Identifying material issues
Tokyo Electron (TEL) identifies material issues that are important for further improving its corporate value over the medium- to longterm, taking into account social issues, the business environment, stakeholder expectations, and the company’s circumstances. For
each material issue, we set medium-term and annual goals, and implement various projects aimed at achieving those goals.

Issues considered from the stakeholder perspective
Step 2

TEL considers the importance of the issues it faces based upon opinions and expectations gained throughcommunication with its stakeholders. → Stakeholder engagement, p. 8

Issues awarenessSocial environment
While steady growth is forecast for the global economy, humans are also faced with various social issues, including
abnormal climate conditions and natural disasters, conflicts between states and terrorism, water and food crises,
population problems and cyberattacks. TEL is deepening its awareness of social issues throughout the value chain, giving
consideration to SDGs, the United Nations Global Compact, RBA and recommendations from third party organizations.

Step 3The SDGs were adopted by the UnitedNations in 2015 as a universal set of goals
for humanity to achieve by 2030. We haveclarified the SDGs related to material issues
and endeavor to achieve the SDGs throughthe development of our business.

Tokyo Electron supports the SDGs

TEL has grasped the social and business environment, as well as theopinions of stakeholders, has analyzed risks and opportunities, andcompared this with our Corporate Philosophy and Management Policies
to identify material issues.
Taking advantage of our strengths as a manufacturing equipment
maker with multiple products, we offer a variety of values to customers,
including production of advanced devices, productivity maximizationand environmental impact reduction. We believe that in this way, wecan contribute to the realization of a more convenient and prosperous
society. We have established three pillars of product competitiveness,
responsiveness to customers and higher productivity in our mediumterm management plan, and identified two additional supporting
factors to make five material issues: people and workplaces, andmanagement foundation.

Material issues• Productcompetitiveness

Perspective of social issues
and stakeholders

SDGs: Sustainable Development Goals

Analysis and selection• Responsivenessto customers• Higher productivity• People and workplaces• Managementfoundation

Perspective of business continuity
and growth

Examination and identification of validity
Step 1Business environment
With the arrival of the IoT era, applications for semiconductors are expanding further with the emergence ofapplications based on new technologies including artificial intelligence, AR and VR. Furthermore, opportunities
for value creation are increasing in the field of FPD, with changes in technologies such as large screen and highresolution, and the spread of organic EL, which is accompanied by expansion in associated design and application
areas. Consequently, semiconductors and FPDs are at a turning point, experiencing a new growth phase andplaying a key role in social infrastructure. As technology becomes more sophisticated and diverse, semiconductor
and FPD manufacturing equipment makers must have the foresight to develop innovative technologies anddeliver them in a timely manner. Furthermore, maintenance and service to improve the productivity and lifespanof equipment is increasingly important.

Risks and opportunities
Given the social and business environment in which TEL finds itself, we examined the risks and opportunities
closely related to sustainable business development.

TEL verified the validity of material issues at the Review Council, incorporating the opinions of external experts. As
a result, we determined that product competitiveness, responsiveness to customers, higher productivity, people
and workplaces and management foundation are appropriate as material issues for fiscal year 2019. From a
medium- to long-term perspective, TEL will promote efforts in these material issues and aim for further growth.

Key opinions and advice obtained from Review CouncilЈЈMaterial issues are linked to the medium-term management plan and can be evaluated in connection to management strategyЈЈWe have set our medium-term and annual goals, continuing from last fiscal year, and recognize the intention to promote initiatives

ЈЈ

Setting of targets incorporating transparency and improvement is desirable, including process indicators and goals which aim for ahigher levelЈЈThe global trend of integrating non-financial initiatives into management is apparent, and it is hoped that promotion of this will continue

Step 4
Material issues
Material issues

Social trends
Environmental issues including
climate change
Evolution of technology

Risks for TEL

Changes in population trends
Sustainable businessmanagement
Supply chain managementLegal violations and non-compliancewith industry codes of conduct
Increases in business costs
Reduction in product dominance
Reduction in customer satisfaction
Securing human resources
Decline in development and support
capability
Ethics and compliance violations
Weakening of monitoring andchecking functions
Weakening of supply system
Worsened relations with suppliers

Opportunities





Reduction of operational costs
Improvement of product environmental performance and creation ofbusiness opportunities
Generating innovative products and services
Maintaining competitive advantage

Medium-term goalProductcompetitiveness

Create strong next-generation products

Responsiveness tocustomers

Become the best and sole strategic partner

Higher productivity

Constantly pursue higher management efficiency

Enhancing corporate competitivenessHighly effective governanceSound and highly transparent business management that builds solid
relationships of trust with stakeholders

Priority themes
Tackling technological innovation
Environmental contribution of productsSolutions that create value for customers
Improvement of customer satisfaction
Quality management
Improvement of quality in the value chain
Diversity

People andworkplaces

Maximize dreams and drive

Career development
Work-life balance
Health and safety

Creation of new value through collaboration
Establishment of sustainable procurement

Governance and complianceManagementfoundation

Build a management foundation for increasing value

Human rights
Environmental management
Supply chain management

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