Quality management
Quality policy

Higherproductivity

Tokyo Electron (TEL) has a quality policy shared by all group companies which it has developed and is rolling out.

1. Quality Focus
Focusing on quality to satisfy customers, meet production schedules, and reduce required maintenance even withtemporary cost increases.
2. Quality Design and Assurance
Building quality into products and assure 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 analysis and resolve problems as
quickly as possible.
4. Continual Improvement
Ensuring customer satisfaction and trust by establishing quality goals and performance indicators and by implementing
continual improvement using the PDCA cycle.
5. Stakeholder Communication
Listening to stakeholder expectations, providing timely product quality information, and making adjustments as needed.

In fiscal year 2018, we are displaying quality promotion posters at all our bases and have distributed qualitycommitment (code of conduct) cards to all employees in order to increase awareness of the policy.

Quality management throughout the value chain

Constantly pursue higher management efficiency

TEL believes that continuous improvement, not only of products and services but also of all work processes,
contributes to improved quality and productivity. We strive to improve operations throughout the value chain,
while strengthening collaboration within the company and externally, reflecting the needs of customers.

Improved
qualityand productivity

Priority themes
In corporate business activities, efforts to improve
productivity will achieve greater efficiency in operations
and will boost revenue. Tokyo Electron is reviewing andoptimizing its current business processes across thecompany as a whole, in development and manufacturing
divisions as well as in sales and management divisions,and we are promoting quality management throughout
the value chain. We are aware of our corporate social
responsibilities in the field of manufacturing, and therefore
pursue greater productivity company-wide, with anawareness of high quality. In addition to in-house efforts,
we also work with our business partners to continually
improve the supply chain. Through these initiatives, we will
endeavor to improve corporate value and contribute to thecreation of a sustainable society.

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TOKYO ELECTRON SUSTAINABILITY REPORT 2018

MarketingDevelopment

Sales

DesignProcurement

Manufacturing

Installation

Maintenanceand service

Management system
Quality
management

Improvement of quality
in the value chain

TEL is building quality assurance systems under the leadership of the Representative Director, President &CEO. To provide consistent, high quality products, TEL has been acquiring ISO 9001 quality management
system certification at various sites since 1994, and to date, nine of the group’s manufacturing companies
have successfully obtained certification.
ISO 9001 certified factories and officesRelevant SDGs

Company nameTokyo Electron Technology Solutions

Decent work andeconomic growth

Responsible consumption
and production

Factory/Office name

Certification date

Yamanashi Office (Fujii/Hosaka)

September 1994

Tohoku Office

December 1994

Tokyo Electron Kyushu

Koshi Office

TEL Magnetic Solutions

�November 2009

March 1997

Tokyo Electron Korea

Balan Factory

September 2011

Tokyo Electron Miyagi

Taiwa Office

September 2012

TEL FSI�TEL Epion�TEL NEXX�Tokyo Electron (Kunshan)�March 2013
May 2014
May 2018

TOKYO ELECTRON SUSTAINABILITY REPORT 201828

Higher productivity
Improvement of quality in the value chain
EducationInitiatives at the development and design stage

TEL believes that every employee needs to have a high awareness and understanding of quality andconducts various educational programs to this end.
In addition to the fundamental quality education that all new employees receive, we focus on PDCA
education for all employees including those overseas. Through e-learning courses, employees learn theneed for continuous improvement using the iterative four steps of the PDCA cycle. As of March 2018, 87%of our employees had completed the courses.
In addition, we promote an education program called TEL 6-Step, a problem-solving model for serious
problems aimed at employees in production and service divisions. This is a customized version of the eight
discipline (8D) problem-solving method1 widely used in quality control. The TEL 6-step program enables
systematic and reliable analysis of problems to determine the root cause, leading to quick implementationof countermeasures and prevention of similar problems. We currently use e-learning training for delivery,and as of March 2018, approximately 5,000 employees had completed the program. Since 2015, wehave conducted not only online education but also group training aimed at overseas subsidiaries anddevelopment teams to provide opportunities for practical learning about resolution of quality issues.
Moreover, to enable employees to improve their knowledge and skills in the area of quality control, andto improve the quality of their work, we encourage them to obtain external QC certification2 through theQM/QC Exam (Quality Management and Quality Control Examination). Since fiscal year 2012, the numberof certified employees has increased each year to approximately 2,000 as of March 2018.

QC certification holders

Approx.
(as of March 2018)

2,000
employees

Streamlining business operations
As one of the key issues in the medium-term management plan, TEL is working to improve productivity
and efficiency in its operations. To do this, we are innovating and redesigning business processes acrossthe entire company. By standardizing and optimizing the business processes of each division and site, weare endeavoring to build a structure where important information for management decisions and business
operations can be acquired and utilized more quickly.
We have gathered experts from across our production, sales, logistics, service, accounting, and business
management divisions around the world. Together, we are conducting a multifaceted review of our crossfunctional, cross-division business processes, including customer processes such as ordering, production,shipping, and acceptance. By incorporating the results of this review into new core systems and other IT
infrastructure, and by utilizing the vast amount of business-related information, we plan to realize highly
productive operations.

1 8D problem solving method: Amethod for solving problems inquality improvement through eightdisciplines or processes
2 QC certification: Quality
management certification operated
by the Japanese Standards
Association and the Union ofJapanese Scientists and Engineers.
The total number of people qualified
nationwide exceeds 460,000 (as ofFebruary 2018).

In order to improve the quality of products, it is important to avoid contamination by defects in upstream
processes, and to ensure quality in each process so that defective products are not allowed to flow into
later processes. From this perspective, Tokyo Electron (TEL) is promoting front-loading and self-processassurance systems. In order to raise the degree of product quality at an early stage, we implement
thorough risk detection and mitigation measures (FMEA1) from the initial stages of product design inan effort to suppress the occurrence or outflow of defects. We also conduct thorough inspections ineach process and verification using simulation in the self-process assurance system. Furthermore, thesemeasures are implemented continuously and effectively in order to prevent similar problems, including
using TEL 6 Step to discover the root cause of defects which occur at customer sites or internally.

� Response to safety laws and regulations

TEL regularly checks the safety regulations and guidelines concerning equipment, and has theestablished responding systems. Equipment is checked by a third party inspection company before
shipment to ensure that the equipment complies with international safety standard and the guidelines
like SEMI S2.2 Also, regarding the Machinery Directive and EMC Directive,3 we obtain certificates ofconformity from the Notified Bodies in Europe.

New coresystems

Strategic
use ofmanagement
resources

Standardization

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TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Optimization

Efficientbusiness
operations
based onforecasts

2 SEMI S2: This is a set ofenvironmental, health, and safety
guidelines for semiconductor
manufacturing equipment
3 EMC Directive: This is one of the New
Approach Directives that apply to theEU member states

Example initiative
At Tokyo Electron Kyushu, the Quality Assurance Division takes the initiative and implements theirown method of quality control. They grouped their whole process in the factory by four phases(development, preparation for mass production, mass production and critical parts management)
and make proposals with a different perspective from the developers by leveraging knowledge
accumulated by the Quality Assurance Division. In these four phases, they identify quality risks withconsideration of irregular work, equipment with new specifications and so on. They also conduct strict
checks taking customer operations into consideration and propose measures that are effective for
quality improvement and ensure thorough implementation of those measures. In this way, they aim toeradicate defects that occur after shipment of their products.

Executive message
In order to deliver high-quality products and services, as is the responsibility of a manufacturer, it is important foreach and every employee to behave in a responsible manner with a high level of awareness in all business processes.
We believe that continuous improvement of product and business process quality leads to meeting customers’
expectations and achieving productivity (quality and efficiency) enhancements across all operations. By pursuing theworld’s best quality, we will build greater solid long-term trust with stakeholders and contribute to society throughaiming for sustainable growth.

Re-engineering of business processes

1 FMEA: Failure Mode and Effects
Analysis. Method to grasp risks inadvance, prevent and mitigate.

Hirofumi Kitayama

Executive Vice President and General Manager,EHS, Quality, Procurement, Production
Technology

Productivity
improvements

Acceleration

TOKYO ELECTRON SUSTAINABILITY REPORT 201830

Higher productivity

Streamlining software development

Streamlining support

TEL is promoting greater efficiency by using its own common platform software across its diverse lineup ofsemiconductor production equipment.
By introducing common platform software that we have developed in-house, we are able to reduce
the hours we spend on developing duplicate functions for each type of equipment. We have alsoachieved improvements in development efficiency when adding specific operations to individual piecesof equipment, by reducing the workload and amount of modification required. Design errors have also
decreased in frequency, contributing to an improvement in software quality.
Furthermore, we are also working to share development know-how across multiple factories andoffices. By periodically exchanging information on improvement efforts being undertaken by eachdepartment and the introduction of new development techniques, each department is achieving better
activity outcomes. These activities have been ongoing for more than 10 years now, and play an importantpart in making our software development more efficient.

To provide customers with efficient support, TEL has introduced the TELeMetricsTM remote diagnosticservice. This service connects us with installed equipment via the internet, enabling us to monitor theoperating status of the equipment.
Previously when an equipment problem arose, field engineers would go onsite to the customer’s plant,
get the relevant equipment data, and bring it back for analysis and troubleshooting. With the introductionof the TELeMetricsTM service, we can now carry out checks at our office on the equipment screens forcustomers that share data with us, and we can download alarm logs and specify the cause of the problem.
By having our specialist engineers analyze the data, we can quickly identify the cause. Narrowing down theparts and work necessary to address the issue with a high degree of reliability, also means we can reduce
the time needed to resolve the problem.

Response to quality problems
Initiatives with suppliers
Developing strong partnerships with suppliers is essential to improve product quality. Since 2000, TEL hasregularly conducted Supplier Total Quality Assessments (STQA) to clarify what is expected of suppliers interms of maintaining and improving quality.
Before starting business with new suppliers, an STQA is conducted via self-assessment to evaluate theirproduct quality, costs, and information security. The assessment also includes CSR issues, including humanrights, ethics, safety, and the environment. If any risks to quality are found, we visit the supplier on-site
to explain the problems, our expectations for improvement, and the level of quality we require. After thesupplier understands the issues, we ask that they plan and implement improvement measures. We alsooffer continual support to suppliers until all necessary improvements have been made. We conduct onsite audits once every three years at suppliers who manufacture important components and at suppliers
where quality issues have been found.
We focus on the change control education with our suppliers. We aim to reduce the number of quality
issues that occur as a result of changes to the design or manufacturing of equipment components andmodules. We also aim to reduce the cost of quality improvements. We conduct briefings for suppliers
to explain matters such as the importance of change control, and have conducted online training since
fiscal year 2016.

Example initiative
Aside from the assessment program described above, Tokyo Electron Kyushu cooperates with suppliers toimplement initiatives to reduce the occurrence of defective goods. We visit the production sites of suppliers
to learn about their production environment whereby they are able to provide effective improvement
proposals. We conduct process analysis together with suppliers to build better processes whereby wepromote steady reduction of defects, creating win-win relationships for improved productivity.

In addition to compliance with ISO and EN safety standards, TEL establishes design rules applicable to its
own equipment to achieve the highest level of safety possible.
In addition to developing systems to manufacture safe products, we fulfill our mission as an equipment
manufacturer by establishing systems for responding to design- or manufacturing-related issues or accidents
arising from operation-related problems. If an accident occurs, we use our S-VICS accident reporting system
to report and share information with all levels of management, from safety and quality personnel in eachdivision all the way to senior management. We immediately conduct an accident investigation to identify thecause and plan preventive measures. In addition to implementing the measures on the problem equipment,
we use a proprietary system called QABOX1 to quickly implement the measures on equipment operated byother customers and reflect those measures in design standards in operation.

Response to serious workplace accidents

Management
SeriousaccidentFire
department
Policedepartment
Customer
contact
point

Customer
Report and workplace recovery

Servicedivision

Accident information:

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

2 FCN: Field Change Notice (generalrecall notice)

TEL Group

Permanent measures

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1 QABOX: TEL Group internal
information sharing and horizontal
deployment tool

Accident
reportingsystem(S-VICS)(Q-VICS)

Operations
divisions
Safetydivision
Qualityassurance
division

Information sharing:

Relevant divisions
Investigation of causes and development ofrecurrence prevention measures
Investigate andidentify causes

Issue FCN2

Confirm spread

Share with Group(QABOX)

Determine measures

Reflect in designstandards

Establish
implementation plan

Revise standards
Notify revision

Operations and information flow:

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