to Customers
Tokyo Electron is committed to providing sufficient safety information on our products toensure that customers can safely use them. All products purchased by customers come witha TEL Safety and Environmental Guidelines manual. The manual describes examples ofpotential risks associated with using our products together with the methods for averting
those risks, as well as safety measures applied to products and recommended methods for
product disposal. It is divided into such categories as chemical, electrical, mechanical andergonomic. The manual is available in 12 languages2 to ensure that customers around theworld can understand the content accurately and safely use the products. In addition to the
TEL Safety and Environmental Guidelines manual, customers are also provided productspecific manuals tailored to the relevant product specifications.
If new safety warnings are identified after the product ships, we provide information toaffected customers. We also strive to ensure that necessary information is communicated to
any customers to whom we deliver products that involve the use of hazardous chemicals orhigh voltage electricity.

2
12 languages: Japanese,
English, German, French,
Italian, Dutch, Russian,Portuguese, Korean,
Traditional Chinese,
Simplified Chinese andFinnishTEL Safety and Environmental
Guidelines

Global Expansion of Training for Customers
We have established training centers all over the world, mainly at our development and production sites, and areproviding customers with training on equipment operation and maintenance to ensure they are able to use theproducts safely. In fiscal year 2021, demand for Web-Based Training (WBT) and Remote Training3 increased as a resultof the difficulty in holding equipment training on-site because of COVID-19.
While we have started remote training for much of our equipment, we are working to improve the content andquality of our WBT and remote training by sharing the equipment and methods we introduced with each of the
training centers. Going forward, we will continue to give priority to customer safety as we promote further
development of our training environment.

3
Remote Training: A
training course,
although remote, taken
by trainees using actual
equipment whileinteracting with the
instructor in real time
4
Safe equipment design: A
design concept thateliminates the cause of
the machine's harm tohumans through thesafety design of themachineSafe Design of Equipment

5
SEMI S2: This is a set ofenvironmental, healthand safety guidelines forsemiconductor
production equipment.
It is used mainly by theleading manufacturers ofsemiconductor
equipment in the UnitedStates and Europe, notonly for semiconductors
but also as safe
procurement guidelines
for electric and electronic
device manufacturing
equipment around theworld.

Taking the entire product life cycle into consideration, we carry out product risk assessments as early as possible in thedevelopment phase. Based on the assessment results, we implement safe equipment design4 to reduce the risks posed
to humans. We also examine and ensure compliance with increasingly strict laws and regulations around the globe,
and have a system in place for all safety regulations of the regions where our equipment is delivered.
We conduct compliance checks through third-party assessment bodies on the equipment we ship to ensurecompliance with international safety standards such as SEMI S25 and CE-Marking6. Additionally, we work with overseas
subsidiaries to take appropriate measures to comply with the laws and regulations of each country and region.

6
CE marking: When
exporting into theEuropean Union, CE
marking defines rules fordisplaying a CE mark as
proof that theequipment is safe andcomplies with
EU-defined rules(Directives).

25

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

We conduct a Customer Satisfaction Survey (TEL CS Survey) every year with the goal of making continual
improvements based on customer feedback. The survey started in fiscal year 2004, aimed at just a limited number ofdivisions. It was expanded to include all semiconductor production equipment divisions in fiscal year 2014, and later
the flat panel display production equipment division and overseas subsidiaries in fiscal year 2016, and currently, it is
implemented company-wide as the Customer Satisfaction Survey Program (CSSP).
Under the CSSP, we survey customers once a year, at the same time each year, and ask specific questions that willlead to improvements on a practical level. Information obtained from the survey is analyzed by business unit
(product), account (customer) and function (software, development, etc.), and the results of this are shared with
relevant divisions, such as sales, equipment/plants and service, to implement actions for improvement. Improvements
are also made continuously to all aspects of the survey method, including the questions asked, the analytical methods
used, and the overall operation of the survey activities.
In the TEL CS Survey for fiscal year 2021, responses were received from approximately 1,400 individual customers(70.2% of all customers), and 96.7% of all survey items received a score of 3 points or higher (Very Satisfied orSatisfied1), which is our annual CSR goal. This marked an improvement of 3.4 percentage points from fiscal year 2020.
When we receive an evaluation of 1 point (Very Dissatisfied), we respond to the customer as quickly as possible as partof a Shift Left approach to implementing early-stage improvements throughout the survey process. Going forward, we
will continue to aim for 3 points or higher for 100% of the questions asked, and the entire company will work as one to
implement customer-driven improvements.
Improvement Example
At a business unit that handles one of our product lines, the results for fiscal year 2018 fell below a score of 3 points inall three divisions (sales, equipment/plants and service), so we have been working on various improvements. Based on
the results of the TEL CS Survey, the Management Council immediately reviewed the results and formulated KPIs2, andhas since monitored the situation every quarter. The following improvement measures have been implemented for
issues identified for each customer in past survey results.

■

Explain our strategies to customers to gain their understanding■

Improve the frequency of customer visits■

Form an internal task force to make continual improvements for equipment-related issues■

Promote direct communication between customers and our engineers■

Clarify ownership of each issue at a meeting to address issues, etc.

1
On a four-point scale,
3 points or higher
represents “VerySatisfied” or “Satisfied”

2
KPI: Key performanceindicator. An
evaluation indicatorfor managing the
progress ofimprovements

By going through the PDCA cycle for these improvement measures, we were able to achieve a target score of 3
points or higher in the sales, equipment/plants and service divisions in the survey for fiscal year 2021. As a result, these
improvements have led to stronger products and we were able to confirm that overall customer satisfaction for ourcompany has improved.
PDCA Cycle

Percentage of responses
that indicated Satisfied
or Very Satisfied
CS Survey activity
preparation

Feedback to customers
Implement improvement activities
in each division
Confirm progress of improvement activities

Conduct survey ofcustomers

96.7%

Analyze and report survey results
Investigate improvement plan

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

26

Promotion of Improved Productivity

HigherProductivity

Continuous Improvement of Business Operations
Tokyo Electron is currently introducing a new enterprise system (ERP1) to improve productivity and quality further. The
new ERPs, being integrated across operational and national boundaries, is aimed at creating the following five benefits:(1) compliance with the new revenue recognition standards in Japan; (2) business and management decision making
with quick response to change; (3) large improvements in business operation efficiency; (4) utilization of globally
integrated information with an eye toward overall digital transformation2; and (5) realization of ultimate work stylereform. Beginning with business operational improvement, we are contributing to the resolution of issues fromCOVID-19 with global progress in the expansion of telecommuting, the shift to online approval operations, and overall
digitalization.
In fiscal year 2021, we made progress in communication and consensus-building that included our headquarters,
manufacturing sites in Japan, and overseas subsidiaries, as well as partner companies, to form a globally unified teamtoward business innovation. In May 2021, the new ERPs began operation, primarily at our headquarters. While making
the most of the knowledge gained from this process and the results, we plan to realize a true globally integrated
system, with project members and all our employees working as one.
Overview of the New Enterprise System

Post-sale

Sales(Export)Service CRM(Field-Support)

Warranty

Global Trade
Management

Technical
Acceptance(Warehouse)

Start-up(Manufacturing)

DeliveryWarehouse
Management
SystemManufacturing

Manufacturing
Execution
SystemProcurement(Procurement)

Booking

Production
Preparation

Production
Planning(Design)

Supply Chain
Management

Design(Plan)ERP (Sales, Inventory, Accounting)3
Safety First: Company
slogan that prioritizes
the safety of every
person connected withour business activities

Initiatives for Higher Productivity

Main activities
Promotion of improved productivity
Continuous improvement of business operations, Initiatives for higher productivity, Software development
initiatives

Productivity improvement in the value chain
Approach to quality, Management system, Ensuring self-process assurance systems and promoting “ShiftLeft”, Measures to prevent quality problems from occurring and recurring, Initiatives with suppliers

SDGs initiatives

27

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1■

Promote productivity, continuously increase management efficiency, contribute to thedevelopment of the industry and society, and contribute to sustainable economic growth■

Promote streamlined business operations and quality management throughout the value
chain, ensuring sustainable forms of production and consumption■

Continuously increasing productivity throughout the entire supply chain throughpartnerships with suppliers

2
DX: Refer to p. 19■ IT System ■ Key Processes

Product
Lifecycle
Management

Schedule

Forecast

Tokyo Electron is striving to promote the standardization and automation of operations and improve productivity along theentire value chain, such as through the development of an enterprise resource planning system and the integration ofbusiness systems in each division and unification of databases. In addition, recognizing the importance of quality
management, we are striving to further improve business efficiency by implementing quality focus operations.
We are enhancing the awareness and capabilities of each employee regarding productivity by rolling out various educational
programs. In addition, we are implementing continuous quality improvement activities throughout the entire supply chain
in collaboration with suppliers. We will strive to enhance corporate value, constantly pursuing improved productivity.

(Opportunities
and Forecast)

Opportunities

Continually Improve Operational Efficiency

Sales CRM

Customer
Investments

Medium-term Goals

1
ERP: Enterprise resource
planning. A system that
integrates the corebusiness operations ofan enterprise, such asaccounting, personnel,
production, logistics andsales, for better
efficiency andcentralized information.

As a manufacturer of semiconductors and flat panel display production equipment, we are committed to continuously
improving productivity while remaining focused on safety and quality in operations along the entire value chain.
Specifically, under the slogan “Safety First3”, we are striving to improve the safety and work environments of every
person connected with our business activities, and we are building quality management systems and pursuing quality
improvement in the value chain in order to understand the true needs of our customers and to achieve the world’s
best quality. We are also conducting company-wide activities for compliance with safety and environmental laws andregulations and to make software development more efficient and smarter. In manufacturing operations, our current
initiatives include BOM4 production, module shipment5 for repeat orders and the building of flow lines6.
Furthermore, to respond swiftly to customer requests and market fluctuations, we are improving our IT
infrastructure and computerizing on-site data by establishing a production system that centralizes all productionrelated information and introduces a manufacturing execution system (MES7). By utilizing the wide range of data
aggregated through these systems in each business operation, we can make production schedules more reasonable
and more efficient, visualize delivery dates for parts, and achieve stronger coordination between sales planning andproduction/procurement/inventory planning. In this way, we will comprehensively promote higher productivity inbusiness operations.
In our manufacturing and logistics operations, where we deal with a wide variety of components, we are also
working on labor savings and efficiency improvements by establishing automated warehouses, introducing awarehousing navigation system and promoting automated inspections.

4
BOM: Bill Of Materials.
A list of parts that
controls a product. It
shows the hierarchicalstructure of the
product and includes
basic information ofeach part, includingwhich parts are used toassemble the product.
5
Module Shipment:
Equipment is shipped
to customers inmodules. The modules
are assembled into
equipment at thecustomer’s site before
inspection andadjustment. This helps
reduce the lead time
between manufactureand shipping.
6
Building of Flow Lines:
Building of a system forsecuring materials andpersonnel and ensuringthat work is carried out
accurately andefficiently according to
an expected schedule
7
MES: Manufacturing
Execution System. A
system forunderstanding andmanaging production
processes and forproviding instructions
and support to workers.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

28

Higher Productivity

Software Development Initiatives
Streamlining Product Development and Improving Added Value
Since 1995, we have incorporated platform software developed in-house in our semiconductor production
equipment and have worked on streamlining operations and improving product quality. By standardizing
platform software, we have been able to reduce the hours spent on developing various types of duplicate
functions for each type of equipment, leading to guaranteed real-time1 control and enhancement of our responseto new demands and technologies. Having adopted such concepts as object-oriented2, we are also working on
more efficient development of new platform software for next-generation equipment.
In fiscal year 2021, as a new base for the digital transformation activities we are promoting, we established TEL
Digital Design Square, and aim to further improve the added value that our products provide through softwaredevelopment.

Quality Policy
1
Real-time: The propertyof time limitation until
the completion of work
2
Object-oriented: A
software engineering
theory3
Smart fab: A fab thatutilizes digital data torealize continuous andprogressive reform ofoperational processes andimprovements in quality
and productivity

Equipment Data Management Plan

4
OES: Optical Emission
Spectroscopy

Remote access:■

Event history
Parts replacement history

CustomersystemField engineer■■

APC/AEC

Customer

Process log
OES4 log

4. Continual Improvement
Ensuring customer satisfaction and trust by establishing quality goals and performance indicators and byimplementing continual improvement using the PDCA cycle.
5. Stakeholder Communication
Listening to stakeholder expectations, providing timely product quality information and making
adjustments as needed.

Customer data:

Customer site■

2. Quality Design and Assurance
Building quality into products and assuring in-process quality control, from the design and development
phase throughout every process.
3. Quality and Trust
When a quality-related problem occurs, working as a team to perform thorough root cause analyses andresolve problems as quickly as possible.

Developing Smart Equipment
Amid advances in manufacturing that make the most of innovative technologies such as IoT and AI, our customers are
forging ahead in improving productivity by taking advantage of visual representations of data and building smart fabs3
to improve consistency in quality. Under these circumstances, we will provide advanced equipment operation services
and promote “equipment data management” to further enhance the added value of equipment, based on the various
types of data generated by customers’ equipment.

TEL data:

1. Quality Focus
Focusing on quality to satisfy customers, meet production schedules and reduce required maintenanceeven with temporary cost increases.

■■

Alarm log
System log

Shareddata

Access to customer's data upon request for
support from customer

Control model

We strive to implement own-process assurance systems by carrying out strict risk management and development/
design inspections beginning at the development stage and also by ensuring verification of customers’ operations
using simulations. We have also built an important component traceability system as part of our effort to strengthen
our information environment. By making it possible to use the One Platform1 to view such information as past
problems and adjustment values used during manufacturing and assembly, as well as important component
inspection information from suppliers, we have successfully strengthened our risk management (FMEA2) to prevent
various types of non-conformance. We believe that thorough implementation of these own-process assurance
systems and prevention makes it possible for employees to focus on high value-added business operations andpromote initiatives that lead to Shift Left3 (front-loading). We will continue to strive to provide high-quality andhigh-value-added products and services to our customers.

Gate Server

TEL site

Gate Server

1
One Platform: A
platform that makes it
possible to easily view
multiple different
systems as seamlessinformation sources inorder to effectively andefficiently achieve
traceability.
Refer to p. 28
2
FMEA: Failure modeand effects analysis.
Method to identify,
prevent and mitigate
risks in advance.
3
Shift Left: Refer to p. 17

Management System
To provide consistent, high-quality products, we have built quality assurance systems under the leadership of ourRepresentative Director, President & CEO. We have been promoting ISO 9001 quality management system certification,
and all of our manufacturing companies within our group have completed the transition to ISO 9001:2015.

TEL expert

ISO 9001 Certified Plants and Offices
Company Name

Plant/Office Name

Certification Date

Fujii Office / Hosaka Office

September 1994

Tohoku Office

December 1994

Tokyo Electron Technology Solutions

Productivity Improvement in the Value Chain
Approach to Quality
Tokyo Electron has defined its approach to quality as follows:“The Tokyo Electron Group seeks to provide the highest-quality products and services. This pursuit of quality begins
at development and continues through all manufacturing, installation, maintenance, sales and support processes. Our
employees must work to deliver quality products, quality services and innovative solutions that enable customer
success”.

29

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Tokyo Electron Kyushu

Koshi Office

March 1997

TEL Magnetic Solutions—

November 2009

Tokyo Electron Korea

Balan Plant

September 2011

Tokyo Electron Miyagi

Taiwa Office

September 2012

TEL Manufacturing and Engineering of America

Chaska Office

March 2013

Tokyo Electron (Kunshan)—

May 2018

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

30

Higher Productivity

Accident Information:■ Example Initiatives

We are focused on process improvement activities (PCS1) using a statistical method. Invariably, our customers’
production sites require limited variations in quality between equipment, accurate process repeatability and highproductivity. To meet these requirements, we ask our suppliers who handle specific important components tounderstand the importance of PCS and cooperate with us. Putting the information acquired from various types ofimportant components into control diagrams and carrying out trend analyses together with our suppliers allows us toquickly detect changes in manufacturing processes and take any necessary steps. These supplier activities and thecontinuous implementation of PCS activities in our manufacturing processes are leading to the suppression ofcomponent quality variability and maintenance/improvement of manufacturing processes that produce quality
products, ultimately helping us provide products surpassing customer expectations. Since new technologies are being
created daily and customer needs are constantly increasing, manufacturing processes that handle new importantcomponents need to be constantly reexamined and improved. Our products consist of tens of thousands ofcomponents, and the task of selecting important components that are especially relevant to customers’ production
and tallying and analyzing them regularly requires many hours. To optimize and streamline this task, we reexamine ouroperational flow, including the adoption of automation, and improve our systems by collecting information from
customers, holding discussions among our manufacturing sites in Japan, and interviewing our suppliers. By
continuously carrying out these activities that incorporate the concept of Shift Left, we are striving to improve our
productivity further.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Management
Accident
Reporting
System (TIRS)PoliceDepartment
CustomerContact Point

Customer
Report and Workplace Recovery

Permanent Measures

Service
Division

Defective Quality
Reporting System(Q-VICS1)
Operations
Divisions
Safety Division
Quality Assurance
Division

Relevant Divisions
Investigation of causes and development ofrecurrence prevention measures
Investigate and
Identify Causes
Confirm Spread

Determine Measures
Establish
Implementation Plan

2
FCN: Field change
notice. Refers to thegeneral recall notice.

Issue FCN2
Share with Group
Companies(QA-BOX)
Reflect in DesignStandards
Revise Standards
Notify Revision

Initiatives with SuppliersContinuously improving quality based on strong partnerships with suppliers is essential for providing high-quality
products quickly to the market. Since fiscal year 2001, we have conducted our unique Supplier Total Quality Assessments(STQA) in an effort to ensure our suppliers properly understand the level of quality expected from them. Before starting a
new business with suppliers, an STQA is conducted via self-assessment to evaluate their product quality, costs andinformation security. The assessment also includes their CSR initiatives, including human rights, ethics, safety and theenvironment. If a risk is identified, we visit the supplier and confirm the area of non-conformance on-site. Once ourapproach to quality has been shared with the supplier, we request that they plan and implement improvement measures,and we provide continuous support until all of them have been completed. In addition, we also conduct audits once every
three years for suppliers who handle important components and for suppliers where quality issues have been found. Also,in the course of holding regular meetings with the leaders of various manufacturing sites in Japan who use STQA, asystem shared by our whole Group, we share supplier-related information and discuss measures to resolve issues.
Additionally, Tokyo Electron Kyushu is working with its suppliers on its own improvement activities. For suppliers
judged to require focused evaluation, we add technically focused check items to STQA, based on past case examples of
non-conformance, and carry out assessment to prevent recurrence. By continuing these activities, we technicallystrengthen preventive measures and increase their effectiveness, linking them to further quality improvement.
■ Example Initiatives

Measures to Prevent Quality Problems from Occurring and Recurring

31

1
Q-VICS: Quality
Valuable
Information
Chain System

Tokyo Electron GroupFire
Department

In order to improve the quality of products, it is important to prevent non-conformance from occurring in upstream
processes and to ensure thorough quality control in each process so that nonconforming products are not allowed toflow into later processes. From this perspective, we promote activities focused on self-process assurance systems. In
particular, we aim to improve the level of completion of product quality by implementing thorough risk detection andmitigation measures (FMEA) from the initial stages of product design, as well as carrying out thorough inspections ineach process and conducting verification using simulation.
Improving the precision of each process and reducing reworking costs in these activities for self-process assurance
systems have enabled us to create high-value-added technologies and products in the upstream processes, leading to
the promotion of the Shift Left concept. We are also promoting Product Lifecycle Management (PLM) by using selfprocess assurance systems to comprehensively manage and analyze all processes from product planning,development, design and production through to service, in an effort to facilitate the earlier release of products,
enhance operational efficiency, improve quality and reduce costs.

To comply with ISO and EN safety standards and achieve higher safety levels, we have established our own design
rules for each of our products. As an equipment manufacturer, we have developed systems for manufacturing
products, which include safety considerations. We have other systems in place for responding to equipment design
and production non-conformance and any occupational accidents.
In the event of an accident, we use our TIRS3 accident reporting system to distribute information to safety andquality personnel in each division, officers and management, including senior management. An accident investigationis also conducted immediately to identify the cause and plan preventive measures.
We use a proprietary system called QA-BOX4 to share information on equipment quality and any major nonconformance across all quality departments in accordance with our operating rules. Measures obtained from theresults of an accident investigation are promptly applied, not only to the problem equipment but also to relevant
equipment operated by other customers, and revisions are also made to the current design standards. Additionally, we
work to prevent a recurrence of the accident by analyzing the factors that led to the human error and creatingprocedures that are easier to understand.
In operating “QA-BOX”, we validate the commonalities among accidents and share the issues and countermeasuresin regularly scheduled meetings attended by the Quality General Manager (GMs) responsible for various types ofequipment. This allows us to examine various approaches to prevent similar non-conformances from occurring in anyof our equipment. Furthermore, by managing the progress of the cases shared in QA-BOX and validating the effects ofthe measures, we ensure the implementation of effective measures and reduce the number of equipment-caused
accidents.

Operations and Information Flow:1
PCS: Process Control
SystemEnsuring Self-Process Assurance Systems and Promoting “Shift Left”

2

Information Sharing:2
EN: European Norm.
Uniform standard for theEuropean Union
complimenting parts oftechnical standards notstated in European
Commission directives(“New Approach”
directives).
3
TIRS: TEL Incident Report
System
4
QA-BOX: Tool for the
sharing and horizontal
expansion of importantquality-related
information within ourcompany

Percentage of Defects by Cause
Having identified reduction of costs for dealing with defective components and unit partsat customer sites as a material issue, since March 2020, the quality assurance division at
Tokyo Electron Technology Solutions have been promoting quality improvement activities
Inadequate
focused on a single point. As part of these activities, we categorized defects at all businessevaluation
units (BUs) by cause, and found that 31% were due to inadequate internal evaluation and
31%
Other
54%
15% were related to our suppliers. There was also a tendency for defects attributable toinadequate internal evaluation to be higher for equipment using new technology and for
Attributableto suppliers
large equipment such as flat panel display (FPDs), and defects related to our suppliers to15%
be higher for other equipment.
Based on analysis of the present situation, each BU raises quality improvements thatwarrant a concerted effort, and proceeds with measures while considering what quality should be like. For example, at
DSP3 Dept. (ES BU) and FPD BU, technical and quality assurance divisions cooperate with suppliers from the planningstage for new equipment, and by using FMEA to extract specific evaluation details, conduct evaluations that take into
account the environment in which the customer will use the equipment. TFF BU and TS BU, meanwhile, have been
conducting activities aimed at achieving zero defects for components and unit parts with a high frequency of defects, andwe are gradually seeing the results of these activities. ES BU and CT BU are also conducting their own quality
improvement activities using the “single point of focus” approach in an effort to resolve important matters.
Together with our suppliers, we will continue striving to further improve the quality of our components and unit partsby continuously rolling out initiatives, including the “single point of focus” approach.

3
DSP: Dry Surface
Preparation

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

32

Corporate GovernanceManagement
Foundation

Medium-term Goals

Corporate Governance Framework

Build a Strong Management Foundation for Underpinning Our
Business Activities

Tokyo Electron is endeavoring to build a strong and sound management foundation that supports the entire Group's business
operations. Regarding problems of climate change and abnormal weather, which have increased in severity in recent years,
endeavoring to preserve the global environment, we have been working hard to achieve the medium- and long-term environmental
goals for our products, plants and offices in order to preserve the global environment along our entire value chain. In terms ofpractical initiatives for respecting human rights, based on our Human Rights Policy, which summarizes the entire Group's guiding
principles on human rights, as well as implementing extensive education and awareness-raising efforts, we are expanding humanrights due diligence (impact assessment and remediation) and grievance processes. Based on the recognition that people are thesource of a company’s growth, we deeply appreciate the new value created by individual employees exercising their capabilities,
while respecting their individuality and values and encouraging work styles in sync with their respective lifestyles. To ensure that
operational decision-making and supervisory functions are exercised sufficiently, we are striving to build a highly effective corporate
governance system to realize medium- to long-term growth while considering corporate culture and business characteristics, andalso strengthening risk management and thoroughly enforcing compliance. As for supply chains, we are promoting activities incompliance with global standards to achieve sustainable operations together with customers and suppliers.

Tokyo Electron upholds the vision of being “a truly global company generating high added value and profits in the semiconductor
and flat panel display industries through innovative technologies and groundbreaking proactive solutions that integrate diverse
technologies.” With over 80% of our sales coming from overseas, we regard building governance structure as essential in order toachieve success in global competition, realize our vision and achieve sustainable growth. To that end, we have built a framework
to maximize the use of worldwide resources, and have worked to incorporate a wide range of opinions to strengthen ourmanagement foundation and technology base, establishing a governance structure capable of ensuring that we attain globallevel earnings power.
We use the Audit & Supervisory Board System, which consists of a Board of Directors and an Audit & Supervisory Board, andhas achieved effective governance based on the supervision of management by the Audit & Supervisory Board. Furthermore, in
addition to the Board of Directors, whose role is to make major operational decisions and play a supervisory role in the executive
management’s execution, and support appropriate risk-taking by them, we have established systems that facilitate growthoriented governance directed at sustainable growth, including the following: (1) the Nomination Committee and Compensation
Committee to ensure fair, effective, and transparent management; (2) the Corporate Senior Staff (CSS) to formulate and advancecompany strategy; and (3) the Business Execution Meeting, to play a role in deliberations of the executive management.
Diagram of the Corporate Governance Framework, Internal Control System and Risk Management System
Shareholders' Meeting

Management& Supervision

Appointment or Dismissal of Audit &Supervisory Board Members

Appointment or Dismissal of Corporate Directors
ReportNomination
Committee

Audit

Board of Directors

Compensation
Committee

ReportProposal & Report

Business execution

Corporate governanceCorporate governance framework,
Sustainability of a Board of Directors
appropriate for resolution ofmanagement issues, Process forevaluating the effectiveness of the Boardof Directors and management issues, etc.

Risk management
Approach to risk management,
Risk management system and initiatives,etc.

Human resources,
Diversity andinclusion, TEL Values,
Employee growth,Work-life balance
Respect for humanrightsApproach to human rights,
Human rights initiatives

Health and safety
Compliance

Health and productivity, Safety
management framework,
Incident reporting system,
Activities for safety

Approach to compliance,
Compliance system, etc.

Environment
Environmental management
system, Environmental risks
and opportunities, TCFD,
CO2 emission amount in theentire value chain, Mediumand long-term
environmental goals,
Environmental initiatives for
products, plants and offices

■

■
■

33

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Cooperate

Independent
Auditors
Cooperate

Cooperate
ReportRepresentative Director,
President & CEO

Global Audit Center

Audit

Ethics Committee
Internal Control Executive Officer

Risk Management Committee

Risk Management Executive Officer

Information Security Committee

Compliance Executive Officer

Export Trade Control Committee

Audit

Business Execution Organization (All Division/All TEL Group companies)

Composition and Results of the Board of Directors, Nomination and Compensation Committee (In fiscal year 2021)
Composition
Speaker/Chairperson

Number of Times Held

Corporate Directors

Independent Outside Directors

Board of Directors

83

Corporate Director (Non-Executive Director)

12

Nomination Committee

31

Corporate Director

10Compensation Committee

22

Independent Outside Director

7

Supply chain
Principles and system ofsupply chain, Supply chain
initiatives

SDGs initiatives■

Corporate Senior Staff(CSS)

Audit &
Supervisory Board
Audit

Supervision/
Appointment or
Dismissal

Business Execution
Meeting

Main activities

Appointment or Dismissal

Audit

Build a highly effective corporate governance system while strengthening risk management
and thoroughly enforcing compliance in order to build a strong and sound managementfoundation
Promote environmental impact reduction activities and endeavor to preserve the global
environment
Progress sustainability initiatives throughout the entire supply chain
Enhance engagement and build a work environment that respects human rights anddiversity while maximizing individual abilities

Sustainability of a Board of Directors Appropriate for Resolution of Management Issues
As a leading company in semiconductor and flat panel display (FPD) production equipment, we believe that proactive risk-taking
and a risk management structure to support it are essential for achieving sustainable growth. The Board of Directors guides its
discussions in an appropriate direction by incorporating a wide range of opinions that stem from the extensive knowledge andexperience of independent outside directors and Audit & Supervisory Board members in addition to executive directors who are
well-versed in the business.
We have also established the Nomination Committee and the Compensation Committee as discretionary advisory bodies toensure fairness, effectiveness and transparency in management. Authorized to propose the appointment and dismissal of the
CEO and corporate directors, the Nomination Committee has established guidelines on their required qualities and eligibility, as
well as a trigger for considering the appointment and dismissal of the CEO, and strives to ensure the objectivity, timeliness andtransparency of the procedures for appointment and dismissal. The Compensation Committee, on the other hand, reviews
performance evaluations of the CEO and corporate directors along with the appropriateness of the amount of theircompensation, with reference to advice from external experts.
Under such a system, we strive to operate the Board of Directors in a way that is appropriate for resolving management issues.
In addition, in order to develop the next generation of human resources who will assume management of operations to
support our sustainable growth, the CEO and Representative Directors play the primary role in constantly anticipating successor
candidates, primarily from among executive officers, evaluating their skills, character, dignity and insight from multiple
perspectives in the course of performing day-to-day duties, and continually supporting the education of the candidates throughassignment, training and other opportunities.
TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

34

Management Foundation

Skills Matrix

Policies for Allocation of Earnings

In view of our Corporate Philosophy that “We strive to contribute to the development of a dream-inspiring society throughour leading-edge technologies and reliable service and support,” we are engaged in enhancing our governance structure andin sustainability-focused management in order to respond to changes in the global environment, achieve success in global
competition, and realize sustainable growth and increased corporate value over the medium to long term to respond to the
mandate from our stakeholders. We believe that our corporate directors and Audit & Supervisory Board members have thenecessary qualifications to realize these initiatives. Described in detail below, all of them have knowledge of global business,governance, sustainability and so on. In addition to this matrix of individual skills, we also disclose the overall diversity of our
Board of Directors in an easy-to-understand format.

Our basic stance is for the appropriate allocation of company earnings to all stakeholders. Our dividend policy toshareholders is to link dividend payments to business performance on an ongoing basis and maintain a payout ratio ofaround 50% based on net income attributable to owners of the parent company. Furthermore, we also set theminimum annual dividend at 150 yen per share in light of the stable distribution of dividends. We effectively useinternal capital reserves to raise corporate value through earnings growth by concentrating investment in high-growthareas and provide returns directly to shareholders by linking dividend payments to business performance. Furthermore,
we flexibly consider implementing repurchases of treasury stocks as part of returning earnings to shareholders.
*Expertise and Experience*
Name

Corporate
Directors

Sales/Marketing●●

Corporate
Management

Semiconductor/
FPD

Tetsuo Tsuneishi●●

Toshiki Kawai

●

●

●

●

Sadao Sasaki

●

●

●

●

Yoshikazu Nunokawa

●

●

●

Tatsuya Nagakubo●

Kiyoshi Sunohara

●

●

●

Seisu Ikeda

●

●

●

Yoshinobu Mitano

●

●

●

Charles Ditmars
Lake II

Outside●Michio Sasaki

Outside●Makiko Eda

Outside●Sachiko Ichikawa

Outside●●●●Kyosuke Wagai

OutsideMasataka Hama

OutsideRyota Miura

Outside●●*Corporate
management: Having
experience inmanaging anenterprise (experience
serving as arepresentative director
or chairperson/president)*

Semiconductor/FPD:
Having knowledge ofsemiconductor/
FPD-related industries*

Manufacturing/development: Having
knowledge/experiencein manufacturing anddevelopment at Tokyo
Electron and othermanufacturers*

Sales/marketing:
Having knowledge/
experience in sales andmarketing at Tokyo
Electron and othermanufacturers

●

●

●

The six categories of“expertise andexperience” are defined
as follows:●●●

Kazushi Tahara

Legal Affairs/Risk
Management●●

Yoshiteru Harada

Audit &
Supervisory
Board Members

Manufacturing/
Development

Finance, Accounting/Engagement with
Capital Markets

●

●

●

●
*

●
●

●

●

●
●
*

Expertise and experience of Corporate Directors andAudit & Supervisory Board Members(Unit: persons)

Independent Outside Directors

8

Corporate Management

12

Semiconductor/FPD
8

Manufacturing/Development
Sales/Marketing
Finance, Accounting/Engagementwith Capital Markets
Legal Affairs/Risk Management

Independence and diversity of Corporate Directors

Foreign national/female Corporate Directors
1086Foreign national Corporate Director(Unit: persons)

4/12
3/12

Female Corporate Director

Supervision and Evaluation of Strategic Decision-making
Setting our strategic direction is recognized as the main role of the Board of Directors. It engages in constructive debate ofmanagement strategy, management plans, and other matters. It serves as the venue for supervising progress on theMedium-term Management Plan and other matters. The Board of Directors also seeks reports and explanations on thestatus of deliberations at the Business Execution Meeting to monitor whether decision making by executive management
functions properly in relation to matters for which approval authority has been delegated to executive management. At
Board of Directors meetings, independent outside directors and Audit & Supervisory Board members actively provide advice
and ask questions regarding the matters and reports made by executive directors well versed in business. The combined
perspectives of both parties have enabled the Board of Directors meetings to achieve an appropriate sense of productive
tension and constructive discussions that are essential for business execution decisions and supervision.
To obtain appropriate advice and questions from independent outside directors and Audit & Supervisory Board members,
the administrative office provides them with explanations on proposals in advance of the Board of Directors meeting as
needed. For matters of particular importance, we establish a venue for dialogue between independent outside directors andAudit & Supervisory Board members and executive management, striving to provide sufficient information to, and engage
dialogue with, independent outside directors and Audit & Supervisory Board members.
35 TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Finance, accounting/engagement withcapital markets:
Having knowledge infinancial accounting
and M&A, or
knowledge/experiencein engagement withcapital markets
Legal affairs/riskmanagement: Having
knowledge in legal
affairs, compliance andrisk management

Establishment of the Director Compensation System
As our basic policies on executive compensation, we emphasize (1) levels and plans for compensation to secure highly
competent management personnel with global competitiveness; (2) high linkage with business performance in the shortterm and medium- and long-term increase of corporate value aimed at sustainable growth; and (3) securement oftransparency and fairness in the decision process of compensation and appropriateness of compensation. Compensation
for inside directors consists of fixed basic compensation, annual performance-linked compensation and medium-term
performance-linked compensation. Compensation for outside directors consists of fixed basic compensation and nonperformance-linked (stock-based) compensation. Compensation for Audit & Supervisory Board members consists solelyof fixed basic compensation in consideration of their role being primarily the audit and supervision of management.
In order to secure transparency and fairness in management and appropriateness of compensation, the Compensation
Committee, which an independent outside director chairs, utilizes advice from an external expert, compares
compensation levels with those of industry peers in Japan and overseas, and analyzes the latest trends and best practices
in Japan and overseas (such as reflecting ESG in compensation). The committee then proposes to the Board of Directors acompensation policy for corporate directors, a compensation system that is globally competitive and the mostappropriate for us, and individual compensation amounts for the representative directors.
Fixed Basic Compensation
Fixed basic compensation is determined in reference to the compensation standards of industry peers in Japan andoverseas. For inside directors, it also depends on the scale of their responsibilities based on the job grade frameworkprovided by the external specialist organization.
Annual Performance-linked Compensation
Annual performance-linked compensation consists of cash bonuses and stock compensation-based stock options at aratio of approximately 1:1. The specific amounts paid and the numbers of stock options granted are determined basedon the results of corporate business performance and individual performance evaluations for the relevant fiscal year.
Net income attributable to owners of the parent and consolidated ROE are adopted as evaluation indicators forcorporate business performance. Evaluation items for individual performance include the degree of contribution toshort-term and medium-term management strategy targets (including ESG).
Medium-term Performance-linked Compensation
Medium-term performance-linked compensation is a performance share (stock-based) compensation to motivate
recipients to contribute to improving medium-term business performance and raise awareness for enhancing
corporate value by sharing the perspective of shareholders through the holding of shares. The number of shares issued
to each corporate director varies according to the payout rate based on their respective responsibilities and level of
performance goal achievement over the relevant three-year period. Consolidated operating margin and consolidated
ROE have been adopted as indicators for measuring the levels of performance goal achievement which are linked to
the Medium-term Management Plan.
Non-performance-linked (Stock-based) Compensation
Non-performance-linked stock-based compensation has been introduced for the purpose of making thecompensation system for outside directors more consistent with their expected role of, in addition to supervising
management, giving advice to management from the perspective of increasing corporate value over the medium tolong term. Under this Stock-based compensation system, shares are granted after the expiration of the applicable
period (three fiscal years), which is set each year.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

36

Management Foundation

Process for Evaluating the Effectiveness of the Board of Directors and Management Issues

Auditing by the Internal Audit Department

To evaluate the effectiveness of the Board of Directors, including the Nomination Committee and Compensation
Committee, we conduct questionnaire surveys of all corporate directors and Audit & Supervisory Board members, as wellas individual interviews with some corporate directors and Audit & Supervisory Board members. We also conduct opinion
exchanges and deliberations with a group comprised mostly of outside directors and Audit & Supervisory Board
members. The results of this questionnaire, summaries of interviews and the content of deliberations are then sharedwith the entire Board of Directors before deliberating and comprehensively evaluating the effectiveness of the Board of
Directors. We appoint a third party to provide advice on setting assessment items and to conduct, aggregate and analyze
the interviews in an effort to increase objectivity.
In terms of the evaluation results in fiscal year 2021, open and dynamic discussions were held at Board of Directors
meetings and off-site meetings. We recognize that the Board of Directors, including the Nomination Committee andCompensation Committee, is functioning in an effective manner.
In light of the results of this evaluation, we will continue our efforts to have fuller discussions regarding medium- tolong-term management strategies, promote diversity, strengthen group governance at a global level, and shareappropriate information with the Nomination Committee, Compensation Committee and Board of Directors.

The Global Audit Center serves as the internal audit department for the entire Group and implements audits based on
the audit plan. Based on the results of these audits, it provides instructions for making improvements as needed,
confirms the progress of these improvements, and provides any necessary support. The Group’s internal control overfinancial reporting in fiscal year 2021 was also evaluated as effective by the independent auditors.

Risk Management Initiatives
We conduct Group-wide reviews to identify the current status of risk management as well as any potential and actual
risks surrounding the Company in the future. Based on the results of the reviews, we have identified the following 13
risks as having potential to cause significant issues to our financial condition, operating results and cash flows, and areworking to address them.
Item

Main Potential Risks

Main Risk Management Initiatives■

1. Market
Fluctuations

Rapid contraction of the semiconductor market could lead to overproduction
or an increase in dead inventory. In addition, a rapid increase in demand could
lead to an inability to supply customers with products in a timely manner
resulting in lost opportunities

2. Geopolitics

Initiatives made by an individual country or region from such perspectives
as industrial policy, national security or environmental policy in shifting todomestic production of semiconductor-related businesses, strengthening
policies prioritizing domestically manufactured products or tightening of export
controls and environmental laws and regulations could lead to restrictions on
business activities

3. Research andDevelopment

Delays in the launch of new products or the mismatch of such products withcustomer needs could lead to a decline in the competitiveness of products

4. Procurement,
Production and
SupplyInterruptions in production due to a natural disaster or delays in component
procurement due to deterioration in the business conditions of a supplier or an
increase in demand that exceeds the supplier’s supply capacity could lead todelays in the supply of products to customers

5. Safety

Safety-related problems with the Company’s products could lead to damages
suffered by customers, liability for damages and a decline in credibility

6. Quality

The occurrence of a product defect could lead to liability for damages, costs forcountermeasures and a decline in credibility

Engagement with Capital Markets
Our management actively engages in Investor Relations (IR) and Shareholder Relations (SR) activities to contribute to oursustainable growth and increase corporate value over the medium to long term. The Chairman of the Board, CEO andcorporate director in charge of finance serve as spokespersons as required at IR conferences in and outside Japan and strive toengage directly with investors. In addition to holding quarterly earnings release conferences, we actively share our businessstrategies and growth story at the Medium-term Management Plan briefings and on IR day. The IR Department, which wasestablished under the direct control of the CEO, also appropriately supplements the explanation through individual interviews
and regularly reports opinions from investors to management so that feedback can be of use in management.
As a part of our shareholder relations activities, company executives play a central role in active and constructive
dialogue with our major institutional investors and proxy-advisory firms. In addition to explaining the Shareholders’Meeting agenda, we continuously engage in dialogue on a wide range of topics, including the business environment, ESG
and sustainability initiatives, and respond to business risks and opportunities, including social and environmental issues, inorder to deepen mutual understanding. To encourage active discussion and facilitate smooth and efficient voting at
Shareholders’ Meetings, we send convocation notices at an early stage and also post the notice in both Japanese andEnglish on our website to provide information to shareholders in a timely manner. In addition, we analyze the results ofthe exercise of voting rights and report to the Board of Directors to further enhance engagement with investors.

■

■

■

■

■

■

■

Establish a quality assurance system and a world-class service system
Resolve technical issues from the product development and design stage
Investigate the cause of any defects and implement measures to prevent thesame or similar defects from occurring
Monitor the quality status of suppliers, conduct audits and provide support
for improvement■

Risk Management
Approach to Risk Management
Reflecting changes in society and the business environment, the risks facing businesses are growing increasingly
complex and diverse. Tokyo Electron considers understanding and appropriately addressing the risks that it may face inits businesses, as well as their impacts, to be essential to its sustainable growth.

Risk Management System and Initiatives
In order to promote more effective risk management, we carry out enterprise risk management1 through a bodyestablished within the General Affairs Department at our headquarters. This body works with the respective
departments responsible for each operation to identify a wide range of risks arising in business activities, such ascompliance risk, human resource and labor risk, and business continuity risk. It then classifies risks with high impact
and probability as our key risks. The body also formulates and executes measures to minimize these key risks, monitors
the effect of said measures, as well as works to understand the status of risk control, and implements the PDCA cycle
for risk management. In fiscal year 2021 we introduced CSA2 and started a risk management committee. We willcontinue these activities going forward. By continuing to strengthen and progress risk management activities
throughout our Group, we will implement risk management that is more effective than ever before.

37

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

1
Enterprise risk
management:Group-wide systems andprocesses related to risk
management activities
2
CSA: Control SelfAssessment. Internalrisks and controls areevaluated andmonitored by those whoare actually performing
the duties with the goalof building andmaintaining anautonomous risk
management system.

Violations of the laws and regulations of the countries and regions where theCompany does business could lead to diminished public confidence in the
Company, fines, liability for damages or restrictions on business activities

8. Intellectual
Property Rights

The inability to obtain exclusive rights to proprietary technologies could lead to
reduced product competitiveness. Furthermore, infringement of the intellectual
property rights of third parties could lead to liability for damages

9. Information
Security

Breaches of information or the suspension of services due to unauthorizedaccess by cyberattack, natural disasters or other factors could lead todiminished public confidence in the Company or liability for damages

10. Human Resources

The inability to recruit and retain necessary human resources on an ongoingbasis or the inability to create an environment where people with diverse
values and expertise can play an active role could lead to diminished productdevelopment capability or customer support quality

11. Environmental
Issues

The inability to respond appropriately to each country’s climate change
policies, environmental laws and regulations, and customer needs could leadto additional related costs such as for developing new products or changing
specifications, as well as to reduced product competitiveness and diminishedpublic confidence in the Company

12. The Novel
Coronavirus(COVID-19)

The spread of COVID-19 could slow the Company’s business activities or lead tothe deterioration of global economic conditions

13. Other Risks

Business could be influenced by global and regional political conditions,
economic conditions, financial and stock markets, foreign exchange
fluctuations and other factors

Formulate business continuity plan, establish alternate production
capabilities, develop multiple sources of important parts, seismically reinforce
plants, etc.
Build a system for the stable supply of products by sharing forecasts based on
demand projections with suppliers to ensure the early procurement of partsand production leveling

■

■

■

Monitor compliance activities at key sites in and outside Japan under the
direction of the Chief Compliance Officer
Have assessments conducted by external experts and report identified issues
to the CEO, Board of Directors and Audit & Supervisory Board for swift andeffective action■

Advance the R&D strategy, business strategy and intellectual property
strategy in an integrated manner to build an appropriate intellectual property
portfolio■

Establish an information security system that conforms to global standards
by launching a dedicated security organization and having security
assessments conducted by external experts
Establish globally standardized rules and regulations for information
management■■

Make ongoing improvements to work environments and promote health andproductivity management, including having top management share direction
through regular employee meetings, establishing training plans for the next
generation of human resources, visualizing career paths for employees andoffering attractive remuneration and benefits■

Set industry-leading medium- to long-term environmental goals2
Reduce greenhouse gas emissions from product use. Reduce overall energy
consumption and increase the ratio of renewable energy used at plants andoffices
Provide technologies that help reduce the power consumption ofsemiconductors

■

■

■
■

■

2
Medium- to long-term
environmental goals:
Refer to p. 50

Establish the Corporate Innovation Division, and build a Group-wide
development framework that integrates innovative technologicaldevelopment with the technologies of each development division
Provide highly competitive next-generation products ahead of competitors
through collaborating with research institutions and sharing a technology
roadmap spanning multiple generations with leading-edge customers

Based on the “Safety First”1 approach, thoroughly implement safety design
at the product development stage, promote safety training and establish areporting system in the event of an accident■

1
Safety First: Refer top. 28

Carefully watch policy and diplomatic trends to understand moves tointroduce regulations
Communicate opinions to policy-making authorities such as through publiccomment, and anticipate the impact of different countries introducing
polices and regulations, and consider countermeasures■■

7. Laws andRegulations

Periodically review market conditions and orders received at Board of
Directors and other important meetings, and appropriately adjust capital
investments, personnel/inventory planning and other aspects of businessAccount Sales Division and Global Sales Division to strengthen the sales
framework and customer base by grasping investment trends of customers
and responding to a wide range of customer needs

Establish an Emergency Task Force headed by the CEO
Restrict travel to high infection-risk countries and regions, maintain supply
chains and thoroughly implement infection prevention measures at plants
and offices
Take necessary measures to counter such risks

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

38

Management Foundation

Compliance
Information Security

Approach to Compliance

As the data society develops and the importance of information security increases, we take active measures to use
data including digital transformation and achieve information security effectively.

To practice Tokyo Electron’s Corporate Philosophy, it is vital that each employee performs their daily duties with strong
interest in and a deep understanding of compliance. We established “Tokyo Electron’s Code of Ethics” as a code of
conduct to ensure that our employees are aware of the risks around them and conduct themselves appropriately. We
have built a global system that can directly raise questions and concerns about compliance and business ethics toquickly address potential problems.

Main activities

Compliance System
Creating information security systems

Information security management

Responses to security threats

We established a system centered around theVice President and General Manager,
Information Security, and are implementing
integrated security measures on a global scale.

We identify risks by conducting periodic risk
assessments and internal audits andimplement technological, human,organizational and physical security
measures.

To respond to cyberattacks and information
leaks, which are major security threats inmodern society, we actively introduce
advanced technologies and havespecialized organizations create systems toestablish mechanisms for reliable
monitoring.

In order to effectively promote a global compliance program, we have appointed a Chief Compliance Officer (CCO) andestablished a dedicated Compliance Department at our headquarters. Additionally, people responsible for compliance(Regional Compliance Controllers) have been appointed at key overseas sites, creating a system for direct reporting to
the Chief Compliance Officer and Compliance Department. The primary role of the Compliance Department is toformulate and review our practical compliance programs, establish and implement business ethics, plan andimplement education and training, and establish and operate internal reporting systems. It also cooperates with the
Risk Management Business Support Group established within our General Affairs Department, regularly confirms theobservance of laws and regulations in each country as well as internal company rules at each Group company, andassesses compliance risks. Furthermore, the Internal Audit Department conducts operational audits based on annual
plans, which leads to the improvement of findings as appropriate.

24
Representative Director, President & CEO

Establishment of global rules
We established global standardized
information security rules and regularly
conduct checks on compliance status andprovided education for all relevant parties.

Supply chain security

Increasing resilience

We respond to customer requests andmonitor the status of security at suppliers
so that we can securely use confidential
information and customer information in
our business activities withoutcompromising utility.

To prepare for the occurrence of security
incidents, we established a specialized
incident response organization and haveestablished systems so that we can shareincident information at an early stage andpromptly respond and recover.

General Manager of Legal, Compliance Unit
Chief Compliance Officer
Compliance Department (Headquarters)

U.S.

Europe/Israel

Vice President andGeneral Manager
Information Security

Day-to-day activities implemented globally

Tokyo Electron

Security Monitoring Organization

Information Security Management

Early detection of signs ofpotential attacks

Information Security
Committee

Incident Response Organization
Minimization of damage
when an incident occurs
Human/Organizations

Technology

24

PhysicalStrengthen/Improve39

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

China

Singapore/Malaysia

Systems established in preparation for
emergencies

Responses to security threats

Information Security
Committees at eachcompany

TaiwanRegional Compliance Controllers

Overview of Information Security
Mechanisms that support information
security activities

Korea

Plan

Do

Act

Check

Supply Chain
Security
Customers

Suppliers

Compliance Initiatives
Business Ethics
In addition to establishing the Code of Ethics as the standard of conduct by which all executives andemployees should abide, we have also established an Ethics Committee to promote and raiseawareness of compliance and business ethics more effectively within the company. We have also set
up the Disciplinary Committee as a subordinate organization of the Ethics Committee for the
purpose of ensuring that reasonable and appropriate disciplinary action is taken and proper
procedures are followed.
To ensure awareness of the Code of Ethics, we have translated it into five languages, including
Japanese, and have distributed it in the form of a booklet to all executives and employees. In fiscal
year 2021, the Code of Ethics was revised. In addition to reflecting standards required as a global
Code of Ethics
company, we added a number of new provisions on such important issues as personal dataprotection, information security, and money laundering. In addition, in pursuit of clarity andusability, we have made changes to the booklet design and adopted a bullet point format. We arealso striving to raise awareness of compliance and corporate ethics by regularly obtaining
confirmation from all executives and employees that they understand and comply with the revised content.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

40

Management Foundation

Human Resources
Human Resource Management

Initiatives for Anti-Bribery and Corruption and for Competition Laws
In fiscal year 2021, we established the company-wide Basic Policy on the Prevention of Bribery and Corruption, andthrough regular education, we are working to promote understanding and awareness. Based on this basic policy, we
have prepared the Guidelines for Gifts, Hospitality and Entertainment, which stipulate specific, practical procedures
and standards on monetary amounts, and we have established a thorough process requiring prior approval for cases
outside these standards. Using questionnaires that we have prepared, we also regularly check the status of our
suppliers' efforts to prevent corruption and provide them with feedback on the results and areas for improvement as
required.
We have also established the company-wide Basic Policy on Competition Law Compliance, and have prepared,
disseminated and enforced guidelines that summarize different types of violations in an easy-to-understand format,
based on applicable laws and regulations in the countries and regions in which we operate.
Compliance Training
We conduct online and face-to-face training adapted to different levels for all employees1. We will systematically expand ourcomprehensive training program and multilingual support, and reinforce efforts to foster compliance awareness and practice inthe company.
Internal Reporting System
Preventing problems from occurring and resolving them before they become significant requires a system that allows
employees to raise questions and concerns about business ethics and compliance without reservation or hesitationand to discuss them fully. For this reason, we have established an internal reporting system that ensures complete
confidentiality, anonymity and the prohibition of retribution so that employees can safely and reassuringly provide
information and seek redress outside the chain of command about behavior that is, or may be, in violation of laws,
regulations or business ethics.
Specifically, we have established and are operating the Tokyo Electron Group Ethics & Compliance Hotline—a global
common internal point of contact that uses a third-party system that is also accessible to our suppliers—as well as anexternal point of contact that allows direct consultation with an outside law firm. The internal point of contact can beaccessed via phone or a dedicated website 24 hours a day, 365 days a year, and accommodates all languages used by
employees.

For Tokyo Electron, corporate growth is about people. Employees are a foundation for creating value. Our aim is forboth the company and employees to grow together by engaging each employee at work and linking this to increased
productivity for the company as a whole. Specifically, we are taking initiatives focused on: (1) improving employee
development and engagement, such as through promoting support for career development, encouraging them tostretch themselves and providing opportunities for skill and leadership development, (2) improving productivity
through developing the workplace environment, such as by using IT for better operational efficiency and promoting
smart work and (3) attracting outstanding talent such as through employer branding, strengthening partnerships with
universities and labs and promoting internships, including international ones. To expand these initiatives effectively,
human resources function has deployed a team supporting business on a global level.

Employee Engagement
1
Training and seminar
topics include basics ofcorporate ethics andcompliance, anticorruption, export
compliance, insider
trading prevention, theAct for Subcontracting
and the prevention ofharassment. Sometraining is limited tocertain employees.

Information
Providers

Progress/Results Report
Follow-up

Internal Pointof Contact

Planning
for measures

Confirmationof effects

Implementationof measures

UP 12 points

Progress/Results Report

External Pointof Contact(Outside Law Firm)

Report/Consult

At Tokyo Electron, diversity and inclusion are management pillars that lead to the continuous generation of innovationand increased corporate value. We are actively pursuing them with the strong commitment of our management.
Although the areas of emphasis for diversity and inclusion vary by country, we have taken on gender and nationality as
major themes and put the following goals and initiatives in place based on the characteristics of each region.

Representative Director, President & CEO

ReportCompliance
General Manager of Legal, Compliance Unit
Department/
Chief Compliance Officer
Legal, Compliance
Division of Each
Overseas
Subsidiary
Request for Investigation/
Corrective and Preventative Action■

Relevant Divisions, etc.
Report/Consult

Progress/Results Report■

Reports and consultations received via these points of contact are handled with sincerity, and investigations areundertaken in accordance with internal regulations. If a compliance violation is found, disciplinary action is taken inaccordance with the Rules of Employment2, and preventive measures and corrective measures, such as improvements
to the workplace environment, are implemented as necessary.
In fiscal year 2021, a total of 82 cases were received via the internal reporting system, of which 6 were recognized ascompliance violations. The reports and requests for advice primarily related to harassment, but some concerned theimproper reporting of attendance and breaches of internal procedures. As a result, we have conducted regulareducation programs for our employees to prevent harassment and have provided thorough follow-up with thoseconcerned or involved. There were no reports or cases of non-compliance that could have had a serious impact on ourbusiness or on local communities.

41

Improvementof measures

Diversity and Inclusion

Report

NoticeFollow-up
Redress
Report/Consult

Reviewingof circumstances

Diversity and Inclusion
Board of Directors
Audit & Supervisory Board Member

Third-party system

Progress/Results Report

Continued Implementation of Engagement Surveys

Score

Response to Internal Reports

Report/Consult

Improving employee engagement is essential to maximize corporate
performance and achieve sustainable growth. Recognizing that employees
both create and fulfill company values for us, we have been regularly
conducting engagement surveys since fiscal year 2016 to assess the current
state of employee engagement and identify issues. Based on the results of thesurveys, our management takes the lead in making improvements to foster abetter workplace environment and culture. These initiatives resulted in an
increase in the employee engagement score of 12 points from fiscal year 2016
to fiscal year 2021 and a turnover rate of 2.5%. We plan to continue these
initiatives since we believe that improving employee engagement leads toproviding increased value to our stakeholders.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

2
A leniency system has
been introduced
whereby any
disciplinary action may
be reduced or
exempted in the eventthe employee involvedin a complianceviolation has made areport or sought advice
on his/her own volition.

■■

In terms of succession planning, we conduct a diversity-conscious talent pipeline (plan for developing humanresources) and strive to increase the ratio of women in management positions
Taking into consideration that many of our employees are engineers, we actively invest in the use of recruiters
and branding to hire women at a level that is equal to or greater than the ratio of women in each region (or theratio of women majoring in science and engineering in the case of engineers)
We create an organizational structure where even those from outside of Japan can take on corporate roles
through the use of technology and shared global human resources systems
We organize events such as talks on diversity and inclusion from internal and external experts and leaders,
generate networking opportunities for employees with similar characteristics and experience, and hold roundtable discussions regarding careers before and after taking maternity/paternity leave and childcare leave

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

42

Management Foundation

TEL Values
Systems and Initiatives for TEL Values

Support for Career Development
We are expanding programs designed for employees to quickly acquire basic skills according to their different levels
and goals through our global human resources system. Effort is being put into providing information and tools so that
employees can gain a more concrete image of their own learning, experience and career development.

A total of 14,479 employees are working at the 76 Tokyo Electron sites located in 18 countries and regions of the world, and webelieve that each of them maintaining a high level of engagement and demonstrating their full potential will lead directly to ourcompany’s growth. By sharing with our employees the direction toward which management is aiming and providing platforms
for direct dialogue through the employee meetings and discussions held every year at each site, we are striving to build mutual
trust between the organization and individuals. Furthermore, to realize our Corporate Philosophy, we established TEL Values,
which delineate Tokyo Electron’s values, the mindset that each employee must possess, and the codes of conduct to be passed
on to the future. The TEL Values—pride, challenge, ownership, teamwork, and awareness—are being put into practice by our
employees all over the world.

Leader Programs
In nurturing the next generation of leaders to support our future, we are globally expanding our succession programs
to identify and systematically nurture staff to take on the role of realizing medium- to long-term improvement ofcorporate value. Selected next-generation management candidates are provided growth opportunities with an eye tothe future through participation in events such as external training, building networks outside the company, andcultivating a broader perspective.

TEL Values
Pride

We take pride in providing high-value products and services.

Challenge

We accept the challenge of going beyond what others are doing in pursuing our goal of becoming
number one globally.

Ownership We will keep ownership in mind as we think things through, and engage in thoroughimplementation in order to achieve our goals.

Provision of Global Learning Opportunities
For employees to acquire skills related to their duties and to gain a broader insight, we encourage them to actively
participate in both internal and external seminars. We are also moving to standardize our core programs on a global
basis so that employees are able to learn using our consistent group content and guidelines regardless of whether they
are in Japan or overseas.

Teamwork

Corporate Education System (TEL UNIVERSITY)

We respect each other's individuality and we place a high priority on teamwork.

Awareness We must have awareness and accept responsibility for our behavior as respectful members ofsociety.

Management

Executives

Leaders

Junior Employees
New Employees

Mid-level Employees*
OJT: On the job training

Introductory programs (new graduates, mid-career recruits)OJT* programs (new graduates, mid-career recruits)
Level-based Programs

Employee Growth
The global human resources system introduced in fiscal year 2018 clarifies each employee's roles and responsibilities tosupport talent management effectively. In coordination with development programs, Tokyo Electron supports the careerdevelopment and growth of our employees by presenting the skills required for a variety of jobs in the company, theknowledge they should/can acquire and a description of expected duties at higher levels. We are also working to build
workplaces where diverse individuals can flourish by conducting talent assessments across all countries and regions, realizing
fair total rewards for employees and utilizing a performance management system and a global common human resource
system.

Business skills
Goal-based Programs

Global communication
Employee life support
Technical programs (seminars, workshops)

Work-life Balance
Work Styles
Tokyo Electron recommends work styles that incorporate work-life balance and continuously develops work
environments to enable this. We are promoting efficient ways of working suited to our employees' lifestyles and social
situations so that our employees can make the most of their work hours by utilizing a teleworking system in addition
to a flextime system.
Karuizawa Training Center

Provision of Personalized Learning Opportunities
Since each employee’s growth is different, we are putting effort into the practice of on-demand education* as amechanism that allows individuals to learn as they want, when they want, and according to their own needs. In
addition to group training, by proactively utilizing e-learning programs, we are providing opportunities for employees
to learn from any location.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Junior employee programs

Compulsory web-based training

Human Resource Concept at TEL UNIVERSITY

43

Mid-level employee
programs

Leader programs

Global Human Resources System

We have established TEL UNIVERSITY as an in-house educational
establishment, helping employees to independently build theircareers and realize their personal goals for their growth anddevelopment. Our aim is to stand shoulder to shoulder with each
employee, supporting their self-growth and fruitful careerdevelopment throughout their working life, and create a foundationthat enables the organization and individuals to trust each other andgrow. TEL UNIVERSITY plays an important part in helping employees
realize our vision of being “a truly global company generating highadded value and profits in the semiconductor and flat panel display
industries through innovative technologies and groundbreaking
proactive solutions that integrate diverse technologies”. Through thefollowing four initiatives, we are focusing on employee growth that
leads to corporate growth.

Manager programs

Leave System
Based on the belief that taking appropriate leave and properly
Refreshment leave
managing work hours also contributes to better employee
productivity, we strive to correct long work hours and aim to enhance
the leave system and promote taking leave.
Since fiscal year 2019, we have set an annual target of 70% annual
paid leave use and have promoted employee awareness for planned
use of leave. We are also promoting regular monitoring of leave use status and urging management to improve leave
use rates, ensuring that five days of compulsory annual leave are taken as required by law since April 2019. In fiscal year
2021, the leave use rates were 62.5% in Japan and 75.3% overseas, affected by COVID-19. We will continue to encourage
our employees to take annual paid leave.

1,235 employees*
On-demand education:
Education programs
that allow employees tolearn at their own
convenience, anywhere,anytimeTOKYO ELECTRON SUSTAINABILITY REPORT 202 1

44

Management Foundation

Our goal is to provide refreshment for employees and thereby boost their motivation to work. The system grants
special (paid) leave from two weeks to one month per five years of service to employees who have worked for morethan 10 years. In fiscal year 2021, 688 employees in Japan and 547 employees overseas took refreshment leave.
In addition, to the system made available by existing laws, we are independently building a substantial frameworkthat allows employees to adopt a flexible approach to work that accords with diverse life events such as raisingchildren or caring for family members. With regard to the situation in Japan, we have acknowledged the maximum
extension of the childcare leave period to the day a child reaches three years of age, as well as expanding our provisionof a reduced working-hours program for childcare to include employees rearing children as far as graduation fromelementary school. In addition to nationally mandated leave to care for a sick or injured child, we enhance our support
system by establishing our own childcare leave, nursing care leave, etc.

Supplier Human Rights Risk Survey Results
The results of human rights risk surveys conducted at suppliers showed that 35% of those with 500 or more
employees had potential/actual risks. Among these risks, the major risks are health and safety issues related tohuman rights, followed by labor issues. Based on these results, we continued to request those suppliers tocomply with domestic laws and regulations and social norms related to health and safety. We will work to
reduce human rights risks by promoting corrective actions together with our suppliers.
Meanwhile, inside our company, we identified potential human rights risks in the areas of labor, and healthand safety. To mitigate these risks, we are renewing our efforts to fully manage working hours and also taking
steps to improve operational efficiency further.
■ Percentage of companies considered to have potential/actual risks■ Percentage of companies considered to have low risks

Respect for Human Rights■■

Conscious of our corporate social responsibility, Tokyo Electron recognizes that it is important to conduct ourselveswith a strong sense of integrity. Based on this recognition, we have firmly upheld human rights since our founding, as
reflected in the spirit of our Corporate Philosophy and Management Policies. For us, respecting human rights means asignificant undertaking, not only to fulfill our responsibility for eliminating adverse impacts on people caused throughbusiness activities, but also to respect those people who support our business activities, and contribute to therealization of a sustainable, dream-inspiring society. We incorporate the concept of respect into every aspect of ourbusiness activities, and strive to nurture a dynamic corporate culture where each person can realize his or her fullpotential.

Human Rights Initiatives
In fiscal year 2018, we formulated our Human Rights Policy1, summarizing our approach to human rights. We have specified thehuman rights we believe are particularly important in business activities as Freedom, Equality & Non-Discrimination; Freely
Chosen Employment; Product Safety & Workplace Health and Safety; Freedom of Association; and Appropriate Working Hours& Breaks/Holidays/Vacations. In preparing the Human Rights Policy, we referred to the United Nations’ Guiding Principles on
Business and Human Rights and the International Bill of Human Rights and the ILO Declaration on Fundamental Principles andRights at Work referred to therein, the Ten Principles of the United Nations Global Compact, and the RBA Code of Conduct2.

Assessment

Remediation

Commitment to respecting
human rights

Assessment of human rights risks
in business and supply chains

Actions to reduce risks basedon assessment results■

Human Rights Policy publication
Awareness and implementation■ Education■

CSR assessment
Human rights risk assessment■ Human rights impact assessment

■

■

■

■

Feedback sheet publication
Program development and review
according to issues

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

35%

■

■

■

■

1
Human Rights Policy
www.tel.com/csr/
employee/diversity/
2
RBA Code of Conduct:
The RBA establishes a setof standards for supply
chains in the electronics
industry for a safe labor
environment to ensurethat workers are treatedwith respect and dignity
and that companies takeresponsibility forenvironmental impact inthe manufacturing
process.

Sustainability Report publication
Disclosures on the website

3
CSR assessment: Refer
to Supply Chain
Management on p. 54

Reporting system

Health and Safety■

65%

Regular disclosure of
information■

Working hours
Burden of
employmentrelated fees■

ReportWe ensure that our executives and employees, as well as suppliers, are fully aware of this content. Specifically, we
publish the Human Rights Policy on our website to make it available to everyone inside and outside the Company, andalso implement online human rights training targeting all of our executives and employees.
In fiscal year 2021, as in the previous fiscal year, we conducted human rights due diligence, as well as risk surveys,
and identified and assessed impacts. As part of the surveys, we utilized a self-assessment questionnaire (SAQ) forinternal use, based on the RBA Code of Conduct, and also reviewed the results of a CSR assessment3 for suppliers ofmaterials, staffing and logistics to assess the current situation throughout the value chain. We are using the results ofthese surveys to consider corrective actions and reduce human rights risks.

45

Appropriate use of water and waste water management to prevent
pollution

Management Systems
Labor

Approach to Human Rights

Commitment

Environment■

Deployment of trained emergency response personnel
Designation of emergency response teams, and provision of
personal protection equipment and training
Establishment of risk assessment procedures and programs,
assuming emergency situations
Implementation of evacuation drills for all workers, assuming fires
and other emergencies

We recognize the importance of having highly effective grievance mechanisms related to human rights and areworking to establish and operate those mechanisms. In fiscal year 2021, we further strengthened our internal andexternal reporting systems in Japan and overseas for employees and suppliers.
By continuing to conduct human rights due diligence going forward, we will assess and correct any human rights
issues we identify in our business activities and further improve the grievance mechanisms we provide.

Health and Safety
Health and Productivity Management
Having every employee find fulfillment in both work and life and achieve their maximum performance is also
important for the future advancement of Tokyo Electron. To create healthy and comfortable workplaces for
employees, we are working to develop our systems further. Besides conducting various medical checkups inaccordance with the law, we offer face-to-face consultations by designated occupational health physicians for
employees who work long hours. We also offer counseling opportunities supported by external industrial counselors
for those who request them. Furthermore, we are working on strengthening health-related support, organizing
regular line-care1 seminars aimed at management, and, where necessary, holding liaison meetings with the healthofficers and health professionals at each Group company in Japan. Based on the collaborative health2 concept, incooperation with the Tokyo Electron Health Insurance Society, we are actively expanding data health3 initiatives,
providing employees health guidance and effective prevention and health promotion according to their individual
circumstances by utilizing examination data from medical checkups. As a result, the health literacy of employees infiscal year 2021 rose, demonstrated, for instance, by an increase in the percentage of employees receiving specifichealth guidance4. Furthermore, again in fiscal year 2021, as in fiscal year 2020, the entire Group in Japan collectively
received recognition as top 500 companies under the 2021 Certified Health & Productivity Management
Outstanding Organizations Recognition Program5. We will continue to promote various initiatives at the global levelto maintain and improve our employees' health.

1Line-care: A workplacemeasure for mental
health, in which
managers andsupervisors take a leadrole in responding torequests by workers foradvice, with the aim of
improving the workplaceenvironment
2Collaborative health:Situation where acompany actively
cooperates with aninsurer, such as a healthinsurance society, toeffectively and efficiently
promote the health of its
employees and theirfamilies
3
Data health: Refers to amore effective andefficient health careprogram that is
implemented in line withthe health status of
insured persons, byutilizing and analyzing
the health and medical
information heldelectronically by the
medical insurer
4
Specific health guidance:
Health guidance
provided for reducing
the number of people
with metabolic
syndrome (visceral fat
syndrome) or at risk ofmetabolic syndrome,and for the early
detection and early
treatment of lifestylediseases and cancer, etc.
5
Certified Health &Productivity
Management
Outstanding
Organizations
Recognition Program:
The program publicly
recognizes particularly
outstandingorganizations that arepracticing healthoriented business
management, based on
initiatives attuned to
local health-related
challenges and on
health-promotion
initiatives led by the
Nippon Kenko Kaigi

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

46

Management Foundation

Environment
Safety Management Framework

Environmental Management System

Based on a culture of “Safety First,” we carry out ongoing activities for safety promotion. In an effort to raise theoverall level of safety and occupational health, we use a management system based on OHSMS1 to manage safety andoccupational health and also follow the PDCA cycle to reduce the potential risk of work-related incidents. Moreover,by sharing information of any issues at internal meetings, such as those of the EHS Council and the Manufacturing
Company Presidents’ Council, we promote safety management as a company-wide initiative.

1
Occupational Healthand Safety Management
System (OHSMS): A
management system toimprove the overall levelof safety andoccupational health

Incident Reporting System
If an incident occurs, the information is shared with related parties and persons in charge through the TEL Incident
Report System (TIRS), newly developed in fiscal year 2019, creating a system that resolves issues and leads to the
proposal of measures to prevent reoccurrence. Through the operation of TIRS, we strive to improve the accuracy ofreport content further.

Activities for Safety
On-site Safety Patrols
At each plant and office, monthly safety and health committee meetings are held to discuss measures for any
workplace safety or employee health issues and to conduct safety patrols. We have also set up a system forautonomous problem-solving at manufacturing sites, with safety patrols by representatives from appropriate
departments at least once per month.

ISO 14001 Certified Plants and Offices
Company nameRisk Assessment and Stop Work Authority
Before starting work at our manufacturing facilities, the work details and the risks are shared with all workers involved,
and they each increase their awareness in an effort to prevent incidents. In addition, effort is also being directed toproviding guidance to safety managers as well as making workers stop work and take corrective action in the event ofan unforeseen incident while on the job.
Safety Education
In addition, we are implementing two education programs globally for theestablishment of safe work environments.
■ Basic Safety Education
TCIR
Our program on basic safety targeting all employees. This is provided as
introductory training for new hires as well as refresher training every thirdyear of employment.
■ Advanced Safety Education
Our program on advanced safety targets employees working on production lines and in cleanrooms. Participants are
required to complete the course every year. For overseas transferees, the laws and regulations in their previous andfuture places of employment are compared, and additional safety education is added as necessary.

0.27

To eliminate incidents, we also provide online training and risk assessment training for employees in Japan andoverseas. Also, to expand the concept of safe equipment design2 to our design, manufacture, and service operations,
we hold a semiannual safe equipment design seminar at our manufacturing sites in Japan, inviting an external guest to
speak. Finally, we also promote our initiatives to prevent accidents, such as providing our suppliers and customers withsafety information as circumstances demand.
As a result of having maintained a high priority on creating safe work environments, TCIR3 has been maintained atless than the company’s target of 0.5, with 0.27 in fiscal year 2021.

47

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Environmental issues such as climate change are growing ever more crucial. To promote activities in the medium to longterm that meet the environmental/ESG needs of its customers and other stakeholders, the Manufacturing Company
Presidents’ Council, which includes the corporate director in charge of EHS, monitors and supervises progress related toenvironmental issues. A headquarters has been established, headed by the corporate director in charge of EHS, andpromotes environmental activities across the entire Group. The Environment Council, made up of members appointed by
the executives of the Group companies, sets targets related to environmental issues, monitors progress and also works toachieve its goals. Furthermore, to continuously promote our environmental activities, we have operated anenvironmental management system based on ISO 14001 since fiscal year 1998, primarily at our manufacturingsubsidiaries. In March 2017, we acquired multi-site ISO 14001 certification for our plants and offices in Japan that had
previously acquired certification separately. Coinciding with this multi-site certification, we have developed astandardized group format for environmental impact assessments, the identification of useful environmental aspects,
environmental management programs and internal audit checklists. During fiscal year 2021, we established approximately
100 environmental goals for different levels across the entire Group and carried out these improvement activities. Any
issues identified through these activities are reviewed by the Environment Council, reported to the Manufacturing
Company Presidents’ Council and used for promoting environmental activities across the entire Group. Under such anenvironment management system, fiscal year 2021 was again free from environmental incidents, accidents, violations,and associated legal proceedings.
Plant/Office name

Certification dateTokyo Electron

EHS Promotion Center (Fuchu Technology Center)

Tokyo Electron Technology Solutions

Fujii Office/Hosaka Office/Tohoku Office

Tokyo Electron Kyushu

Koshi Office/Ozu Office

Tokyo Electron Miyagi

Taiwa Office

Tokyo Electron (Kunshan)—

March 2013

Chaska Office

March 2013

May 1998

TEL Manufacturing and Engineering of America
2Safe equipment design:
Refer to p. 25
3
TCIR: Total Case
Incident Rate. The
number of workplace
incidents per 200,000
work hours.

Tokyo Electron Korea

North Chelmsford Office

May 2018

TEL Technology Center Korea, Balan Plant

July 2014

Environmental Risks and Opportunities
The various issues related to the environmental impact on our daily lives and the business activities of companies.
Physical risks, such as rising average global temperatures, strong winds, disasters, and water shortages caused byclimate change and abnormal weather, heighten the risks in business, such as damage to assets, increased operating
costs, and impacts on the supply chain. In terms of legal risks, we recognize that stronger environmental laws andregulations, more stringent regulations on greenhouse gas emissions, the introduction of carbon taxes, and so on willlead to higher costs for associated measures. At the same time, promoting environmental initiatives leads to more
opportunities to sell outstanding, environmentally friendly products, reduce operating costs, and further improve
corporate value. As a participant in the semiconductor and flat panel display (FPD) industry, by leveraging Tokyo
Electron’s advanced technological prowess to create added value, we can contribute to the creation of semiconductor
and FPD products with low power consumption and the building of an energy-saving society that makes the most of
information technology.
Based on the requirements of ISO 14001, we identified and analyzed internal and external issues in relation to theenvironment, namely, our relationship with the climate, air quality, and water quality. We also clarified theenvironmental needs and expectations of customers, suppliers, governments, and employees and identified thecompliance obligations of our group. From this information, we defined the following as its risks and opportunities toaddress: (1) environmental management by reducing the environmental impact of its business activities, (2)compliance with applicable laws, and (3) enhancing product competitiveness with the environmental contribution of
products.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

48

Management Foundation

TCFD

CO2 Emissions Across the Value Chain

Initiatives Related to Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
We are pursuing ongoing disclosures and initiatives based on the TCFD framework and relating to risks andopportunities that climate change presents to our business.

We will work to grasp the environmental impact throughout the value chain and develop business activities that are consciousof reducing this impact. Based on our environmental slogan “Technology for Eco Life,” we aim to resolve environmental
problems through leading technology and reliable services.

Status of Initiatives Related to Recommendations of the TCFD
■ Governance
Each of our corporate directors for EHS and CSR is working under the supervision of the CEO to monitor progress ofgoals related to our response to climate change.
With the establishment of the EHS Promotion Department and CSR Operations Department at headquarters, these
activities are being driven by the entire Group. At the Environmental Council, comprised of members appointed byexecutives of the Group companies, company-wide goals are set, progress is monitored and the achievement of thesegoals is promoted.
■ Strategy
Utilizing the framework of the TCFD recommendations, we identified the risks and opportunities of climate changethat will impact business over the medium to long term. We have evaluated the quantitative impact on businessfrom some of those risks and opportunities, and we aim to continue quantifying others going forward as we
investigate relevant measures.
■ Risk Management
Through the Manufacturing Company Presidents’ Council, we approve company-wide risk management initiatives,
from short term to long term, that related divisions and councils recommend, and then apply those initiatives to thefacilities and divisions of the Group companies.
For Scope 11 and 22 CO2 emissions, we are adopting renewable energy from a global perspective, including theimplementation of measures at our key manufacturing sites in Japan with high emissions.
For Scope 33 emissions, we recognize the importance of providing products that generate fewer CO2 emissions
because about 88% of the emissions in our entire value chain are generated during use of products after sale, so weare focusing on the development of a range of environmental technologies.
We also formulate business continuity plans in anticipation of natural disasters caused by abnormal weather andother factors, and take measures with our suppliers to ensure that business operations can be maintained.
■ Metrics and Targets
To further reinforce our initiatives toward improving environmental performance of products and conserving theenvironment at our plants and offices, we revised our medium-term environmental goals in December 20204. While
supporting the advancement of information and communications technology through the provision of oursemiconductor and FPD production equipment, we are also committed to achieving new environmental goals in
keeping with our Corporate Philosophy: “We strive to contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support”.
Examples of Climate Change (Risks and Opportunities) Impacting Business over the Medium to Long Term
ScenarioType

Details■

2°C
Temperature
Increase

Transition risks■■

4°C
Temperature
Increase

Physical risks■■

CommonOpportunities■■■

Increased energy costs in line with taxes on fuel and energy
Assuming our greenhouse gas (GHG) emissions and use of renewable energy remain at fiscal year 2021 levels, if a carbon tax
were applied, we estimate our costs would increase by 1.1 billion yen/year by fiscal year 2026 (assuming a tax of 6,000 yen per
ton CO2) and 2.6 billion yen/year by fiscal year 2041 (14,000 yen per ton CO2)
Decreased net sales if we are unable to meet customers’ requirements and demands for environmental initiatives
Reduced reputation among investors, NGOs and local communities if a response to climate change and other environmental
issues is delayed
Impacts on us, our suppliers and customers from abnormal weather (net sales decrease as a result of supply chain disruptions,operation stoppages, production/shipping delays and other factors)
Accelerated efforts to create new value, including innovation toward development of low-GHG products and services, andequipment and technologies that contribute toward the manufacture of low-power consumption devices
Gaining superiority and business opportunities through proactive initiatives for climate change and adding value to the market
Higher productivity by streamlining operations and reducing related environmental impacts
Securing a competitive advantage by building resilience (responsiveness to climate change) into global operations, including
working to adopt renewable energy, and improving corporate value through these initiatives

1
Scope 1: Direct
greenhouse gas (GHG)
emissions from use offuel and gas we owned
or controlled
2
Scope 2: Indirect GHG
emissions from use ofelectricity, steam andheat we purchased
3
Scope 3: Emissions
from corporate value
chains (excluding scope
1 and 2 emissions), suchas producttransportation,
employee businesstravel and major
outsourced production
processes*
Scope 3 is divided into
upstream activities,
which include emissions
associated withpurchased or procured
products and services,and downstream
activities, which include
emissions associatedwith sold products andservices.
4
Revision of mediumterm environmental
targets: Refer to p. 50

409 kilotons

186 kilotons

5,813 kilotons

Not from our GroupOwn emissions

Not from our Group

Scope 3 upstream

Fuel- and energy-related
activities

Employee commuting

11 kilotons

14 kilotons

1 kiloton

162 kilotons

Waste generated in operations

1 kiloton

Purchased goods and services

211 kilotons

Direct emissions from fueland gas use
Scope 1

29 kilotons

Business travel

Capital goods

Scope 3 downstream

Scope 1, 2

Indirect emissions from electricity
use and heat purchase
Scope 2157 kilotons

Upstream transportationand distribution

End-of-life treatment ofsold products

2 kilotons

Use of sold products

5,668 kilotons
Downstream transportationand distribution

143 kilotons

9 kilotons

Downstream

Upstream

Our total CO2 emissions of Scope 1 and Scope 2 is 186 kilotons, while Scope 3 accounts for a total of 6,222 kilotons,
approximately 97% of the total. Of this, CO2 emissions when using products is 5,668 kilotons, about 88% of the total.
This is why we consider the development of products with low CO2 emissions during operation to be important.

Medium- and Long-term Environmental Goals
In order to further strengthen our initiatives toward the environment in our products, plants and offices, the contents of themedium-term environmental goals for fiscal year 2031 were revised in December 2020. In the goals for products, thereference year for per-wafer CO2 emissions was changed from fiscal year 2014 to fiscal year 2019. In addition, in the goals forplants and offices, the total CO2 emissions reduction goal was changed from 20% reduction to 70% reduction while reaching a
rate of 100% renewable energy usage. At present, we are working on new initiatives toward achieving these revised goals.
Specifically, we are planning to introduce renewable energy at our plants and offices in Japan, the United States and China
starting from fiscal year 2022. This will bring our use of renewable energy company-wide to over 50% while dropping our CO2
emissions by 40%. In terms of products, we are moving ahead with understanding the amount of CO2 emissions during theuse of standard equipment and creating a roadmap. We are rolling out activities toward achieving our goals based on this.
We have set the following as a long-term goal to achieve by 2050. As a leading corporation in environmental management,
Tokyo Electron works actively to conserve the global environment. We strive to contribute to the development of a dreaminspiring society by proactively promoting the reduction of environmental burden of both our products, facilities, and at thesame time, providing evolutionary manufacturing technologies that effectively reduce the power consumption of electronic
products. We1 are working on initiatives for this at a company-wide level.

Medium-term environmental goals for 2030 (Revised in December 2020)
CO2 emissions reduction goals
Products

30%

reduction

Per wafer (compared with 2018)70%

reduction

Total emissions (compared with 2018)
Reduce energy consumption by 1% YoY at each plant andRatio of renewable energy 100%
Asaaleading
leadingcorporation
corporationininenvironmental
environmentalmanagement,
management,Tokyo
TokyoElectron
Electronworks
worksactively
activelyto
toconserve
conservethe
theglobal
globalAs

Long-termgoal
goal(2050)(2050) environment.
Long-term
environment.We
Westrivestrivetotocontributecontributetotothe
thedevelopment
developmentofofaadream-inspiring
dream-inspiringsocietysocietyby
byproactively
proactivelypromoting
promotingthe
reductionof environmental
burdenof both
our products,
facilities,
and atthetime,time,
providingevolutionary
the reductionof environmental
burdenof both
our products,
facilities,andatsamethe same
providingmanufacturing
technologies that
effectively
reducethe power
consumption
electronic products.
evolutionary manufacturing
technologies
thateffectively
reducethe power ofconsumptionof electronic products.

49

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1
T. Kawai, CEO / Top Management Conference / 2021.5.25

150

Management Foundation

Product Initiatives
Products that Contribute to a Sustainable Society
Of the CO2 emissions from our value chain, emissions during product use account for about 88%. For this reason, we have madeit a key corporate objective to promote environmentally friendly product design and lower the energy consumption of our
products. In fiscal year 2021, we moved ahead with setting out a roadmap for key models to reach our medium-term
environmental goal to reduce per-wafer CO2 emissions by 30% by fiscal year 2031 (compared with fiscal year 2019) for the keymodels of each business unit, and have established guidelines for calculating CO2 emissions that include the amounts of processgases and chemical substances to use, as well as the area, volume and mass occupied by equipment, in addition to our existingones for energy and water. Based on these guidelines, we have begun estimating CO2 emission levels for equipment using ourbase year (fiscal year 2019), and have also started studying environmental technology strategies. As we work to further raise
environmental awareness, we will continue to incorporate environmental technologies as an important added value in our
technological strategies through various activities.
■ Example initiative
In our Cellcia™ series of test systems, we have improved the cooling circuits in the cooling chiller, increasing
efficiency and boosting cooling capacity by 30%. This has enabled us to make the cooling chiller smaller, reducing
our equipment footprint1. In addition, we have brought in new functions to automatically switch off heaters andchillers inside our Precio™ series of wafer probers when idling.
Initiatives for Product Environmental Laws and Regulations
In order to comply with each country’s environmental laws and regulations pertaining to products, we proactively collectinformation and take appropriate action as required. An example of our efforts for EU REACH2 is that we properly
investigate and disclose information on the presence of any chemical substances in articles. We introduced the
chemSHERPA3 format in fiscal year 2021 and collected information on chemical substances for concentrations in the parts
per billion (ppb4). As an effort toward GHS5 requirements, we provide safety data sheets (SDS6) when selling chemical
products. We also promote the local procurement of chemical products and effectively address laws and regulations. In
explaining and addressing the frequently revised environmental laws and regulations, we continue to offer “web-based
training for Product Environment Compliance” to all employees, and we provide suppliers with information on therelevant environmental laws and regulations. We will continue to monitor each country’s environmental laws andregulations rapidly and strive to take appropriate action.

Plant and Office Initiatives
Renewable Energy Initiatives
We have set as a medium-term environmental goal the use of 100% renewable energy sources at our plants andoffices by fiscal year 2031. To reach this goal, we are planning to introduce renewable energy at our sites in Japan, theUnited States and China, starting from fiscal year 2022. This will bring our use of renewable energy company-wide toover 50%, while dropping our CO2 emissions by 40%.
As an initiative toward in-house generation of renewable energy, at Tokyo Electron Miyagi (Taiwa Office) and Tokyo
Electron Technology Solutions (Fujii Office, Hosaka Office), renewable energy generated from solar panels is used to
power the plants, and monitors displaying their energy profile have been set up at the entrances to the plants. At
Tokyo Electron Kyushu (Koshi Office), generated energy is sold, helping to prevent global warming. In fiscal year 2021,
we generated a total of 4,068 MWh of renewable energy in Japan. In addition, Tokyo Electron U.S. Holdings has
continued to purchase green power from external sources, amounting to 4,980 MWh in fiscal year 2021.
Initiatives to Prevent Global Warming and Save Energy
As our medium-term environmental goal, we want to reduce total CO2 emissions by 70% by fiscal year 2031
(compared with fiscal year 2019) at our plants and offices, and have set the goal of reducing energy consumption by atleast 1% year-over-year at each of our plants and offices. To achieve this goal, we have brought in a number of
initiatives, including our energy-saving clean room operation, setting office air conditioning at appropriate
temperatures, introducing devices that offer superior energy-saving performance, and bringing in renewable energy.
As a result of these activities, we managed to reduce by 10% year-over-year the amount of energy used at our plants
and offices per net sales in fiscal year 2021. In addition, the increase in the amount of energy used to develop andevaluate products and increase production meant that our power consumption was 355 GWh (12% increase YoY), andthe CO27 emitted by our energy sources was 169 kilotons (9% increase YoY). In addition, in fiscal year 2019, we revised
the per-unit basis for plants and offices in Japan to more appropriate levels based on the correlation between business

51

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

operations and energy, sharing these and putting them into practice. Specifically, the per-unit basis is calculated bycompound weighting using data on the number of development and evaluation machines, production volume, floor
space, and man-hours in each region. As a result, the goal has been achieved at 1 of the 11 total plants and offices inJapan and overseas.
■ Example initiative 1

We are bringing in a system at our manufacturing sites in Japan to make it clear how much energy is saved at ourplants and offices. Previously, we used to graph changes by extracting data by hand, but now, through integrated
management on the cloud, we can check changes at any time, as well as check the deployment and effects of BKM1
at each plant and study or implement measures. This system is scheduled to be fully in place by fiscal year 2022.

1
BKM: Best Known
Method■ Example initiative 2

The new manufacturing wing that started operation at the Tokyo Electron Technology Solutions (Fujii Office) in August2020 uses energy-saving air-conditioning equipment, allowing it to save an expected 30% of energy or more in terms offloor area.
1
Footprint: The overall
area a piece ofequipment takes up ona flat surface when
seen from directlyabove

2
EU REACH: An EU
regulation pertaining to
the Registration,
Evaluation,
Authorization, andrestriction of CHemicals
3
chemSHERPA: A data
entry support tool for
appropriately managing
information on
chemical substances in
products across anentire supply chain
4
ppb: parts per billion(1 × 10-9)
5
GHS: Globally
Harmonized System ofClassification andLabelling of Chemicals
6
SDS: Safety Data Sheet(Safety Data Sheetrefers to the document
containing hazard
information aboutchemical substancesthat is issued when acompany transfers orprovides chemical
substances, products
containing chemical
substances, to anothercompany)7
The emission
coefficient for power
consumption in Japan in
fiscal year 2021 uses thepost-adjustment
emission coefficient on
a per-electricity
supplier basis, while theemission coefficientsfor power consumption
overseas uses theemission coefficients inEmissions Factors 2019
Edition issued by theInternational Energy
Agency (IEA).

■ Example initiative 3

At Tokyo Electron Kyushu (Koshi Office), heat source chillers that used to be controlled, managed and run
independently have been switched to integrated operation. This is expected to save about 470 MWh and 170 t-CO2
annually going forward.

Initiatives to Reduce Water Consumption
With the growing importance of water resource preservation in global
environmental initiatives, we have established a goal of keeping water
consumption at the same level or below that of the baseline year (fiscal
year 2012 for plants and offices in Japan and a fiscal year of theirchoosing for each overseas operation). Our ongoing efforts to achievethese goals include reusing pure water from our manufacturing
operations, installing water-saving devices, watering lawns withrainwater, and implementing the intermittent operation of cafeteria
faucets. During fiscal year 2021, as a consequence of new buildings
coming online and an increase in water consumption associated withproduct development and evaluation, water consumption amounted to1,397,000 m3, up 7% year-over-year. Moreover, in terms of our goal of
maintaining water consumption at the baseline level (per-unit basis) ateach plant and office, we achieved 10 of the 13 goals. Additionally, anestimated 1,195,000 m3 of wastewater was discharged in fiscal year 2021.

Percentage of plants and offices achieving water
intensity target
(%)

100

86

77

69

75
50
25
0

2019

2020

2021

(FY)

Initiatives to Reduce Waste
To curb the amount of waste generated and to recycle it wherever possible,
we promote initiatives to reduce waste. In addition to participating in the
Recycling rateelectronic manifest system2 to ensure proper waste management, we areengaged in maintaining an appropriate amount of parts inventory and inreusing cushioning material. We are also achieving lower waste processing
costs by promoting waste sorting activities and by modifying space used forstoring waste to increase storage capacity and reduce the frequency ofcollection. In fiscal year 2021, we surveyed waste disposal operators in Japan using a unified on-site checklist, and weshared the results. As a result of these initiatives, in fiscal year 2021, we generated 183 tons of incinerated and landfill
waste, and the recycling rate3 was 98.8%, achieving our single-year goal of maintaining a recycling rate of 97% orhigher for the 15th consecutive year since fiscal year 2007. We have also maintained a high level of recycling of 95% at
our overseas plants and offices.
■ Example initiative
At the Chaska Office of TEL Manufacturing and Engineering of America, wood recycling is encouraged, and in
addition, packaging materials that would normally be sent to landfills are converted to heat or power generationmaterials. The recycling rate was 85% in fiscal year 2020 but climbed 14 points in fiscal year 2021 to reach 99%.

98.8 %

2
Electronic manifest
system: A system forelectronically tracking
the flow of industrial
waste instead of using
paper-based manifests(i.e., paper forms for
tracking industrial
waste). The system uses
a communications
network of dataprocessing centers,
businesses that generate
waste, and waste
collection/disposal
companies.
3
Recycling rate: (Recycled
amount/Amount ofwaste generated) × 100

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

52

Management Foundation

Supply Chain Management
Principles and System of Supply Chain Management

Management of Chemical Substances
We constantly monitor and manage our use and release of any chemical substances used in product development andmanufacturing subject to the Japanese PRTR1 law. Whenever we introduce a new chemical substance or change theway an existing substance is used, we check for environmental, health, and safety risks beforehand and conduct
appropriate processing after use by contracting expert vendors and using in-house processing facilities. In response to
the Fluorocarbons Recovery and Destruction Law, we conduct simple checks, regular inspections and so on based onlaw in an effort to monitor the amounts of fluorocarbons filled and recovered. In fiscal year 2021, none of our plants oroffices had fluorocarbon leakages requiring notification.
URL

Biodiversity

www.tel.com/csr/environment/office/In carrying out our business activities, we have a not insignificant impact on biodiversity, and yet without the benefits
yielded from biodiversity, we could not sustain our activities. In recognition of this, we will develop a framework for
promoting initiatives to conserve biodiversity. We set a single fiscal year goal of conducting at least two ecosystem
tours or conservation activities at our plants and offices in Japan. Results in fiscal year 2021 show that a total of 18
events were held, attracting a total of 52 participants.

Green Procurement

URL

1
PRTR (Pollutant Release
and Transfer Register):A framework for
tracking, tabulating anddisclosing quantitative
data on chemical
substances that may behazardous to humanhealth and theecosystem, including
the amounts used anddischarged into theenvironment and theamounts transferred (aspart of waste) off theplants and offices

Initiatives in the Supply Chain
CSR Operations
To keep track of our suppliers’ engagement in CSR activities, we have conducted a CSR assessment in areas such aslabor, health and safety, the environment and ethics since fiscal year 2014. We analyze the results of the assessments,
provide feedback and work together with our suppliers to remediate any issues. In fiscal year 2019, we completely
revised the content of the survey based on audit standards stipulated by the RBA and have since conducted surveys
on materials1, staffing2 and logistics3 suppliers.
In fiscal year 2021, with the help and understanding of our suppliers, steps were taken to repay workers with respect
to cases of an employment-related expense burden for forced labor and bonded labor, which had been identified in
the previous fiscal year and which have been given particular emphasis in the RBA Code of Conduct. In addition, withrespect to cases of false reporting, changes were made in business processes and audits were introduced.
Regarding the human rights issue of “freely chosen employment,” we have expressly stipulated our zero-tolerance
policy for forced labor and bonded labor, and by communicating this to our major suppliers, we are promoting
initiatives to ensure that all people in our supply chain can work of their own free will.

www.tel.com/csr/environment/green-procurement/

We began implementing our Green Procurement Guidelines in January 2001 and have since promoted green
procurement, prioritizing the purchase of environmentally friendly parts and products. Through these guidelines, we
strive to gain the understanding and cooperation of our suppliers with respect to building environmental management
systems, monitoring, reducing and disclosing information on the environmental impacts of business activities, anddeveloping environmentally friendly products.

Logistics Initiatives

URL

www.tel.com/csr/environment/product/

We have been promoting activities designed to reduce the environmental impact of our logistics. We have been
implementing a modal shift2 from air to ocean transportation for the overseas shipping of our semiconductor and FPD
production equipment, and at the same time, we have been working hard to reduce production lead times. We have also
been endeavoring to reduce CO2 emissions and costs by adopting the shelved trolleys traditionally used in shipping FPD
production equipment to semiconductor production equipment, thereby improving the load factor of trucks.
In fiscal year 2021, we set a new environmental goal for logistics to reduce the amount of wooden packaging
materials used by 50% (packaging for semiconductor production equipment fiscal year 2024). We will continue topromote activities that contribute to the achievement of this goal.

Environmental Communication

URL

2
Modal shift: Efforts totransform the means oftransportation

www.tel.com/csr/environment/office/

Our environmental policy requires that we promote cooperative partnerships with our stakeholders and respond
appropriately as a company to their expectations and wishes. In promoting initiatives for the environment, we
maintain close communication with all our stakeholders.
We are introducing online environmental education programs to better promote environmental communicationinternally. Our online programs consist of an environmental program for new employees and mid-career recruits, plus
a refresher program for existing employees. In fiscal year 2021, we carried out refresher programs for existing
employees, which about 8,000 people in Japan attended.

E-COMPASS
We established E-COMPASS (Environmental Co-Creation by Material,
Process and Subcomponent Solutions) as a new supply chain sustainability
initiative. E-COMPASS aims to align our products and the entire operations
more closely with our environmental mandates, strengthen our ties withbusiness partners, solidify our industry leadership, and pave the way for asustainable future. We will utilize every management resource at our
disposal to drive the major trends of digitalization and greening of society
and actively endeavor to preserve the global environment throughout the
supply chain.

53

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Pursue Digital × Green change throughout the supply chain

Environmental Co-Creation by Material, Process andSubcomponent Solutions

Provide Best Products・Best Technical Service
Environmental
Performance

To make its entire supply chain sound and sustainable, Tokyo Electron has formulated a procurement policy based on thelaws, regulations and social norms of each country, as well as the RBA Code of Conduct, and is promoting activities based on
this policy by disseminating it throughout the Company and its suppliers. We also promote improvement activities fromvarious perspectives while valuing continuous communication with diverse suppliers, including materials suppliers that
handle parts and raw materials, staffing suppliers that provide services and logistics suppliers that handle physicaldistribution operations.
We strive to create value in the supply chain by working to build relationships of trust with our suppliers, who support ourbusiness as partners, and by working together to conduct operations in compliance with global standards. Under theleadership of the Representative Director, President & CEO, issues identified during various activities are shared with relevant
divisions for consideration and action on specific improvements.

Supply Chain CSR Process

Plan

Do

Check

Act

Formulationof supply
chain policies

Notification of requests to our
suppliers and appeal for CSR
activities

Implementation of supply
chain CSR assessment andanalysis of response

Provision of feedback based on
the results and requests for
improvements to suppliers

Responsible Procurement of Minerals (Conflict Minerals)
We regard taking action against conflict minerals (3TG4) obtained through illegal exploitation, including sources withhuman rights violations or poor working conditions, as an important part of corporate social responsibility. Our resolutegoal is to eliminate the use of raw materials made from these conflict minerals, as well as any parts or components
containing them. We conduct surveys on conflict materials using the CMRT5 and referring to the OECD6 Due Diligence
Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. In fiscal year 2021, we
conducted our seventh annual survey on potential conflict minerals, and as a result, we were able to identify 236 RMAP7
conformant smelters, providing us confidence that 3TG sourced from these smelters were conflict-free. In addition, noneof the materials we procured were found to contain 3TG involved in conflict.
Procurement BCP
As part of our business continuity plans (BCPs), we collaborate with suppliers fordisaster preparation. We maintain a database of suppliers’ production sites so that if acrisis arises, we can promptly identify impacted suppliers and quickly collaborate inrecovery efforts. During fiscal year 2021, about 22,000 supplier sites were registered,and post-disaster impact surveys were conducted five times.
In addition, we conduct BCP assessments8 on our suppliers, analyze their responses
and provide them with feedback to promote further improvement. In the fiscal year
2021 assessment, improvements in the overall rating level were observed at 20% of
suppliers, and improvements in the overall raw score were seen at 43%.

Percentage of supplier sites bycountry (FY2021)
U.S. 2.0%
China 3.5%

Taiwan 1.1%

Other 4.8%

Japan 88.6%

1
Material suppliers:
Surveys have been
conducted since fiscal
year 2014 for suppliers
accounting for morethan 80% of our
procurement spend.
2
Staffing suppliers:
Surveys have been
conducted since fiscal
year 2019 on 100% of
employment agencies
and contracting
companies (internal
contractors).
3
Logistics suppliers:
Surveys have been
conducted since fiscal
year 2019 on 100% of
customs-related
operators.
43TG: Tantalum, tin,tungsten and gold
5
CMRT: Conflict Minerals
Reporting Template.
Survey format forreporting conflictmaterials, provided by
the Responsible
Minerals Initiative(RMI), which has
establishedinternational guidelines
on conflict minerals.
6
OECD: Organisation for
Economic Co-operation
and Development
7
RMAP: Responsible
Minerals Assurance
Process. A program
promoted and led by
the RMI for auditing
smelters/refiners that
do not use conflictminerals.
8
BCP assessment: A
survey that hascontinuously been
conducted to key
suppliers accounting for
more than 80% of our
procurement spend
since FY2013

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

54

TEL FOR GOOD (Social Contribution Activities)
Initiatives around the World

Expanding TEL FOR GOOD Activities
Tokyo Electron’s social contribution activities aim to contribute to the resolution of social issues and the development of local
communities through various activities while deepening relationships of trust with all stakeholders.
As a manufacturer of semiconductor and flat panel display production equipment, we have selected four focus areas. We place great
importance on innovation and technology, focus on the education of human resources to support them and aim to preserve the global
environment while, at the same time, ensuring communication and involvement with the communities where we are operatingworldwide.
In addition to taking initiatives through business, we strive to help achieve the SDGs through the activities of TEL FOR GOOD.

4 Focus Areas and Relevant SDGs

Korea

In support of the semiconductor scholarshipprogram sponsored by the Korea
Semiconductor Industry Association (KSIA),Tokyo Electron Korea, together withsemiconductor manufacturers and device
manufacturers, has since 2008 been
providing scholarships to students who havedemonstrated excellence in thesemiconductor sector. Through fiscal year
2020, one science and engineering student majoring in semiconductors was
selected and awarded a semiconductor scholarship of approximately 1 million yen.
Starting in fiscal year 2021, the number of scholarship recipients was increased totwo. The scholarships are awarded during the commemorative ceremony for
Korean Semiconductor Day, which takes place on October 29 every year.

U.S.
Innovation and Technology

Education

Environment

Community Involvement

Semiconductor ScholarshipGirl Day at the University of Texas at Austin

In collaboration with the Women in
Engineering Program at the
University of Texas at Austin, Tokyo
Electron America is promoting theparticipation and advancement of
women in engineering fields.
Targeting girls up to junior high school, the program offers more than 150 STEM1
activities, with corporate partners and volunteers acting as hosts to provide thestudents with opportunities to explore STEM themes. In fiscal year 2021, 10
Tokyo Electron America employees prepared for these activities and carried out
a project to help the students search for common elements found at home using
the AR-enhanced periodic table2.
1 STEM: Science, Technology, Engineering and Mathematics
2 AR-enhanced periodic table: Our advertisement presenting a periodic table of elements withaugmented reality (AR) features, which was granted a Guinness World Records title on June 30,
2017

Number of TEL FOR GOOD Activities (FY2021)
By focus area

By region

Education
11
Innovation andTechnology
15

Europe10China 3Korea
9

United States
14

Environment
16
Community Involvement
94

Taiwan
16

Japan
84

TEL FOR GOOD is the brand namethat represents our social
contribution activities. From fiscal
year 2019, we are using it as acollective term for social
contribution events and various
programs, donations and volunteer
activities sponsored by our groupcompanies around the world.

Japan

To preserve the forest environment, Tokyo
Electron Miyagi has been continuously
planting trees since fiscal year 2018. In fiscal
year 2021, to prevent the spread of COVID-19,
a smaller, elite corps of eight employees
carried out various afforestation activities,
including thinning and tree planting, as well as
trail and bridge maintenance. To ensure theireffective utilization, the thinned trees wereused as teaching materials in elementary and junior high schools in Taiwa-cho,
where they were made into tops and flutes.

EuropeAssistance after the July 2020 Heavy RainIn support of activities to prevent the
spread of COVID-19 and in the hopes ofending the pandemic and returning
people’s lives to normalcy as soon as
possible, we donated 100 million yen to
the International Federation of Red Cross
and Red Crescent Societies (IFRC).

After heavy rain caused flooding,especially in the Kyushu region in
July 2020, we donated 100 million
yen to Kumamoto Prefecture tohelp the flood victims and in thehopes of quickly restoring theaffected areas.

* Photo credit: Hitoyoshi City

55

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Afforestation Activity “Tokyo Electron Forest”

Virtual Running Event

Because of a lockdown due to COVID-19, Tokyo
Electron Europe organized a virtual running eventnear the homes of participating employees. Eachteam formed within the company set up a target
distance, which was run by individual employees
wearing T-shirts printed with the Tokyo Electronlogo. Tokyo Electron Europe contributed funds inan amount matching the total distance run by
the participants. When added up, the donatedfunds amounted to approximately 800 euros and were donated to Sonnenstrahl
e.V., a charitable organization located in Dresden serving cancer-afflicted children
and their family members.

Science Intercollegiate

Science Intercollegiate is an event foruniversity and technical college
students to present findings of theirown research. We have been afeatured sponsor since the firstcompetition. By providing an
opportunity to present their research,
the event aims to motivate students toundertake research and to foster
original and richly creative scientists and engineers. The 10th Science Intercollegiate
was held online from January 25 to February 28, 2021, attended by 60 students
from 40 finalist groups, bringing the total number of students presenting theirresearch to more than 1,900 since the event’s inception.

TaiwanHsinchu Supplementary Japanese Language
SchoolIn Hsinchu, where Tokyo Electron Taiwan’s
headquarters is located, supplementary
Japanese lessons and presentations are held
for the children of expatriate Japaneseemployees, targeting students of junior highschool age or younger. In fiscal year 2021, 36
students participated in these activities.
Volunteers handle everything in the
supplementary school, from administration to
the actual teaching, with two hours of Japanese language lessons offered every week.
Tokyo Electron Taiwan contributes funds every year to support the school’s activities,
which offer the students a rare and precious opportunity to study Japanese.

Japan

Special Topics
Support to Help End the Global Pandemic

Japan

Tree Planting for Recharging Water Resources

Approximately 80% of Kumamoto
Prefecture’s water supply resources areunderground. For Kumamoto City inparticular, because 100% of the waterworks
are supplied by groundwater, preservation ofgroundwater is an important activity forsecuring future water resources.
Since 2006, Tokyo Electron Kyushu has
been working on broadleaf afforestation
suited to groundwater recharge in Nishihara Village, in the outer rim of southern
Mount Aso, and in fiscal year 2021, carried out brush clearing and supplementary
planting. So far, approximately 2,800 employees and family members haveparticipated in these activities, planting a total of 4.2 ha with 13,810 trees.

Japan

Support to Prevent the Spread of
COVID-19

To help prevent the spread of COVID-19,
Tokyo Electron Technology Solutions donated
10 million yen each to Yamanashi and Iwate
Prefectures, where its plants and offices arelocated. The donated funds were utilized forthe two prefectures’ COVID-19-related
operations, such as purchasing equipmentthat could quickly confirm PCR test results.

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

56

Performance Summary: Social
Social

FY2017The scope for calculating social data is the Tokyo Electron group (28 consolidated companies), and the calculating period is fiscal year 2021 (April 1, 2020 to March 31, 2021).

Second career support system

Japan: Tokyo Electron Ltd. and six consolidated subsidiaries (including Tokyo Electron Technology Solutions Ltd., Tokyo Electron Kyushu Ltd., Tokyo Electron Miyagi Ltd., andTokyo Electron FE Ltd.)Electron (Shanghai) Ltd., and Tokyo Electron Singapore Pte. Ltd.)

23

Men

30

30

28

18

20

Women

4

1

2

5

3

100.0

100.0

100.0

100.0

100.0

Employee Retention (Japan)

FY2017FY2018FY2019FY2020

FY2021

10,92011,696

12,46913,542

14,022

Japan

6,967

7,268

7,526

7,806

7,921

Rest of Asia

1,850

2,218

2,832

3,494

3,796

448

492

513

528

509

1,655

1,718

1,598

1,714

1,796

North America

Employee retention

Employees(Employment type/Japan)

FY2018FY2019FY2020

Number of employees

7,288

7,516

7,797

8,100

8,296

Regular employees

6,967

7,268

7,526

7,806

7,921

Men

6,079

6,292

6,479

6,681

6,722

Women

888

976

1,047

1,125

1,199

321

248

271

294

375

Men

209

181

220

263

348

Women

112

67

51

31

27

Non-regular employees

Recruitment/Employment (Japan)

denotes data with third-party assurance

FY2017

94.1

Men

94.1

94.3

93.5

94.6

94.8

Women

85.2

87.1

88.0

88.6

89.3

17 yrs. 1 mo.

17 yrs. 1 mo.

17 yrs. 2 mos.

17 yrs. 2 mos.

17 yrs. 4 mos.

Men

17 yrs. 4 mos.

17 yrs. 4 mos.

17 yrs. 5 mos.

17 yrs. 5 mos.

17 yrs. 7 mos.

Women

15 yrs. 5 mos.

15 yrs. 7 mos.

15 yrs. 8 mos.

15 yrs. 11 mos.

15 yrs. 10 mos.

102

103

108

82

87

82

82

88

54

75

Refreshment leave

Paternity leave

62.5

Number of those who took leave

586

639

605

901

688

Men

499

556

507

773

610

Women

87

83

98

128

78

Number of those who took leave

179

180

155

184

148

Number of those who took leave

44

41

56

46

41

2

4

8

12

16

42 (95.5)

37 (92.5)

48 (100.0)

34 (97.1)

25 (92.6)

44

44

43

48

54
15

252

Women (percentage who took leave)

Men

233

207

Women

2

32

32

47

45

Number of those who returned to work
after leave

30–49 yrs old

0

4

1

1

1

Men

0

4

1

1

1

Women

0

0

0

0

0

0

0

0

0

0

Men

0

0

0

0

0

Women

0

0

0

0

0

Percentage of women

2.8

19.2

16.1

16.7

17.8

Number hired

279

262

239

150

191

102

102

85

42

56

Men

85

85

67

35

49

Women

17

17

18

7

7

145

96

123

119

82

92

Women

15

21

26

14

31

7

4

9

12

12

6

3

5

10

11

Men

1

1

4

2

1

Percentage of women

11.8

14.9

20.1

15.3

20.4

Percentage hired (TEL)

2.13

2.22

2.18

2.06

2.43

Percentage hired (Group)

1.98

1.91

2.04

2.01

2.3

Number of people

42

20

22

23

26

Percentage

1.6

1.8

2.0

2.0

2.2

Number of users

Women

125

156

201

242

313

Men

123

155

196

235

305

Women

2

1

5

7

8

1 Percentage of female managers Calculation method: Number of female managers/Number of managers × 100
2 Grade resetting through global human resources system since FY2018
3 As of March 31

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

Men

2

6

6

8

Women

42

38

37

40

39

Percentage reinstated

93.6

93.6

93.5

94.1

96.4

Retention rate

95.7

90.0

88.9

93.3

95.0

Number of those who used

132

170

176

153

149

Men

23

24

8

11

9

Women

147

152

145

138

123

464

455

517

625

510

Men

263

281

334

428

353

Women

201

174

183

197

157

106

120

129

125

86

Men

16

19

26

26

29

Women

90

101

103

99

57

2

3

5

2

2

Men

1

2

2

2

0

Women

1

1

3

0

2

50

47

63

95

110

Men

31

25

38

56

69

Women

19

22

25

39

41

Number of those who took leave

Number of those who took leave
Childcare support leave

Number of those who took leave
Extended nursing care leave

Number of those who took leave
Short nursing care leave

0

0

2

2

0

Men

0

0

0

1

0

Women

0

0

2

1

Number of those who used
Shorter working hour system fornursing care

FY202172.6

280

Leave to care for a sick/injured
child

FY2020
67.2

166

Shorter working hour system

FY201964.3

MenChildcare leave

FY2018
64.1

198

156

12
1.0

Take-up rate3

131

135

28
1.0

FY2017
Annual paid leave

163

170

20
1.4

denotes data with third-party assurance

70

155

21
1.4

Work-life Balance (Japan)

FY2021

Men

20
1.4

1 Average in recent five years 2 Turnover due to personal circumstances

72

50 and over yrs old

57

Women
Turnover percentage

253

30–49 yrs old

Reemployment system

Men

281

Under 30 yrs old

Female managers (Group)1, 2, 3

FY2020

Average service years

199

50 and over yrs old

Employees with disabilities

FY2019FY2021
93.8

167

Under 30 yrs old

Career-track recruits

FY2018FY202093.0

72

Number hired

New graduates hired

FY2021FY201993.4

Employee turnover
Turnover2

FY2017FY2018
92.9

Retention after three years of joining TEL

Composition of Employees

Europe and Middle East

FY202123

FY2017

Regular employees(Region/Group)

FY202030

1Number of regular employees

FY201931

Percentage of regular employees who received regularperformance and career evaluations

Overseas: 21 consolidated subsidiaries (including Tokyo Electron America, Inc., Tokyo Electron Europe Ltd., Tokyo Electron Korea Ltd., Tokyo Electron Taiwan Ltd., Tokyo

FY201834

Number of users

3 Take-up rate of annual paid leave Calculation method: (Days of paid leave taken by employees*)/(Days of paid leave provided to employees*) × 100

0* Incl. non-regular employees

Customers
FY2017
Percentage of respondents who selected “Very Satisfied” or “Satisfied” in thecustomer satisfaction survey

FY201867.6

FY201959.4

FY202084.4

FY2021
93.3

96.7

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

58

Performance Summary: Social

Performance Summary: Environment
Environment

Products/Innovation
FY2017FY2018FY2019FY2020

FY2021

Total number of incidents of non-compliance with regulations and voluntary codes
concerning the health and safety impacts of products and services

0

0

0

0

0

Number of active issued patents

Active issued patents (Region/Country)

The scope for calculating environmental data is the Tokyo Electron group (28 consolidated companies), and the calculating period is fiscal year 2021 (April 1, 2020

16,023

16,767

17,473

18,137

18,692

to March 31, 2021).

Japan

4,984

5,091

5,304

5,348

5,484

Japan: Tokyo Electron Ltd. and six consolidated subsidiaries (including Tokyo Electron Technology Solutions Ltd., Tokyo Electron Kyushu Ltd., Tokyo Electron

North America

4,224

4,321

4,415

4,606

4,822

Miyagi Ltd., and Tokyo Electron FE Ltd.)

Europe

199

185

179

191

206

Korea

2,672

2,864

3,076

3,223

3,363

Taiwan

2,387

2,675

2,817

2,948

2,925

China

1,557

1,631

1,682

1,821

1,892

Overseas: 21 consolidated subsidiaries (including Tokyo Electron America, Inc., Tokyo Electron Europe Ltd., Tokyo Electron Korea Ltd., Tokyo Electron Taiwan Ltd.,Tokyo Electron (Shanghai) Ltd., and Tokyo Electron Singapore Pte. Ltd.)Greenhouse Gas Consumption/Emissions

denotes data with third-party assurance

FY2017Scope
CY20151

CY20171

CY20181

CY20191

70.0

76.1

81.2

79.8

74.3

Japan

66.5

71.5

82.9

83.1

84.9

North America

72.3

78.0

85.1

85.5

87.3

Global patent application rate
Patent application success rate

CY20161

CO2 from energy consumption

1 Calendar year when patents were filed/granted

FY2018FY2019FY2020

100

100

100

100

100

Percentage of employees who received training on advanced safety

100

100

100

100

100

0.46

Lost time incident rate (LTIR)

0.77

0.28

Number of workplace injuries per 200,000 work hours (TCIR)

0.40

0.38

0.20

0.51

1.38

Emissions (kt-CO2)

141

152

159

155

169

Japan

110

119

127

127

138

Overseas

31

33

32

28

31

Scope 1 emissions (kt-CO2)

8

9

9

11

12

Japan, energy-derived

6

7

7

10

10

Procurement
FY2017FY2018FY2019FY2020

FY2021

100

100

100

100

100

Rate of improvement after supply chain CSR assessment (including green procurement survey)

16.9

20.7

—2

35.8

23.1

Rate of improvement after supply chain BCP assessment

32.3

Number of identified RMAP conformant smelters (rate of identification)

237 (100)

249 (100)19.4
253 (100)

16.0
261 (100)

236 (100)Governance
FY2018FY2019FY2020

FY2021

Total number of critical incidents notified to Board of Directors

1

0

0

0

0

Total number of incidents subject to legal action on the basis of anti-competitive conduct, antitrust activity, or monopolistic practices where the governance body’s involvement was revealed

0

0

0

0

0

Number of executive officers who received training on anti-corruption3

12

13

0

0

15

Total number (percentage) of directors who provided instructions on the body’s policies andprocedures in relation to anti-corruption3

11 (100)

12 (100)

12 (100)

11 (100)

11 (100)

Total number (percentage) of directors who received training on anti-corruption3

9 (81.8)

9 (75.0)0 (0)11 (100)

0 (0)Payment to industry groups, etc. (thousand yen)4

19,676

20,543—

Payment to politically affiliated organizations (yen)0—

Average tenure of directors—

Average rate of attendance for board meetings

21,0938.04
99.46

29,927

0
7.36
98.24

2

2

2

2

143

150

144

157

Japan

104

112

120

118

128

Overseas

29

31

30

26

29

Scope 3 emissions (kt-CO2)

4,028

5,855

6,467

5,874

6,222

Emissions (kt-CO2e) (Japan)

70

26

47

59

3

3

3

6

5

PFCs

8

11

18

24

30

SF6

9

4

11

11

7

Other

8

8

15

18

28

9

8

15

16

17

1 Scope 1: Direct GHG emissions from use of fuel and gas owned or controlled by TEL
Calculation method: Emissions = Σ (fuel consumed × CO2 emission factor)
Emission factor based on Japan’s Act on Promotion of Global Warming Countermeasures
2 Scope 2: Indirect GHG emissions from use of electricity purchased by TEL
Calculation method: Emissions = Σ (purchased electricity × CO2 emission factor)
Adjusted emission factors for the electrical power providers concerned based on Japan’s Act on Promotion of Global Warming Countermeasures were used as the emission factor for Japan
Emission factors based on values from the Emissions Factors 2019 edition published by the International Energy Agency (IEA) were used as the emission factor for overseas electricity consumption
3 Scope 3: Emissions from corporate value chains (excluding scope 1 and 2 emissions), such as product transportation, employee business travel, and major outsourced production processes
The entire scope is divided into 15 categories, of which calculations were made for categories 1, 2, 3, 4, 5, 6, 7, 9, 11, and 12. Calculations for categories 8, 10, 13, 14, and 15 were not made as they are either notincluded in TEL’s activities, or have already been included in other categories.
4 Scope 1: Non-energy-derived CO2 and greenhouse gases other than CO2
Calculation method: Emissions = Σ (consumption × emission per unit consumption – amount recovered and properly treated) × global warming factor
Global warming factor is based on Japan’s Act on Promotion of Global Warming Countermeasures

Resource Consumption

denotes data with third-party assurance

Consumption (thousand m )Education on TEL’s Code of Ethics/pledge rate5
Percentage of employees who have consented to the information security agreement
Significant fines and non-monetary sanctions for non-compliance with laws and regulations inthe social and economic area

FY2019FY2020

FY2021

—

—

—

98.8

99.9

99.9

100.0

100.0

99.4

0

0

0

0

0

966

1,054

1,098

363

390

430

Tap water

385

387

422

411

450

Industrial water

225

220

269

297

303

Overseas

194

177

186

207

214

Use (t) (Japan)

157

194

165

132

38

Water Consumption(Unit: kt-CO2)

127

119

110

(Unit: thousand m3)

138

127

Cash
donationsbreakdown

FY2018FY2019FY2020

FY2021

242

238

281

250

244

Charity donations (providing donations/relief supplies to charity organizations)

17

13

11

4

13

Community investment (charitable expenses for long-term cause for community)

43

49

55

68

62

Commercial initiatives (charitable expenses with anticipated effects on businessgrowth)

40

38

34

28

25

31

33

32

28

385

31

194

225
2017
Japan

Overseas

2018

2019

2020

2021

(FY)

177

220
2017

2018

Industrial water (Japan)
Overseas

269

186
2019

Tap water (Japan)

297

1,183
430

411

422

387

1,098
390

363

359

251
FY2017

1,054

966

861

Social Contribution
Spending on social contribution (million yen)6

1,397

359

CO2 Emissions from Energy Consumption

5 Scope: Global

FY2021

1,305

861

Water

Copier paper

—

1,240

251

Compliance
FY20181,143

FY2020GroundwaterJapan

3 Scope : Japan 4 Industry groups were reviewed from FY2017

FY2017FY2019

1,183

6.09
98.96

FY2018

1,055

3

0

4.84

FY2017Scope

32,036

0

99.39

28

HFCs

Scope 14 emissions (kt-CO2e)

20.3

2 Unable to compare with previous fiscal year due to comprehensive revisions, including the survey

FY20172
133

Non-energy-derived greenhouse gas

Percentage of new important suppliers screened using social criteria

21.2

Overseas, energy-derived

3

0.27

1.21

Scope 22 emissions (kt-CO2)

0.63

0.23

FY2021

1.24

FY2021

Percentage of employees who received training on basic safety

FY20201.34

1

CO2 by scope

FY2019

1.77

SafetyFY2017FY2018Emissions metric (sales) (t-CO2/billion yen)

450

207
2020

303

214
2021

(FY)

Groundwater (Japan)

6 Spending on social contribution activities excluding disaster relief contributions

59

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

60

Performance Summary: Environment
Energy Consumption/Generation

Amount of Waste Generated
Scope

EnergyFY2017FY2018FY2019FY2020Scope

FY2021

Emissions metric (sales)(kL/billion yen)

0.84

Consumption(crude oil equivalent) (kL)67,45775,03380,91884,931

94,640Japan

52,676

59,61365,75770,52078,035

Overseas

14,781

15,42015,161

14,411

16,605

253,300

282,274

305,795

317,614354,961Japan

200,547

226,747

250,911265,293294,652

Overseas

52,75355,52754,88452,32160,309

3,083

2,991

3,565

3,820

1,666

1,947

1,948

2,611

2,728

Overseas

1,211

1,136

1,043

954

1,092

797

875

915

1,482

1,560

796

874

915

1,481

1,560

1

1

0

1

0

3,334

3,458

3,834

3,334

4,980

0

0

0

0

0

Japan
Overseas
Purchase (MWh)Green power

Japan

3,334

Overseas
Power generation (MWh)PV power generation system

Japan

Power sales (MWh)*
Japan

3,458

3,834

3,334

Japan

14,997

11,393

13,694

14,208

12,973

13,705

925

741

752

1,016

1,292

3,683

4,904

6,619

5,911

6,718

Recycled amount (t)12,128

14,211

14,77013,74814,814

11,281

13,561

14,092

12,831

13,587

847

650

678

917

1,227

190

224

190

241

183

Japan

112

133

116

142

118

Overseas

78

91

74

99

65

874

905

1,006

1,078

1,195

Japan

709

759

850

900

1,006

Overseas

165

146

156

178

189

Japan
Overseas
Amount of waste (t)Incinerated and landfill waste

Water discharge volume (thousand m3)
Water discharges

Chemical Substances Consumption/Emissions (Japan)
Scope

FY2017FY2018

101

121

144

82

84

98

106

12

11

12

24

4,068

Ferric chloride

4,436

4,414

4,392

3,804

4,068

Hydrogen fluoride and its water-soluble salts

25

0

0

0

0

0

1,225

1,285

1,382

1,225

1,285

0

Overseas000Methylnaphthalene

PRTR Class I designated chemical substances

VOCs1* Heating, cooling and steam not sold

5

5

5

10

13

0.0

0.0

0.0

0.1

0.1

1

1

1

1

1

Amount transported (waste amount) (t)

59

95

96

111

131

Consumption (t)

5

5

5

10

13

Other

0

NOx

Emissions (t)

7.9

11.5

9.6

11.9

13.0

SOx

Emissions (t)

2.5

2.7

2.8

4.0

4.9

Environmental Impact of Logistics

1 VOCs: Volatile Organic Compounds

Scope

FY2017

Emissions (kt-CO2)
CO2

FY2021

100

3,804

1,382

FY2020

64

4,392

1,386

FY2019Volume handled (t)

4,414

1,386

FY2021

13,989

4,436

1,346

FY202014,960Emissions (t) (Japan)

Recycling

4,980

1,346

FY201914,435

Overseas
Specially controlled industrial waste

FY201812,31833

Overseas

Power sales

0.68

2,877

Consumption(crude oil equivalent) (kL)
Fuel

0.75

Japan

Consumption (crude oil equivalent) (kL)
Gas

0.63

Waste

Consumption (MWh)Electricity

0.66

FY2017

Amount generated (t)Japan

FY2018FY2020

FY2021

122

146

186

152

7

12

9

9

9

90

Overseas

FY2019

97

110

137

Other
Scope

143

177

ISO 14001

Proportion of marine transportation(international)

31.9

36.4

35.9

Japan

34.3

31.9

FY2017

Number of certified offices

FY2019FY2020

FY2021

9

9

9

11

5

5

5

5

5

3

4

4

4

6

Number of ecosystem tours2

18

22

17

18

18

Overseas
Biodiversity

FY2018
8Electricity Consumption

CO2 Emissions from Logistics and the Proportion of Marine Transportation

Number of ecosystem tour participants2

396

718

595

368

52

(Unit: Million kWh)

(Unit: kt-CO2)

Number of breaches of environmental laws andregulations

0

0

0

0

0

Amount of fines for breaches of laws andregulations

0

0

0

0

0

20,445

34,11032,71531,184

31.9

200.5

52.8
2017
Japan

226.7

55.5
2018

250.9

265.3

2019

Overseas

52.3
2020

35.9

294.7

146
122
97

54.9

36.4

2021

(FY)

2017
Logistics in Japan2018

Environmental laws and regulations

9

9

12

90

60.3

186

152

Total product shipment (t)29Recycling Rate/Generation of Incinerated and Landfill Waste in Japan

99.0

2019

Overseas logistics

Volume of PRTR Class I Designated Chemical Substances Handled in Japan
(t)

144 1

143

137

2020

2021

28,862
2 Scope: Japan

177

7
110

34.3

31.9

99.0

99.2

98.9

121 1

99.1

101 1

82

84

5
12

Target: Maintain recycling rate of 97% or more

(FY)

100 1

5
11

13

10
12

24

98

106

64 1

Proportion of marine transportation
in international logistics (%)

112

133

116

2017

2018

2019

142

118

2020

2021

5
25
33

Incinerated and landfill waste (t)Recycling rate (%): (Recycled amount/Amount of waste generated) × 100

61

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

(FY)

2017
Ferric chloride
Methylnaphthalene

2018

2019

2020

2021

(FY)

Hydrogen fluoride and its water-soluble salts
Other

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

62Independent Practitioner's Assurance

Corporate Profile
Corporate Profile（TRANSLATION）

Independent Practitioner’s Assurance Report
Mr. Toshiki Kawai,
Representative Director, President & CEO,Tokyo Electron Ltd.

June 28, 2021

Masahiko Sugiyama
Representative Director
Deloitte Tohmatsu Sustainability Co., Ltd.
3-2-3, Marunouchi, Chiyoda-ku, Tokyo

We have undertaken a limited assurance engagement of the CO2 Emissions from energy consumption in Japan, theWater consumption in Japan, Female managers percentage in Japan and Annual paid leave take-up rate in Japan
indicated withfor the year ended March 31, 2021 (the “Sustainability Information”) included in the “TOKYOELECTRON SUSTAINABILITY REPORT 2021” (the “Report”) of Tokyo Electron Ltd. (the “Company”).

Company name:Main business:

Tokyo Electron Limited

Semiconductor production equipment business,flat panel display (FPD) production equipment business

Address:
Akasaka Biz Tower
3-1 Akasaka 5-chome, Minato-ku, Tokyo
107-6325, Japan

Capital:Established:
November 11, 1963

14,668 (consolidated)
1,667 (non-consolidated)

Representative:

Number of locations:

Toshiki Kawai
Representative Director,
President & CEO

Japan: 7 companies at 26 locations
Outside Japan: 21 companies at 50 locations in 17
countries and regions
Worldwide total: 28 companies at 76 locations in 18
countries and regions (consolidated)

The Company’s Responsibility
The Company is responsible for the preparation of the Sustainability Information in accordance with the calculation
and reporting standard adopted by the Company (indicated with the Sustainability Information included in theReport). CO2 quantification is subject to inherent uncertainty for reasons such as incomplete scientific knowledge
used to determine emissions factors and numerical data.
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional
Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.
We apply International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews ofFinancial Statements, and Other Assurance and Related Services Engagements, and accordingly maintain acomprehensive system of quality control including documented policies and procedures regarding compliance withethical requirements, professional standards and applicable legal and regulatory requirements.
Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Sustainability Information based on theprocedures we have performed and the evidence we have obtained. We conducted our limited assurance engagementin accordance with the International Standard on Assurance Engagements (“ISAE”) 3000, Assurance Engagements
Other than Audits or Reviews of Historical Financial Information, issued by the International Auditing and AssuranceStandards Board (“IAASB”), ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, issued by the
IAASB and the Practical Guideline for the Assurance of Sustainability Information, issued by the Japanese
Association of Assurance Organizations for Sustainability Information.
The procedures we performed were based on our professional judgment and included inquiries, observation ofprocesses performed, inspection of documents, analytical procedures, evaluating the appropriateness of quantification
methods and reporting policies, and agreeing or reconciling with underlying records. These procedures also included
the following:
・ Evaluating whether the Company’s methods for estimates are appropriate and had been consistently applied.
However, our procedures did not include testing the data on which the estimates are based or reperforming theestimates.
・ Performing interviews of responsible persons and inspecting documentary evidence to assess the completenessof the data, data collection methods, source data and relevant assumptions applicable to the sites.

54,961 million yen

Number of employees:(as of April 1, 2021)

Financial Data
Earnings Release:
URL

www.tel.com/ir/library/report/

Securities Report:
URL

www.tel.co.jp/ir/library/fs/

Integrated Report/Annual Report:
URL

www.tel.com/ir/library/ar/

The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent
than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would have been obtained had we performed a reasonableassurance engagement.
Limited Assurance Conclusion
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention
that causes us to believe that the Sustainability Information is not prepared, in all material respects, in accordance withthe calculation and reporting standard adopted by the Company.
The above represents a translation, for convenience only, of the original Independent Practitioner’s Assurance report issued in
the Japanese language.
Member of
Deloitte Touche Tohmatsu Limited

63

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

TOKYO ELECTRON SUSTAINABILITY REPORT 202 1

64