About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessTokyo Electron’s Sustainability

Higher Productivity

Management Foundation

TEL FOR GOOD

7

Data

Initiatives for the Sustainable Development Goals (SDGs)

Sustainability and Framework of Corporate Principles
Tokyo Electron’s sustainability initiatives are the practice of its Corporate Philosophy through achieving its
Vision. We make clear the material issues in our growth and promote these initiatives. Together with thebuilding of a resilient management foundation, by providing high-value-added products and services, we
contribute to the resolution of issues and development of industry and society as well as the achievement of
the SDGs.
To be a company that is highly trusted and loved by society, we work on medium- to long-term profit
expansion and continuous corporate value enhancement.
Framework of Corporate Principles

The SDGs are a universal set of goals to achieve by 2030, which wereunanimously adopted by the United Nations Sustainable Development
Summit in 2015. For each priority theme of our material issues, we clarified
the SDGs it is working toward through business and conduct activities for theentire Group.
Tokyo Electron Supports the SDGs.
Additionally, we regularly hold SDGs workshops where employees working
in a variety of fields come together autonomously to share activities throughbusiness and discuss issues such as future prospects toward the achievementof the SDGs.
In fiscal year 2022, we reaffirmed the 17 goals and 169 targets* being undertaken by the priority themes ofour material issues.
* 169 targets reaffirmed: Our initiatives toward the 17 goals and 169 targets that make up the SDGs

MissionCorporate Philosophy: Purpose of Tokyo Electron’s existence and its mission in society

VisionVision: Top priorities to be addressed to realize the Corporate Philosophy

Value

TEL Values: Attitudes, codes of conduct, and values to be observed by each employee

Refer to 169 Targets of the SDGs on p. 13

We strive to contribute to the development of a dream-inspiring society through our leading-edge technologies andreliable service and support.

New Medium-term Management Plan

A company filled with dreams and vitality that contributes to technological innovation in semiconductors

Pride/Challenge/Ownership/Teamwork/AwarenessSustainability Promotion Framework

In addition to pursuing sustainable operations in line with our approach to sustainability, we also strive to generate
medium- to long-term profit expansion and continuous corporate value enhancement by creating new value
through our business and contributing to the resolution of industrial and social issues and to the development ofindustry and society. In June 2022, we revised our Vision and set new financial targets in the new Medium-termManagement Plan and also announced our main initiatives for the future to achieve the new Medium-termManagement Plan as well as our capital policy, shareholder return policy and other measures.

We promote sustainability activities throughout the entire Group through the following committees.
Financial Model Targets in the New Medium-term Management Plan
Conference Name
Sustainability
Committee

Participants■■■

Sustainability Global
Committee

Sustainability
Monthly Meeting
1
2

■
■

■

Corporate officers and General Managers
Presidents of the Group companies in Japanand overseas companies
The executive officer in charge of thesustainability promotion
Heads of related departments
Sustainability managers of the Group
companies in Japan and overseas companies2
Person in charge of sustainability at related
divisions■■■

Function

Meeting
Frequency

Set and manage progress of sustainability goals(short-, medium- and long-term)
Promote company-wide projects1

Twiceannually

Promote activities for achieving annual
sustainability goals (short- and medium-term)■

Implement global projects■

Share information on sustainability activities■

Discuss cross-division sustainability initiatives

Financial Model (Through FY2024)

FY2022 Results

Financial Targets (by FY2027)

Net Sales¥1.5 trillion¥1.7 trillion¥2 trillion¥2.0038 trillion≥¥3 trillion

OperatingMargin

26.5%

28%

>30%

29.9%

≥35%

37.2%

≥30%

ROE*

>30%

Twice
annuallyMonthly

Report and discuss important issues at the Corporate Officers Meeting, the highest decision-making body on the executive side
Corporate Officers' Meeting: Refer to the Corporate Governance System on p. 31
Sustainability manager: Person responsible for coordinating all aspects of sustainability at the Group companies in Japan and overseas companies

In addition to these committees, we invite all employees to submit examples of sustainability in the workplace,
toward issue resolution and advancement of industry and society, and practice of our Corporate Philosophy.
Outstanding initiatives are awarded the TEL Sustainability Award by the CEO and shared throughout the entire
Group as best practices.

We formulated the Medium-term Management Plan in May of 2019 and have been engaged in efforts toachieve a financial model, as the Plan’s core target, with net sales of 2 trillion yen, an operating margin of 30%
or more, and ROE of 30% or more by fiscal year 2024. As the semiconductor production equipment market has
expanded significantly, our business developments in our focal fields have been progressing smoothly, andperformance has outperformed the growth of the market. As a result, we have nearly reached our targets two
years ahead of schedule.
We seek to achieve world-class operating margins and ROE and have set new financial targets under the new
Medium-term Management Plan of net sales of at least 3 trillion yen, an operating margin of at least 35%, andROE of at least 30% by fiscal year 2027.
* ROE: Return On Equity

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessParticipation in Global Initiatives
We participate in a variety of global initiatives and promote sustainability in our business activities.

United Nations Global Compact

Higher Productivity

Responsible Business Alliance

Task Force on Climate-related Financial
Disclosures

In 2020, we expressed our approval of the recommendations offeredby the Task Force on Climate-related Financial Disclosures (TCFD*).
We are conducting ongoing disclosures and discussions based on theframework of governance, strategy, risk management, metrics andtargets relating to the risks and opportunities that climate changepresents to our overall business.

DJSI Asia PacificEuronext Vigeo World 120 Index

CDP*

TCFD: Refer to p. 48

1
2

8

Data

FTSE4Good Index

STOXX Global ESG Leaders indices

Corporation Governance of
The Year®

MSCI World ESG Leaders Indexes

Sustainalytics’ ESG Risk Ratings

Institutional Investor

DJSI: Dow Jones Sustainability Indices. An ESG (environmental, social and governance) investment index of S&P Dow Jones Indices LLC. The DJSI Asia
Pacific covers companies in that region.
FTSE4Good Index: An index related to environmental performance and corporate social responsibility developed by FTSE Russell.

3

MSCI World ESG Leaders Indexes: Companies that have high ESG performance are selected from the MSCI Global Sustainability Index, an ESG
investment index developed by Morgan Stanley Capital International (MSCI).
Please refer to the link for the logo’s disclaimer.

4
5

Euronext Vigeo World 120 Index: An index selected by NYSE Euronext and Vigeo Eiris composed of 120 companies that excel from an ESG perspective.
STOXX Global ESG Leaders indices: STOXX, a subsidiary of Deutsche Börse, selects companies that meet its evaluation standards based on the resultsof research from the ESG research company Sustainalytics.

6

Sustainalytics’ ESG Risk Ratings: An ESG risk measured for institutional investors by Sustainalytics in the Netherlands. The rating is based on acompany’s exposure to industry-specific material ESG risks and how well a company is managing those risks. Copyright ©2022 Sustainalytics. All rights
reserved. This article contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of

Evaluation from Third-party Institutions
Our sustainability initiatives have allowed us to continue to be selected as a constituent stock underleading global ESG investment indices, including the DJSI1 Asia Pacific Index, FTSE4Good Index2, MSCI World
ESG Leaders Indexes3, Euronext Vigeo World 120 Index4 and STOXX Global ESG Leaders indices5. At thesame time, we were evaluated as a low-risk company in Sustainalytics’ ESG Risk Ratings6.
In 2021, we were selected as a prestigious A List company in the water security category of a survey
conducted by the CDP7, and won recognition as the “Grand Prize Company,” an award given to the mostoutstanding company, in the Corporate Governance of the Year®8 2021 program sponsored by the Japan
Association of Corporate Directors.

TEL FOR GOOD

Additionally, the entire Group in Japan received recognition as top 500 companies under the 2022
Certified Health & Productivity Management Outstanding Organizations Recognition Program9.
Regarding our IR10 activities, we were selected as the “Most Honored Company” by U.S. magazine
Institutional Investor, and received the Best IR Award from the Japan Investor Relations Association.

The United Nations Global Compact (UNGC) is a global initiative that
promotes sustainability, proposed by ex-UN Secretary-General Kofi
Annan at the 1999 World Economic Forum. We signed onto the
UNGC in 2013 and are working to contribute to the realization ofsound globalization and a sustainable society in accordance with its
Ten Principles in the areas of Human Rights, Labor, Environment andAnti-Corruption.

The Responsible Business Alliance (RBA) is a global initiative promoting
supply chain sustainability focused on the electronics industry. We joined
the RBA in 2015, and as a member company, we work together with
suppliers to ensure compliance with the RBA Code of Conduct comprised offive sections: Labor, Environment, Health and Safety, Ethics andManagement Systems.

Management Foundation

Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an

7endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particularpurpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers.
CDP: An international environmental non-profit organization (NPO) established in the U.K. that conducts surveys on climate change and water security

8

measures taken by private corporations and local governments, and the results are made public.
Corporate Governance of The Year®: Carried out by the Japan Association of Corporate Directors since 2015 with the endorsement of the Ministry of

910

Economy, Trade and Industry and other organizations to encourage companies that practice sound corporate governance to attain medium- to longterm growth.
Certified Health & Productivity Management Outstanding Organizations Recognition Program: The program publicly recognizes particularly
outstanding organizations that are practicing health-oriented business management, based on initiatives attuned to local health-related challenges
and toward health promotion initiatives led by the Nippon Kenko Kaigi.
IR: Investor Relations

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Identifying Material Issues
Tokyo Electron identifies important and priority material issues to be addressed for medium- to long-term profit
expansion and continuous corporate value enhancement by examining both social and business environments,
evaluating risks and opportunities and through active engagement and such with stakeholders.

Higher Productivity

Management Foundation

We examined the risks and opportunities closely related to sustainable business development in considerationof the SDGs and other initiatives, social issues and social/business environments.
Social Trends

Environment

Issues AwarenessSocial Issues■

Human rights■

Supply chain
management■■

GovernanceCompliance■Business Environment
The spread of IoT, AI and 5G, smarter industries, autonomous driving, use of the highly anticipated metaverse, and othertechnologies, are moving us toward a data-driven society at an unprecedented speed. Semiconductors are a core partof this shift, and their market size is expected to more than double in the next ten years with technological innovations
in larger capacity, higher speed, higher reliability, lower power consumption, etc. Alongside this, the semiconductor
production equipment market in which we operate is expected to expand even further.
New evolutions are also required in Flat Panel Display, 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, anddesign improvements that take advantage of enhanced characteristics such as high-definition, lower power
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 under international frameworks
such as SDGs and the Paris Agreement in which initiatives toward decarbonization are essential, the role which
technological innovations in semiconductors and displays will play in society will be more prominent in the future.
At the same time, in step with the increasing importance of corporate governance, which fundamentally supports
the medium- to long-term growth of corporations, further strengthening of measures is essential to ensure safety andquality, as well as compliance and risk management.

9

Data

Social Themes of Risks and Opportunities■

With the state of society being affected by things such as the spread of COVID-19, the invasion of the conflict in
Ukraine and also due to climate change causing abnormal climate conditions and natural disasters, along withhuman rights issues, conflicts between nations, supply chains disruptions, cyberattacks and so forth, we are
currently facing many issues. Mitigating climate change and eliminating inequality in human rights in particular
are pressing issues for the global community, and there are strong calls for further action, not just byinternational organizations and national governments, but also by the private sector.
While participating in global initiatives such as the United Nations Global Compact and RBA and keeping aneye on societal trends, and considering recommendations from third party organizations, we also examinesocial issues that may impact our business activities.

TEL FOR GOOD

Evolution oftechnology■■

Information security■

Main Potential Risks

Opportunities

If we fail to comply with laws and regulations, industry
codes of conduct, in-house policies and so forth,product competitiveness and social credibility will
decline, and the cost of correcting the problem will
increase business costs.

Create business opportunities by providing technologies,
products and services that contribute to the reduction ofenvironmental impact

If we fail to comply with laws and regulations, industry
codes of conduct and so forth, social credibility andemployee engagement will decline.

Create a workplace environment that respects employee
diversity and enables all employees to demonstrate theirfull capabilities, improve employee turnover rate andpromote health management

If a natural disaster occurs, or it becomes impossible tocontinue business transactions with suppliers, events
such as delivery delays and contractual nonperformance will harm business continuity.
If sustainability-related issues such as the environmentand human rights become more serious, operations will
stagnate.

Establish a sustainable production system, further
increase business operations efficiency, improve business
continuity through enhanced business continuity plans(BCPs), strengthen competitiveness in the supply chain
and build trusted relationships with customers andsuppliers

If management’s monitoring or supervising function
declines, management risk will increase, and businessactivities will stagnate.

Enhance corporate value on a medium- to long-termbasis, gain stakeholders’ trust and increase social
credibility

If an ethical or compliance violation occurs, we will losesocial credibility and suffer economic loss.

Operate healthy corporate activities by complying withlaws and regulations, industry codes of conduct,
corporate ethics and other rules

If the development of leading-edge technologies isdelayed, we will lose business opportunities.

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

If confidential information is leaked, social credibility
will decline, and compensation for damages will be
required.
If a cyberattack or natural disaster occurs, our businesswill stagnate.

Build a rock-solid information infrastructure bystrengthening information security, and improveinformation literacy

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer ResponsivenessStakeholder Engagement

Higher Productivity

Management Foundation

TEL FOR GOOD

10

Data

Identified Material Issues

We examined the opinions and requests obtained through engagement opportunities with stakeholders.
Main Engagement Opportunities■

Shareholders/investors■■■

Customers■■

Earnings release conference, Medium-termManagement Plan briefing, IR Day
IR conference, IR road show1, individual IR interview
Shareholders’ MeetingTechnology conference
Joint development
Customer satisfaction survey

Key Opinions and Requests
■

■
■

■
■

■

■
■

Suppliers■■■

Production update briefing
TEL Partners Day
Sustainability assessment (including E-COMPASS)
STQA2 audit

■

■

■

■

Employees■■

Employee meeting
Global engagement survey
Individual workshops■■

Medium- to long-term enhancement of corporate value
and measures for such enhancement
Initiatives for highly effective governanceCapital policy, including shareholder return
Provision of innovative technologies for the future
Maximization of productivity using high-value-added
service
Proposal of comprehensive and optimal solutions
Sharing aspects such as market and technology trends
and information on production plans in a timely manner
Encouraging understanding regarding expected quality
standards, compliance with industry code of conduct, etc.
Further improving added value of products and service
through collaboration with us
Sharing of initiatives for corporate policy and Mediumterm Management Plan
Opportunities for career development and skill
improvement
Creation of work environments in which diverse humanresources can thrive

Material Issues

Importance to society

Stakeholders

Importance to business

Material Issues
Product
Competitiveness
Customer
Responsiveness■■Continuously create high value-added nextgeneration products
Strong relationship based on trust/Sole strategic
partnerPriority Themes
■

■
■

■
■
■

Local communities■■

TEL FOR GOOD (social contribution activities)
Tours of plants and offices
Environmental debriefing■■

Cooperation with companies regarding regional
revitalization and development
Promotion of environmental conservation
Human resource development and generation of
innovation

Higher Productivity■

Pursuit of operational efficiency

■
■

■
■
■

■

Governments/
associations■■

Cooperation with the government and administrative
agencies
Collaboration with global initiatives
Industry group activities■■■

Collaboration toward solving common issues
Create new value through innovation
Building of sustainable supply chains■

Management
Foundation■

Build a strong management foundation that
underpins our business activities

■
■
■

1
2

IR road show: IR activities presented directly to shareholders and investors
STQA: Supplier Total Quality Assessment■■■

Tackling technological innovation
Solutions that create value for customers
Improvement of customer satisfaction
Continuous 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

Identified Material Issues

Annual Sustainability Goals for Each Material Issues

We have come to understand social issues and business environments, considered risks and opportunities,
examined the opinions and requests of all stakeholders and identified our material issues. The CEO and thoserelated to sustainability, such as the corporate directors and the executive officers, approved “ProductCompetitiveness,” “Customer Responsiveness,” “Higher Productivity,” and “Management Foundation” as material
issues.
Based on a strong “Management Foundation” of safety, quality, compliance, governance, and risk managementthat underpin our business activities, we will be the first to grasp leading-edge technological trends and changing
needs, and continuously create next-generation products with overwhelming added value and performance toincrease “Product Competitiveness.” With our extensive track record in “Customer Responsiveness,” we will build
absolute trust with our customers and be the sole strategic partner. Furthermore, through “Higher Productivity,”
which arises from continually pursuing operational efficiency, we will work toward medium- to long-term profit
expansion and continuous corporate value enhancement.

We are identifying the priority themes for each material issue, setting annual sustainability goals for each fiscal
year, and understanding and verifying the progress of results.
We have also clearly identified the persons responsible for each goal, and by conducting various activities toachieve said goals, we are in turn contributing to the SDGs and further enhancing our corporate value.

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

11

Annual Sustainability Goals and Results
Fiscal Year 2022
Material Issues
Product
Competitiveness
Customer
ResponsivenessPriority Themes
Tackling technological innovation
Solutions that create value for customers
Improvement of customer satisfaction
Continuous improvement of business
operations

Annual Sustainability Goals

Results■

Ensure that 20% or more (three-year moving average) of all equipment models are new products for next-generation technologies

■

24.1%

■

Maintain the previous year’s global patent application rate1 (±10 percentage points)■

Maintained the previous year's rate (Achieved 74.3% in fiscal year 2021 and 74.6% in fiscal year 2022)■

Increase Tokyo Electron’s value to customers■

Both orders and sales increased significantly due to higher demand for semiconductors■

Increase sales-in-field solutions business by 5% or more from the fiscal year 2021 level■

Increased by 33% from previous fiscal year■

Achieve evaluations of “Very Satisfied” or “Satisfied” for 100% of customer satisfaction survey responses2■

100% (All 30 questions)Target a 10% improvement in operational efficiency as a medium- to long-term goal, achieve centralized data management throughadoption of a new enterprise resource planning (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(1) Completed adoption of ERP at headquarters (2) Implemented preparations to adopt ERP at manufacturing sites in Japan andoverseas subsidiaries■■

HigherProductivity■

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■

Quality management■■

Promote Shift Left5 (front-loading) activities for quality■

Reported at the Quality Council on measures6 and issues due to rework after defects occur
The Quality Domain Subcommittee has been working to improve the environment for strengthening analytical capabilities andpromoting the improvement of equipment and parts quality■

Identify risks and thoroughly implement countermeasures from the initial development stage (thorough prevention)■

Examine and define what the quality domain aims to be■

Diversity and inclusion■■

Career development
Work-life balanceContinued to regularly update and operate the Quality Dashboard4
Conducted surveys and set KPIs for effectiveness verification■■

Improvement of customer productivity/
yield

Continued and thoroughly operated QA-BOX3
Held regular monthly meetings to decide how to respond to issues posted on the QA-BOX and ensure that the entire Group is
involved■■■

Health and safety■

Conduct a diversity-conscious talent pipeline (plan for developing human resources for the succession planning) and achieve the goal ofincreasing the ratio of female in management positions■■

Identified the talent pipeline in each organization
Identified the gap between the medium-term target and the actual status of the ratio of female managers

Implement initiatives to make the ratio of female recruits equal to or greater than the general ratio of females7 in each region■

Increased ratio of female engineers hired in April 2022 to 12% from 6% in the previous year (Japan)

Create an organizational system where even those from outside of Japan can take on corporate roles through the use of technology andshared global human resources systems■

Implemented a reporting system mechanism that operates globally for some functions

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

(1) Conducted leader training (e.g., management skills training) Total: 425 participants (Japan) (2) Conducted external web-based
education Total: 988 participants (Japan) (3) Conducted generation-specific career training Total: 371 participants (Japan)
Number of Career Counseling Room users: 98 (Japan)

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: the total case incident rate (TCIR) is less than 0.50■■

64.6% (Japan)
Strengthened promotion of specific health guidance to eligible persons to improve the implementation rate by increasing
opportunities for interviews by enhancing online interviews
0.30

Reported to and discussed with the Board of Directors on the status of sustainability, human capital, intellectual property, andinternal audit
Conducted external evaluation to strengthen internal audit system■ Developed Shareholder Relations (SR) activities with institutional investors with an awareness of general shareholders' meeting
proposals and sustainability-related issues■ Increased off-site meetings from once to twice a year to discuss medium- to long-term strategies and the governance system.
■

GovernanceManagement
Foundation

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 Control Self-Assessment (CSA) (2) Unifiedclassification and response to risks to the entire Group (3) Launch of internal education program Roll out in Japan in fiscal year 2022 andoverseas in fiscal year 2023

(1) Continued operation of the PDCA cycle throughout the entire Group (quarterly monitoring of risk catalog, semi-annual meetingsof the Risk Management Committee (2) Conducted assessments by external organizations on the risk catalogs that centralize risks
for the entire group (3) Conducted workshops for management class and elementary web-based education for employees

Continuous cultivation of a compliance culture (1) Provide Code of Ethics training and achieve a pledge rate of 100% (2) Implement andimprove a compliance survey (3) Achieve 100% recognition of the internal hotline among employees(1) 91.6% (2) Reviewed the objectives and details of the survey based on the results of the third-party assessment to implement
the survey (3) 91.6%

Reduce per-wafer emissions of CO₂ by 30% (by fiscal year 2031, compared with fiscal year 2019)■

Reduced by 10.7% (compared with fiscal year 2019)

Reduce the amount of the use of wooden packaging materials by 50% (packaging for semiconductor production equipment, by fiscal
year 2024)■

Reduced by 8.6% (switchover percentage to reinforced cardboard)■

Reduce total CO2 emissions at plants and offices by 70% (by fiscal year 2031, compared with fiscal year 2019)■

Reduced by 48.5% (compared with fiscal year 2019)■

Rate of 100% renewable energy usage at plants and offices (by fiscal year 2031)■

60.3% adopted (electricity switchover percentage)■

Reduce energy consumption by 1% YoY at each plant and office (per-unit basis8)■

Achieved goal at 7 of 11 plants or offices

Maintain water consumption (per-unit basis9) at each plant and office at the fiscal year 2012 level in Japan and at individual base year
levels overseas■

Achieved 7 of 14 goals■■

Risk management
Compliance■■

Environmental contribution of products

Environmental management

■

■

■

Supply chain management■

Implement supply chain sustainability 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

■
■
■

■

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)
Material suppliers: Achieved 80% or more of our procurement spend

1 Global patent filing rate: Percentage of inventions filed as a patent application in multiple countries 2 For each question, average score is calculated for all customers who responded 3
QA-BOX: Refer to Measures to Prevent Quality Problems from Occurring and Recurring on p. 29
Shift Left: Refer to p. 16 and Ensuring Self-process Assurance Systems and Promoting Shift Left on p. 28
4 Collected, analyzed, processed and concisely summarized data and summarized in tables, graphs, etc. 5
Self-process Assurance: Refer to Ensuring Self-process Assurance Systems and Promoting Shift Left on p. 28 7 The ratio of females majoring in science or engineering in the case of engineers6
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 PlanTOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

12

Fiscal Year 2023
Material Issues

Priority Themes

Annual Sustainability Goals

Initiatives to the SDGs

Product CompetitivenessContinuously create highvalue-added next-generation
products
Customer Responsiveness
Strong relationship based ontrust/Sole strategic partner

Higher Productivity
Pursuit of operational
efficiency

Tackling technologicalinnovation

Solutions that create
value for customers
Improvement ofcustomer satisfaction
Continuous
improvement ofbusiness operations
Quality management
Improvement ofcustomerproductivity/yield

■
■

■
■

■

■

■
■

■
■

Increase research and development (R&D) investment to be 1 trillion yen or more over 5 years (fiscal year 2023 to 2027)
Maintain the previous year’s global patent application rate (±10 percentage points)

Increase Tokyo Electron’s value to customers
Increase sales-in-field solutions business by 5% or more from the fiscal year 2022 level
Achieve evaluations of “Very Satisfied” or “Satisfied” for 100% of customer satisfaction survey responses

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 evenmore on high-value work (1) Launch ERP introduction to overseas subsidiaries (2) Prepare for ERP introduction to domestic manufacturing sites
Check the impact of important common issues and thoroughly implement measures to prevent recurrence of similar faults
Strengthen the information environment for more accurate quality status and promote improvement activities
Identify root causes of market failures and promote and strengthen Shift Left (front-loading) initiatives by thoroughly implementing countermeasure activities
Identify risks and thoroughly implement countermeasures from the initial development stage (thorough prevention)

Recruit and develop world-class human resources regardless of nationality, age, gender, etc., in order to realize an optimal organization and optimal placement of the appropriate personnel to execute our business strategy
Conduct a diversity-conscious talent pipeline (plan for developing human resources) for succession planning and achieve the goal of increasing the ratio of female managers¹ to 8% globally and 5% in Japan (by fiscal year 2027)
Implement initiatives to make the ratio of female recruits equal to or greater than the general ratio of females in each region■ 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■ Implement a personnel exchange program for engineers at overseas subsidiaries and domestic manufacturing sites■ Share the message of top management's commitment to promoting diversity and inclusion and its continued dissemination■■

Diversity and inclusion■

Career development■

Work-life balance
Health and safety
GovernanceManagement Foundation
Build a strong managementfoundation that underpins
our business activities

■

■
■

■

■

Risk management■■

Compliance■

Environmental
contribution of products■

Environmental
management■■

Foster a culture of learning and development in the workplace through (1) Leader development a culture of business ethics and compliance (2) Provision of personalized global learning opportunities (3) Support for careerdevelopment 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 is less than 0.50
Continue to improve on issues identified in evaluations of the effectiveness of the Board of Directors
Further strengthen the PDCA cycle
Continue to implement internal education programs
Implement company-wide risk management tools
Continue to foster a culture of business ethics and compliance (1) Strengthen efforts to continuously communicate the CEO message and foster a culture of business ethics and compliance (2) Continue to improve and implement acompliance program² based on compliance risk assessments (3) Systematic implementation and effective review of various compliance training programs
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)
Reduce CO2 emissions of overall logistics (own delivery) by 10% (by fiscal year 2027)

Reduce total CO2 emissions at plants and offices by 70% (by fiscal year 2031, compared with fiscal year 2019)
Rate of 100% renewable energy usage at plants and offices (by fiscal year 2031)
Reduce energy consumption by 1% YoY at each plant and office (per-unit basis)■ Maintain water consumption (per-unit basis) at each plant and office at the fiscal year 2012 level in Japan and at individual base year levels overseas■■■

Implement supply chain sustainability assessments for the following percentages of suppliers
Material suppliers: Covering at least 85% 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 85% of our procurement spend■

Supply chain
management

1 Include experts in the number of managers 2 Compliance program:

Refer to Compliance System on p. 39

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

13

Data

169 Targets of the SDGs
Material Issues

Relationshipwith theSDGs

Actions under 169 Targets

Listed Pages

Priority Issues
Promote inclusive and sustainable industrialization
Enhance resource use efficiency and expand the introduction ofclean technologies and environmentally sound technologies■ Support scientific research in the industrial sectors of all countries
and enhance technological capabilities■

Product
Competitiveness

Customer
Responsiveness

HigherProductivity

Tackling technologicalinnovation

9.2/9.4/
9.5

Solutions that create
value for customers

9.4/9.b

Improvement ofcustomer satisfaction

9.4

■

13.1

12.5

P. 18

P. 21

Diversify industries and create added value in products
Enhance resource use efficiency and expand the introduction ofclean technologies and environmentally sound technologies■ Prevent and reduce the generation of waste and reduce waste
through recycling and reuse■■Continuous improvementof business operations

8.2

Quality management

8.2

12.2/12.4/
12.5

Improvement ofcustomer productivity/
yield

8.2

12.2/12.4/
12.5

P. 26
Raise economic efficiency through diversification, technologicalenhancement and innovation
Reduce environmentally sound chemical substances and waste■ Prevent and reduce the generation of waste and reduce waste
through recycling and reuse
■

P. 28

■

P. 28

5.1/5.5/
5.b/5.cDiversity and inclusion

P. 24

16.2/16.7

P. 42
■

5.5

Career development

Work-life balance

3.9

Health and safety

3.9

8.2

17.16

10.2/10.3

Reinforce global
partnerships toachieve sustainable
development

P. 42

P. 44

P. 45
Promote gender equality and ensure equal opportunity andequalities of outcome■ Ensure equal opportunity and equalities of outcome byencouraging suitable legislation and taking other measures■ Reduce organic chemical substances and air, water, soil and otherpollution■ Reduce corruption and bribery in all forms■ Reinforce resilience and adaptive capacity to climate changerelated hazards and natural disasters■

GovernanceManagement
Foundation
Risk management

16.5

Compliance

Environmental
contribution of products

3.9

Environmental
management
Supply chain
management

5.1

P. 31

P. 36

P. 39

13.1

P. 53

13.1

P. 47

16.2

P. 55

TOKYO ELECTRON SUSTAINABILITY REPORT 2022

About Tokyo Electron

Sustainability Management

Product Competitiveness

Customer Responsiveness

Higher Productivity

Management Foundation

TEL FOR GOOD

Data

14

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 and development of industry and society through the development of a value chain in our business activities
in R&D, procurement and manufacturing, sales and installation and maintenance services.

INPUT (investment capital) FY2022

OUTCOME (created value) FY2022

Financial capital
Net assets
1,347.0 billion yen
Equity ratio
Total assets

70.5%
1,894.4 billion yen

Intellectual capital
R&D sites 12 total (6 in Japan and 6 overseas)
R&D investment 158.2 billion yen
Broad-ranging knowledge and technologicalcapabilities in semiconductor and flat panel
display (FPD) manufacturing processes
Customer requests and technology trends
Equipment-related data accumulated through AI
and knowledge management
Systems and know-how for promoting digitaltransformation

Human capital
Number of employees 15,634
Proportion of engineers 67.1%
Personnel able to perform globally
Human resource development through TEL
UNIVERSITY

Social and relationship capital
Relationship of mutual trust with customers built
through many years of performance records
Solid cooperative working relationships with
suppliers
Foundation for business activities in local
communities

Natural capital
Energy consumption 100,265 kL
Water consumption 1,417,000 m3

The driving forces behind our Company
Abundant technological capabilities cultivated as an industry leader
Absolute trust from customers based on our reliable technical services
Challenging spirit of our employees who are capable of flexibly and rapidly
adapting to changes in the environment

Installation and
Maintenance
Services
Support the stable
operation of equipment
and provide prompt andaccurate high-valueadded service

Sales
Propose optimal
solutions as the sole
strategic partner

Research andDevelopment
Continuously
strengthening R&D tocreate innovative andunique technologies ina timely manner

Procurement andManufacturing
Efficiently
manufacturing highquality products backed
by a sustainablesupply chain

OUTPUT
Semiconductor Production Equipment/
FPD Production Equipment
Field Solutions

Manufactured capital
Cumulative number of equipment installations Approximately 82,000 units (annual
shipment volume of approximately 6,000 units)
High-quality and high-reliability products incorporating leading-edge technologies
Safety-first operation (TCIR) 0.30
Optimized and efficient production system
Observing equipment delivery and installation schedules
Intellectual capital
Innovative, high-value-added unique technologies
Product lineup with No. 1 or No. 2 semiconductor production equipment market shareand proposals that leverage thisNumber of patents owned 19,572
Highly efficient and high-quality service
Human capital
Retention rate1 96%
Improvement in desire for growth and demonstration of the challenge spirit inemployees, who both create and fulfill Company value
Building of relationships of trust with stakeholders by employees with a high levelof engagement
Ratio of female managers 5.5%
Social and relationship capital
Percentage of respondents who selected “Very Satisfied” or “Satisfied” in thecustomer satisfaction survey2 100%Rate of improvement after supply chain sustainability assessment 31.5%(compared to FY2021)
Number of TEL FOR GOOD programs 155
Creating employment opportunities in and paying taxes to local municipalities andnations where we carry out business activities
Natural capital
Per-wafer CO2 emissions 10.7% reduction (compared to FY2019)
Renewable energy consumption 230,218 MWh
Energy consumption at plants and offices per net sales 26% reduction (comparedto FY2021)
Waste material recycling rate 98.1%

IMPACT (impact on industry and society)
Financial capital
Returning generated profit to stakeholders■■

Continuing proactive investment for growth bybuilding a solid financial foundation

Manufactured capital
Contributing to improved productivity incustomer product manufacturing (utilization
rate and yield)■■

Contributing to the growth of the semiconductor and FPD markets

Intellectual capital
Contributing to the further development ofindustry and society through semiconductor
and FPD technological innovation■■

Contributing to the building of fair and soundmarkets that respect intellectual property

Human capital
Creating a workplace environment replete withdreams and vitality that enables employees torealize their full potential■■

Improving value provided to stakeholders

Social and relationship capital
Contributing to the value creation andcontinuous growth of customers

■

■

■

Maintaining soundness and strengthening
competitiveness throughout the entire supply chain
Contributing to the revitalization of andsustainable development in local communities

Natural capital
Contributing to the preservation of the global
environment through environmentally friendly
products and business activities as well as
collaboration with suppliers■■

Realization of Vision and Practice of Corporate Philosophy

Manufactured capital
Manufacturing sites 9 total (6 in Japan and3 overseas)
Manufacturing-related capital investment, suchas new plant buildings and manufacturing
equipment
Increasing of production capacity and leveling
Many years of know-how and provenperformance in manufacturing operations

Financial capital
Net sales 2,003.8 billion yen
Operating margin 29.9%
Net income 437.0 billion yen
ROE 37.2%
Total annual dividend 219.3 billion yen (payout ratio: 50%)

Contributing to customer manufacturing ofsemiconductors and FPDs that have a low
environmental impact as well as customer
business activities

1 Calculated using data on turnover rate 2 For each question, average score is calculated for all customers who responded

TOKYO ELECTRON SUSTAINABILITY REPORT 2022