TOKYO ELECTRON LIMITED Sustainability Report 2018TOKYO ELECTRON LIMITED Sustainability Report 2018TOKYO
TOKYOELECTRONELECTRONSUSTAINABILITYSUSTAINABILITYREPORTREPORT2018
2018

Cover
Cover
photo:
photo:
Bluebonnet
Bluebonnet(Texas,(Texas,
U.S.)
U.S.)
The
The
cover
cover
photo
photo
shows
shows
flowers
flowers
of ofthethecountries
countries
andandregionsregions
in which
in which
wewedodo
business.
business.

Akasaka
Akasaka
BizBizTower,
Tower,
3-13-1
Akasaka
Akasaka
5-chome,5-chome,Minato-ku,
Minato-ku,
Tokyo
Tokyo
107-6325,
107-6325,
Japan
Japan
Tel:
Tel:
+81-3-5561-7402+81-3-5561-7402
www.tel.com
www.tel.com
TELTELis aistrademark
a trademarkor registeredor registeredtrademarktrademarkof Tokyoof TokyoElectronElectron
LimitedLimitedin Japanin Japan
andandother
other
countries.
countries.

PR56-137
PR56-137

Contents
Corporate
Philosophy

We strive to contribute to the development of a dream-inspiring society throughour leading-edge technologies and reliable service and support.

Editorial policy

1

Contents

2

Tokyo Electron operates on the world stage

3

CEO’s message

5

CSR-oriented operations

7

Identifying material issues

9

CSR goals and results

11

Value creation through business

13

Product
competitiveness

About product competitiveness15

Research and development

16

Tackling technological innovation

17

Environmental contribution of products

19

About responsiveness to customers

21

Solutions that create value for customers

22

Ensuring safety for customers

25

Improvement of customer satisfaction

26

About higher productivity

27

Quality management

28

Improvement of quality in the value chain

30

About people and workplaces

33

Human resource management

34

Diversity

34

Career development

35

Work-life balance
Health and safety

37
39

About management foundation
Corporate governanceRisk management
Compliance
Respect for human rights
Supply chain management
Environmental management
Social contribution activities

41
42
45
46
47
48
49
53

Responsivenessto customers

Higherproductivity
Editorial policy
Scope of disclosure

The purpose of this report is to communicate the roles and responsibilities of Tokyo Electron (TEL) in promotingThis fiscal year, for each material issue, we describe priority themes, short- and medium-term goals, relevant
SDGs (Sustainable Development Goals), and specific activities that will lead to the resolution of social issues.
The activities have been arranged in terms of investment capital and the value chain and explain how TEL

Website:www.tel.com/csr/

People andworkplaces

Sustainability

creates value for customers and society.
For more details, please visit our website.
URL

Update ratea sustainable society and specific activities toward achieving this goal.

Reportwww.tel.com/csr/

TEL remains committed to disclosing information in a timely and transparent manner. Your honest feedbackon this report is highly appreciated.

Information volume

Managementfoundation
Scope

Period covered

This report covers the entire TEL Group (34 consolidated companies), withThis report principally covers fiscal year 2018 (April 1, 2017 to March 31,

some exceptions (indicated in the content).

2018), although some content covers fiscal year 2019.

In April 2014, the status of Tokyo Electron Device changed from a
consolidated subsidiary to an equity-method affiliate.

Contact
CSR Promotion Department, Tokyo Electron Limited

Reference guidelines

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

Global Reporting Initiative (GRI): Sustainability reporting standards

Tel: +81-3-5561-7402

Environmental Reporting Guideline 2012, Ministry of the Environment,
Government of Japan

Published dateJuly 2018(Next report: July 2019. Previously published report: June 2017)1

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

URL

www.tel.com/contactus/

Data
Performance summary (Social)
Performance summary (Environment)

55
58

Corporate profile

61

TOKYO ELECTRON SUSTAINABILITY REPORT 20182

Tokyo Electron operates on the world stage
Tokyo Electron (TEL) operates worldwide as a leading company in semiconductor and flat panel display (FPD) production equipment.
We strive to contribute to the development of a dream-inspiring society through technological innovation achieved in our pursuitof leading-edge technologies.
Tokyo Electron Technology
Solutions (Iwate)

Japan

North
America

148.7 billion yen
7,516Tokyo Electron (Shanghai)Tokyo Electron Europe

119.2 billion yen
1,718Tokyo Electron Miyagi

Tokyo Electron Korea

Europe96.9 billion yen
492Tokyo Electron Singapore

Tokyo Electron America

Asia

Net sales by region (consolidated)

North America
119.2 billion yen (10.5%)

Japan
148.7 billion yen (13.2%)

Number of employees by region (consolidated)

765.7 billion yen
2,220

Other
48.2 billion yen (4.3 %)Europe96.9 billion yen (8.6%)

Tokyo Electron

Korea
378.4 billion yen (33.5%)

Europe492 (4.1%)

North America
1,718 (14.4%)
Tokyo Electron Technology
Solutions (Nirasaki)

1,130.7 billion yen

11,946(Fiscal year 2018)(Fiscal year 2018)

Taiwan174.6 billion yen (15.4%)

China
164.3 billion yen (14.5%)

Tokyo Electron Kyushu

Tokyo Electron Taiwan

Transition of TEL (Net sales trends)

Asia
2,220 (18.6%)

Sales by region
Number of employees by region
Group company location

Japan
7,516 (62.9%)

Main products(billion yen)

1,400.0 (planned)

1,500

Semiconductor production equipment

FPD production equipment

1,130.7
1,000

500

0

1965

1971

Trading company

3

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

1981

1991

Changing to manufacture

2001

2011

2019 2020

Globalization

Innovation and new growth

Coater/Developer
CLEAN TRACKTM
LITHIUS ProTM Z

Plasma Etch System
TactrasTM

Atomic Layer Deposition
System
NT333TM

Single Wafer Deposition System
Trias e+ TM

Single Wafer Cleaning System
CELLESTATM -i

Wafer Prober
PrecioTM XL

Thermal Processing
SystemTELINDY PLUSTM

FPD Etch/Ash System
ImpressioTM

Inkjet Printing System for
manufacturing OLED panels
EliusTM(FY)FPD Coater/Developer
ExcelinerTM

TOKYO ELECTRON SUSTAINABILITY REPORT 20184

On behalf of Tokyo Electron (TEL), I would first like to express my sincere gratitude to all stakeholders fortheir continued support and patronage.

CEO’smessageIn recent years, efforts for building a sustainable society have unfolded on a global level, such as
enforcement of the Paris Agreement, as well as the United Nations Sustainable Development Goals (SDGs)
and Environmental, Social and Governance (ESG). To help build a sustainable society from a medium- tolong-term perspective, companies are required to create and provide diverse value through their products
and services, utilizing their management resources effectively.
On the social front, as we enter an age of the Internet of Things (IoT), where almost everything is connectedto the internet, it is expected that new business models and lifestyles will develop resultant of big data, newapplications such as augmented reality (AR) and virtual reality (VR), as well as artificial intelligence (AI) andother technologies are put to practical use. In addition, on the back of the planned introduction of 5G—
the next-generation telecommunications standard—progress is also being made in the development ofassociated infrastructures. Supporting all these trends are semiconductors. In the area of flat panel displays(FPD) too, in addition to growing demand for small- and medium-sized panels, there also appears to be ashift to larger screens and higher resolution, as well as a widespread adoption of organic electroluminescentdisplays,* and a broadening of design characteristics and their applications. Semiconductors and FPDs arein a new growth phase, playing a key role in our social infrastructure, and raising the expectation of further
development attributable to technological innovation.
Our Corporate Philosophy urges us to “contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support.” We see sustainability as animportant focus for management, and in addition to steadily promoting effective governance andcompliance, we believe it is vital that we improve our corporate value in the medium- to long-term bycontributing through business to the resolution of social issues. We will strive to create value for society
through our high-value-added, strongly competitive products and services, maximizing the effective useof precious management resources, such as the funds generated by our business activities, the knowhow along the value chain, our world-class personnel, and our trust-based relationships with customers
and suppliers. In fiscal year 2017, we redefined the issues that are material in the sustainable growth of
TEL, such as enhancing product competitiveness, reinforcing responsiveness to customers and improving
productivity. This fiscal year, we will again join together in engaging in various activities aimed at achieving
our short-term, medium-term and long-term goals related to these material issues. By continuing topromote sustainability-focused management, our aim is to remain a company which is loved and neededby the community, and in which our employees take pride.
To promote sustainability management in line with international frameworks, we became a signatory to the
UN Global Compact in 2013, and have since implemented initiatives for SDGs on a company-wide basis.
Your continued support and patronage is very much appreciated by all of us at TEL.

Toshiki Kawai
Representative Director, President & CEOTokyo Electron Limited* Organic electroluminescent display: The phenomenon of light being emitted from specific organic compounds when voltage is applied.

5TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 2018

6

CSR-oriented operations
Stakeholder engagement
Continued dialogue and collaboration with stakeholders is important in order for TEL to provide new value through our businessand to build trusting relationships. We will disclose information with a high degree of transparency in a timely manner and reflect
the opinions and wishes of our stakeholders in business activities as we endeavor to improve our corporate value.

CSR policy
The CSR operations of Tokyo Electron (TEL) are initiatives that realize TEL’s Corporate Philosophy. We pursue sustainable
operations from the viewpoints of corporate governance, legal and regulatory compliance, and business ethics while creating newvalue through our products and services. Based on these efforts, we implement CSR activities to help address social issues. We willcontinue to pursue CSR activities to build stakeholder trust, improve corporate value and, by doing so, promote the growth of asustainable and dream-inspiring society.

Stakeholders

Shareholders/investors

Communication opportunities








Customers

Sustainable operations
Material
issuesThrough business activities
Creation of new value

Contribution
to the solutionof socialproblems

Advancement ofdream-inspiring
society

ReinvestDistribute to shareholders
and employees

Improvement ofcorporate value
Pay taxes

CSR-oriented operations

Suppliers

Distribution of profit

Employees



Local communities

Governments/
associations









Earnings announcement
ESG surveys
Interviews
Technology conference
Customer satisfaction survey
Individual technology collaboration
Production update briefing
Partners day
STQA* audit
Employee meetings
Global engagement survey
Career interest survey (Japan)
Community contribution activities
Tours of factories and offices
Industry group activities
Collaboration with various initiatives

Key opinions and requests


































Relevant material issues

Measures for increasing corporate value over the medium- to long-term
Corporate governance initiatives
Medium- to long-term stance on reducing environmental impact
Accurate understanding of customer needs
Proposal of high-value-added solutions
Strengthening engagement from an earlier stage











Development of systems leading to motivation and job satisfaction
Support for medium- to long-term career planning
Initiatives for higher productivity

Creation of innovation leading to the resolution of social issues
Initiatives for respect for human rights
Responsible procurementGreater promotion of collaborative systems
Increased opportunities for communication

Community revitalization
Creation of employment opportunities
Environmentally friendly operations

















Product competitiveness
Higher productivity
Management foundation
Product competitivenessResponsiveness to customers
Higher productivity
Higher productivity
Management foundation
People and workplaces
Management foundation
People and workplaces
Management foundation
Product competitiveness
People and workplaces
Management foundation* STQA: Supplier Total Quality Assessment

CSR promotion framework
TEL implements sustainability management which is integrated into management strategy from a medium- to long-term
perspective. Company-wide CSR policies are set at the CSR management council with the participation of management. The CSR
global promotion conference then sets CSR targets and company-wide initiatives based on these policies. The progress and dayto-day CSR activities are shared at the CSR monthly meeting as we build cooperative systems across the company.
Conference name

Participants

CSR Management Council







CSR Global Promotion Committee

CSR Monthly Meeting

Chairman of the Board
President and CEO
Directors and Managers
Chief CSR Director
Heads of related departments
CSR officers of affiliates and overseas companies
Person in charge of CSR at each division

Function












Meeting frequency

Decide company-wide CSR policy
Discuss important matters

Twice annually

Set CSR targets
Implement global projects

Twice annually

Share information on CSR activities
Discuss cross-division CSR initiatives

Third-party evaluation
TEL’s CSR activities have been evaluated as medium- to long-term initiatives to increase its corporate value and have been
selected as a constituent stock index under leading global CSR and ESG investment bodies.
Following from fiscal year 2017, in fiscal year 2018, TEL was again selected as constituent stock under DJSI1 Asia Pacific 2017, andunder the FTSE4 Good2 and MSCI World ESG Leaders Index. Furthermore, we were also selected for the FTSE Blossom Japan Index
and MSCI Japan ESG Select Leaders Index, which are ESG indices designated by GPIF.3

Monthly
1 DJSI (Dow Jones Sustainability Index): Environmental, social and governance (ESG) investment indices developed by U.S.-based S&P Dow Jones Indices LLC and Switzerland-based RobecoSAM AG. The Asia
Pacific index covers companies in that region.
2 FTSE4Good: An index related to environmental performance and corporate social responsibility developed by the UK-based FTSE Group

Participation in initiatives
UN Global Compact
The UN Global Compact (UNGC) is a global initiative to encourage businesses and otherorganizations to act in a socially responsible manner in order to realize sustainablegrowth. It requires participating organizations to exercise responsible and creative
leadership in the four issue areas of human rights, labor, environment and anticorruption. TEL declared its endorsement in 2013, supporting the UNGC’s Ten Principles.

3 GPIF (Government Pension Investment Fund): An independent administrative agency for pension reserve fund management in Japan, which operates one of the world’s largest public pension reserve funds

Internal initiatives—CSR Promotion Award
In order to promote CSR initiatives within the company, we invite contributions from
employees worldwide of cases of CSR in the workplace that contribute to resolving issues in
the industry and society. We assess these in terms of their alignment with SDGs, resolution

Responsible Business Alliance (RBA)
RBA consists of leading electronics companies dedicated to promoting CSR in their
supply chains. The RBA has a common Code of Conduct governing such areas as labor,
environment, safety and health, and ethics. TEL joined the alliance in 2015, and has
been taking measures to improve sustainability of its supply chain ever since.

7

TOKYO ELECTRON SUSTAINABILITY REPORT 2018of social issues, contribution to corporate value and other aspects, and confer one CSR
Promotion Award and four CSR Merit Awards.

TOKYO ELECTRON SUSTAINABILITY REPORT 20188

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 United
Nations 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, we
can 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• Product
competitiveness

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 of
applications 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 Council
ЈЈMaterial 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 business
management
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 goal

Product
competitiveness

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 products
Solutions 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

9TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201810

CSR goals and results
Tokyo Electron (TEL) establishes annual goals and medium-term goals, based on material issues and their priority themes.
Initiatives aimed at the achievement of goals are promoted throughout TEL, and the results are linked to evaluation andimprovement with the aim of increasing corporate value further.

FY2018Material issues

FY2019Priority themes

Annual goalsEnhancingproduct
competitivenessTechnologicalinnovation aimed atcreating valueEnvironmental
contribution of
products
Accurate grasp ofcustomer needs

Reinforcing
responsivenessto customers

Strengthening
earnings power

Ensure that 5% 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

Results

Solutions that create
value for customers

High quality products

Increase added value ofprocesses

Achieved 9.2%

Achieved 76.0% (maintained programs at the level of theprevious fiscal year)

Reduce per-wafer consumption of energy and pure water by
10% by fiscal year 2019 (as compared with fiscal year 2014)

Achieved for the four models

Get 3 points (“Satisfied”) or more on 100% of customer
satisfaction survey items



Achieved 64.9%

Increase TEL’s value to customers

Achieved increased adoption of TEL equipment by major
customers against the background of vigorous demand formemory

Increase field solutions business sales from the fiscal year 2017 level

Increase of 31.4% from the fiscal year 2017 level

Reduce quality improvement costs from the fiscal year 2017 level

Reduction of 9.8% from the fiscal year 2017 level

Revise business processes to reduce man-hours used for sales
operations from the fiscal year 2017 level







Work-life balance







Human resource
development

Retain 100% of new employees for the first three years
Reach 70% of take-up rate of annual paid leave
Increase the use of the company’s “Pep Up” healthcare
platform from the fiscal year 2017 level

Annual goals

Partially introduced systems to support sales operations

Tackling technologicalinnovation

Product
competitiveness

Increased from 92.9% to 93.4%
Implemented initiatives such as Step-up Activity Training for
employees in their second year
Increased from 64.1% to 64.3%(increase of 0.2 points from the fiscal year 2017 level)
Communicate the policy for overtime reduction at the start ofthe period
20% increase (from 47.1% to 67.2%)
Distribute activity monitors to promote health awarenessEnvironmental
contribution of
products
Solutions that create
value for customers

Responsivenessto customers

Improvement ofcustomer satisfaction

Quality management

Higherproductivity

Human rights anddiversity

Invigorating
people andworkplaces

Priority themes








Material issues

Improvement of quality
in the value chain

Diversity

Career development

People andworkplaces

Work-life balance

Increase field solutions business sales from the fiscal year 2018 level











Corporate governanceImprove on issues identified in evaluations of the effectivenessof the Board of Directors
Revise the internal reporting system (set up new external
hotlines, revise range of persons covered, etc.)In response to the issue of increasing discussion time, holda two-day one-night off-site conference to provide morediscussion time to consider management policies andstrategies such as medium- to long-term growth strategies.
Established external reporting system for group companies inJapan and set up hotlines for supplies



Governance andcompliance

Human rights

Establishinga sustainable
managementfoundation

Safety management

Environmental
management

Ensure that the number of workplace injuries per 200,000
work hours (the total case incident rate) is less than 0.5

Reduce energy consumption by 1% from the fiscal year 2017
level (on a per-unit basis)
Maintain water consumption at the fiscal year 2012 level (on aper-unit basis)







Achieved 0.38



Achieved at 6 out of 11 factories or offices*Achieved 11 out of 14 goals* According to new per-unit basis after revision

Managementfoundation

Become the best andsole strategic partner

Get 3 points (“Satisfied”) or more on 100% of customer satisfaction
survey items

Reduce quality improvement costs from the fiscal year 2018 level

Revise business processes to reduce man-hours used for sales
operations from the fiscal year 2018 level

Constantly pursue
higher management
efficiency

Double percentage of female managers by fiscal year 2021 (ascompared with fiscal year 2018)
Increase number of training sessions attended per person by 10%
from the fiscal year 2018 level
Reach 70% of take-up rate of annual paid leave
Reduce gap between health age* and actual age by 1.5 points byfiscal year 2021 (as compared with fiscal year 2018)

Maximize dreams
and drive* An indication of the risk of lifestyle diseases by age based on the results ofhealth checkups

Health and safetyCreate strong nextgeneration products

Reduce per-wafer consumption of energy and pure water by 10%
by fiscal year 2019 (as compared with fiscal year 2014)

Health

Maintain the previous year’s global patent application rate

Increase TEL’s value to customers



Relevant SDGs

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

Ensure that the number of workplace injuries per 200,000 work
hours (the total case incident rate) is less than 0.5
Improve on issues identified in evaluations of the effectiveness of
the Board of Directors
Establishment of external hotline overseas and reorganize internal
hotline100% participation in human rights training
Reduce energy consumption by 1% from the fiscal year 2017 level(per-unit basis*) at each factory or office* Per-unit basis: Calculated using complex weighting of the number ofdeveloped evaluation machines, units produced, floor area, and labor-hours foreach district

Environmental
management

Build a managementfoundation forincreasing value

Maintain water consumption at the fiscal year 2012 level according
to per-unit basis* set at each factory or office* Per-unit basis: Calculated based on floor area and labor-hours, etc. for each
district

Supply chain
management

11

TOKYO ELECTRON SUSTAINABILITY REPORT 2018



Implement supply chain CSR assessments for 80% or more of
suppliers (procurement volume basis)Assessed key suppliers accounting for more than 80% of our
procurement spend

Supply chain
management

Implement supply chain CSR assessments for 80% or more of
suppliers (procurement volume basis)

TOKYO ELECTRON SUSTAINABILITY REPORT 201812

Value creation through businessWith its business of semiconductor and FPD production equipment and sales and service support, Tokyo Electron (TEL)
contributes to value creation for its customers, through the manufacture of devices using advanced technology, productivity
maximization and environmental impact reduction. Manufactured semiconductors and FPDs are supplied to the market in various
products, including mobile devices, AV equipment and data servers, to realize a more convenient and abundant society amidst
developments in fields such as IoT, big data, and AI. Through its business, TEL contributes to the resolution of industrial and social
problems and the achievement of SDGs, and contributes to the creation of a sustainable society.

AI/IoT

Value creation process through TEL business operations

Manufacturing
Capital throughbusiness activities

Development
and production,
sales andservice expertise

Development

Sales

Service

Products andservices Collaboratingwith consortiums→p. 17

 Improvement ofquality in thevalue chain→pp. 30–32

 Tacklingtechnologicalinnovation→pp. 17–18

Personnel
able to perform
globally

Procurement
and production

 Supply chain

management→p. 48

 Initiatives for Initiatives for

integrated
proposals

integrated
proposals→p. 23→p. 23

 Meeting diverse

needs→pp. 23–24

customersatisfaction

contribution of
products

for customers

 Streamlining

supportMaximizing
productivity

Finance

Reducing
environmental
impactProviding value tocustomers throughproducts andservices

 Improvement ofquality in thevalue chain→pp. 30–32

Relationshipsof trust withcustomers andsuppliers

Semiconductors
and FPDs→p. 32→p. 26→pp. 19–20

FPD production
technology

Social Networking

 Ensuring safety→p. 25

 Improvement of Environmental

Leading-edge
semiconductors

Foundation for value chain
People and workplaces→pp. 33–40

Transportation

Medicine

Governance and compliance→pp. 41–46

Value provided tosociety
by customers

TEL’s capital

13

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Initiatives in the value chain

Value creation

Solution of social
problems

TOKYO ELECTRON SUSTAINABILITY REPORT 201814

Research and development
Research and development for the future

Product
competitivenessAs lifestyles and business models undergo dramatic changes in the era of the Internet of Things (IoT), it isanticipated that the use of semiconductors will expand in all industries, and there will be demands for evenmore advanced technologies. As electronics become even familiar for people, semiconductors becomea larger part of everyday life. Tokyo Electron (TEL) has settled on the TEL Technology Vision 2030 from a
medium- to long-term perspective, and is holding lively discussions regarding technology for the future aswell as its contribution.
TEL Technology Vision 2030

Technology
for Growth

Ability
to Execute

Solution provider
for the semiconductor
industry

Solution provider for all industries
with connections to semiconductors

Employee
Vitality

Now

2030

Development system
TEL has a system, which promotes technology development and technology innovation for the next
generation, in collaboration with the Development & Production Division and business divisions to bringhigh-value-added products to market in a timely fashion. In fiscal year 2018, Tokyo Electron Technology
Solutions was established, merging the factories in Yamanashi and Tohoku. As a result, resources relating todeposition technologies—one of our strengths—were centralized, and our process integration functions
were strengthened. Also, in Tokyo Electron Miyagi, construction of a new R&D building has begun toaccelerate the technology innovation of etch systems. We are creating one of the foremost development
environments in the industry.

Create strong next-generation products
Priority themes
In the era of the Internet of Things (IoT), when a variety ofobjects can connect to the internet, semiconductor andflat panel display technologies support the expansion of
new business models and lifestyles. In such circumstances,
it is important to deliver high added-value and competitive
products in a timely fashion in order to ensure continuous
business expansion. Tokyo Electron engages in cuttingedge development to produce next-generation products
featuring innovative technology. Furthermore, we areconscious of the importance of global environmental issues
such as climate change and resource depletion and we
strive to implement measures to reduce the environmental
burden of our products. Through innovative technology
and environmentally conscious products that will support
the next generation, we contribute to the building of asustainable society.

15TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Tackling
technologicalinnovation

Intellectual property management

Environmental
contribution of
products

Relevant SDGs

Industry, innovationand infrastructure

TEL’s basic policy is to increase corporate revenues by supporting business through intellectual property(IP) protection. IP personnel are assigned at R&D/manufacturing facilities and at the headquarters. In
order to boost competitiveness of TEL’s products, they build IP portfolios that go well with technology andproduct strategies through assessment of R&D and marketing activities from various angles including R&D
and marketing viewpoints.
In fiscal year 2018, TEL introduced an integrated IT platform for managing TEL’s worldwide intellectual
properties. This platform is accessible from any employees involved in IP activities, and strongly supports
worldwide R&D activities. We have maintained global patent application rates* around 70% in the last
seven years. In 2017, we maintained high patent application success rates: 71.5% in Japan and 78.0% in the
United States. To increase IP awareness, we continuously educate engineers, who are the foundation of
TEL’s R&D strategy; in total around 3,900 engineers have become inventors.

* Global patent application rates:
Percentage of invention applications
filed in multiple countries

Climate action

TOKYO ELECTRON SUSTAINABILITY REPORT 201816

Product competitiveness

Collaborating with consortiums

Use of AI technologies

Along with enhancing its own research and development capabilities, TEL is also engaged in thedevelopment of cutting-edge technologies in collaboration with international and domestic consortiums.
In the U.S. state of New York, we have participated in the Albany NanoTech megaplex since its
establishment in 2003. Here, global device manufacturers and makers of semiconductor production
equipment have participated to build a comprehensive semiconductor production line, where we canverify integrated process development and its effectiveness. Taking advantage of an environment close
to the actual device manufacturing, we also conduct joint research projects aimed at resolving specificissues faced by customers. Based in a world-class development environment, our team of more than 100
engineers are advancing efficient development, committed to researching next-generation semiconductor
production equipment and processes directly linked to business.

TEL is promoting the use of AI1 in order to achieve more efficient and stable equipment operation. In
addition to strengthening the training of experts in machine learning, such as through study programs atoverseas universities, in 2017, we established a division responsible for technological innovation utilizing AI,
as well as a division responsible for planning the interdivisional use of data. Thus, we are putting in place
an organizational structure that promotes planning, marketing and development activities on a companywide basis.
With this structure, we are driving our efforts using AI to analyze the vast amounts of data coming out of
our equipment, to help us predict and control the condition of the equipment. By monitoring the operating
status of our semiconductor production equipment in real time via the internet, and using AI to analyze
that data, we target to meet the demands of our customers, namely, maintaining equipment performance,
achieving wafer process uniformity, and avoiding unexpected downtime.

Korea

U.S.

Tokyo Electron Korea
TEL Technology Center Korea

TEL Technology Center, America
CNSE

Addressing advancements in display

Belgium
imec

Singapore
FranceIME

CEA-Leti

Japan
Tokyo Electron Miyagi
Tokyo Electron Technology Solutions
Tokyo Electron Kyushu

Taiwan© CEA / Pierre Jayet

TEL Technology Center, Taiwan

1 AI: Artificial Intelligence

Consortium
Tokyo Electron development sites(as of April 1, 2018)

Flat panel display (FPD) has evolved along with advancements in liquid crystal technology to a highresolution that cannot be identified by the human retina. In recent years, there has been greater adoption,
particularly for smartphones, of organic EL display, which can produce a brighter screen with less power.
These advancements have been supported by technology for forming minute electronic circuits on glass
substrates, for which our equipment is widely used in the etch process.
TEL adopted the industry’s first high-density plasma generation technology, known as ICP,2 anddeveloped PICPTM3 that advanced this technology further. PICPTM creates even more uniform plasmacompared with conventional ICP, enabling fine etch and achieving formation of a uniform fine circuit
over the whole substrate. In addition, this technology provides stable quality, improved productivity, andextends the replacement cycle of consumable parts, thus reducing environmental burden.
In the future, it is expected that demands on the display market will progressively increase for features
such as high definition, low power consumption, Free Form,4 Flexible5 and Touch UI6 on the display market.
Therefore even finer circuit formation is essential to achieve these. TEL will make significant contributions
to the future advancement and development of displays by enabling production of fine, uniform circuits
required for leading-edge displays.

2 ICP: Inductively Coupled Plasma
3 PICP TM: Planar Inductively Coupled
PlasmaTM, which describes thecreation of extremely uniform highdensity plasma on a panel substrate
4 Free Form: Non-rectangular shaped
display
5 Flexible: Bendable and freely
deformable display
6 Touch UI: Touch User Interface is
a computer-pointing technology
based upon the sense of touch

Tackling technological innovation
Integrating logic and memory
In this era of IoT, data centers are processing massive amounts of data such as in information and image
analysis, and as the increasing power consumption of semiconductor devices proves to be an issue,
attention is being drawn to neuromorphic devices inspired by the neural circuits of humans. Computersin data centers consume power in the order of several tens of kilowatts, but the human brain consumes
only about 20W when doing the same processing. Similarly, whereas the operating frequency1 of today’s
semiconductor devices is 5 GHz, the human brain runs at just several tens of hertz. Neuromorphic devices
use synaptic connections2 to integrate the processing function and the memory function, which had
previously been divided between logic and memory of a conventional microprocessor. This enables ahigher degree of information processing with less power consumption like the human brain.
Leveraging its strengths in deposition technologies and pattern technologies, Tokyo Electron (TEL) has
initiated research efforts into new materials needed for next-generation computing, such as neuromorphic
devices, quantum computers, as well as manufacturing processes for utilizing these materials.

17

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

1 Operating frequency (or clock speed):
The number of signals per second
to adjust the pace of processing ofmultiple electronic circuits. Indicatesthe processing performance of thecomputer. The higher the frequency,
the more power is consumed.
2 Synaptic connection: A junction
formed between neurons (cells
making up the nervous systemof an animal) regarded as having
an important role in learning andmemory.

BetelexTM

ImpressioTM

Executive message
The semiconductor and FPD industry is evolving more and more with the dawning era of the Internet of Things (IoT).
In response, we will create customer value, developing competitive new technologies and products at a rate fasterthan the industry evolves.
We will continue our efforts to create new value by combining and integrating our various technologies withthose of universities, business partners and other external parties. With challenges though comes failure. Our viewis that constructive failure hails future success. We believe that repeated challenges revitalize the organization,
nurture human resources and produce innovative technologies and products, which in turn, will help create value forcustomers in the future.

Yoshifumi Tahara
Senior Vice President and General Manager,
Development & Production 4th Division

TOKYO ELECTRON SUSTAINABILITY REPORT 201818

Product competitiveness
Environmental contribution of products
CO2 emissions across the value chain

Products that contribute to a sustainable society

Tokyo Electron (TEL) believes it is important to recognize environmental impact throughout the value chain in conducting its businessactivities. We aim to resolve environmental problems through leading technology and reliable services, in line with our environmental
slogan “Technology for Eco Life.”

Of the total CO2 emissions from the TEL value chain, emissions arising from product use account for
90% of our total CO2 emissions. For this reason, we have made it a key corporate objective to promote
environmentally friendly product design, and lower the energy consumption of our products.
In fiscal year 2015, we established a goal to reduce energy and pure water consumption by 10% by fiscal
year 2019, using fiscal year 2014 consumption as the baseline. To achieve this goal, we are working to
reduce energy use and improve overall throughput. As a result, we achieved the goal for one model in fiscal
year 2016 and three models in fiscal year 2017 ahead of schedule. Moreover, even after achieving the goal,
we have maintained our efforts for these models. For instance, in fiscal year 2017 we achieved our 10%
reduction goal for the PrecioTM XL test system. Then in fiscal year 2018, by switching to energy-efficient
motors, we were able to reduce power consumption per wafer by a further 20%. In addition, in fiscal year
2018, the percentage of sales from energy-saving models based on in-house standards was 92.8% of total
product sales.
To further reduce the overall environmental impact of our products, we must examine our primaryequipment, peripherals, associated facilities, and management at our customers’ factories. Going forward,
it will become increasingly important to improve the operational efficiency of our equipment andencourage overall energy-efficient operations at our customers’ factories.

5,494 kilotons
361 kilotons

152 kilotons

Scope 3 upstream

Scope 1 & 2

Scope 3 downstream

Not from the TEL GroupOwn emissions

Not from the TEL Group

Fuel- and energy-related
activities

Employee commuting

11 kilotons

11 kilotons

Capital goods

Business travel

10 kilotons

137 kilotons
Purchased goods andservices

179 kilotons

Waste generated in operations

1 kiloton

Direct emissions fromfuel & gas use
Scope 1

9 kilotons
Indirect emissions fromelectricity use & heat purchase
Scope 2143 kilotons

End-of-life treatment of sold products

2 kilotons
5,382 kilotons* Based on in-house standards

110 kilotons

Initiatives for product environmental laws and regulations

Downstream

Scope 1: Direct GHG emissions from use of fuel and gas owned or controlled by TEL
Scope 2: Indirect GHG emissions from use of electricity, steam and heat purchased by TEL
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* Scope 3 is divided into upstream activities, which include emissions associated with purchased or procured products and services, and downstream activities, which include emissions associated with sold products and services

The total of Scope 1 and Scope 2 of the TEL Group is 152 kilotons, while Scope 3 accounts for a total of 5,855 kilotons, which isapproximately 97% of the total. We believe that it is particularly important to develop products with low CO2 emissions during operation,
as CO2 emissions from the use of products sold amount to 5,382 kilotons, which is 90% of the overall total.

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

92.8%

* Test System Precio™ XL power consumption
per wafer

Downstream transportationand distribution

12 kilotons

19

20% reduction

Use of sold product

Upstream transportationand distribution

Upstream

Percentage of energy-saving model*
sales in total sales

Power consumption reduction rate*

In order to comply with each country’s environmental laws and regulations pertaining to products, TEL
proactively collects information and takes appropriate action as required. An example of our efforts for EU
REACH1 regulations is that we investigate the presence of any substances of very high concern (SVHC) inarticles, and disclose information appropriately. As for efforts for GHS2 requirements, we provide safety
data sheets (SDS) when selling chemical goods.
In fiscal year 2018, we established a new environmental IT system, making it possible to share
information more efficiently with our supply chain. In addition, we have also continued to offer “web based
training for Product Environment Compliance” to all employees, providing a description of the frequently
revised environmental laws and regulations and product compliance. We also provide suppliers withinformation on the relevant environmental laws and regulations. We had no violations of environmental
laws and regulations during fiscal year 2018.
We will continue to rapidly monitor each country’s environmental laws and regulations, and strive totake appropriate action.

Logistics initiatives

URL

1 EU REACH: An EU regulation
pertaining to the registration,
evaluation, authorisation, andrestriction of chemicals
2 GHS: Globally Harmonized Systemof classification and labelling ofchemicals

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

As logistics regulations have become more stringent in recent years and the demand for a lower impact on
the environment rises, TEL has been promoting modal shifts3 and other activities designed to reduce theenvironmental burden of its logistics.

3 Modal shift: Switch of transportationmeans from truck or aircraft to
one that has a lower impact on theenvironment, such as rail or ships

TOKYO ELECTRON SUSTAINABILITY REPORT 201820

Solutions that create value for customers
Systems for creating value for customers

Responsivenessto customers

By developing and strengthening close relationships with customers through a customer account system,
Tokyo Electron (TEL) is promoting a deeper understanding of customer needs and linking this to thecreation of product development and service businesses in the seamless collaboration with its businessdivisions and development divisions. Moreover, in order to take a more comprehensive and inclusive
approach to meeting customer needs, in cooperation with our corporate divisions we are also promoting
development activities on common themes across the multiple products and functions.
To promote these activities and to improve their efficiency, we are working to build globally unified
systems and operations. For the service division in particular, we have established the Global Service
Committee. Service leaders from each business unit and each overseas subsidiary regularly gather topromote One-TEL service activities. Discussions by the Global Service Committee cover all manner ofsubjects, including improving the technical skills and interpersonal skills of the more than 3,000 fieldengineers worldwide, the localization of start-ups, improving work efficiency using the work-time
management system, and the concept of the Total Support Center. Based on these discussions, theGlobal Field Division takes a central role in promoting the sharing of information and knowledge between
accounts and between overseas subsidiaries, and in the development of optimal operational methods.
In addition to helping create value for customers by improving our ability to make proposals and solve
problems to meet customer needs, we are also contributing to create value for TEL by improving the speed
and efficiency of our business.

Development capabilities beyond product fields

Become the best and sole strategic partner
Priority themes
With the coming of the Fourth Industrial Revolution,a variety of objects are connected to the internet, andanalysis and utilization of big data through AI is advancing.
Applications for semiconductors and flat panel displays
are expanding and customer needs for semiconductor
production equipment are diversifying and increasingin complexity. Against this background, it is essential
to accurately grasp customer needs in order to provide
optimal products and services. Since the establishmentof Tokyo Electron (TEL), we have positioned customer
satisfaction as a key management theme, and haveendeavored to build firm relationships of trust with ourcustomers. Furthermore, TEL proposes integrated solutions
as a manufacturing equipment company deploying multiproducts. We continue to aim to contribute to value
creation for our customers so that they will see us as an
irreplaceable strategic partner.

21

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Along with the advancement of scaling and performance of semiconductors, innovative solutions to
optimize overall manufacturing processes at customer sites are highly required. TEL has been working on
the challenge by taking the advantage of high technological competency as an equipment manufacturer
deploying a product lineup featuring a variety of products.
During fiscal year 2018, we have established a Process Integration Center (PIC). In response to thegrowing technological requirements essential for building a more enriched and prospective society—such
as AI and automated driving, widely spread of IoT solutions—PIC is engaged in extensive research on
innovation by integrated process technologies based on a combination of multiple processes, leading-edge
equipment, and novel materials. The semiconductor trend to 3D structure is one of those innovations. 3D
structure is micro-fabricated with complex elements built in a vertical direction on a wafer, enabled bynumerous repetition of multiple processes such as thin film deposition, lithography, etch, and cleaning.
Utilizing our comprehensive strength with an extensive product lineup featuring a variety of products, weare contributing to the evolution of overall semiconductor manufacturing technology.

TactrasTM VigusTM

CertasTM

Clean
Etch
Solutions thatcreate value forcustomers

Improvement ofcustomersatisfaction

CELLESTATM -i

EXIMTM

Process tools

Relevant SDGs
LITHIUS ProTM Z

Thin film
Lithography
Industry, innovationand infrastructure

Responsible consumption
and production

Trias e+TM

TELINDY PLUSTM
NT333TMTOKYO ELECTRON SUSTAINABILITY REPORT 201822

Responsiveness to customers

Initiatives for integrated proposals

Knowledge management
TEL promotes company-wide knowledge management.1 By sharing knowledge and connecting different
divisions and overseas sites, we are working to share best practices to deliver high-quality services toour customers. In the area of field service, we have built a system that centralizes information on pastequipment issues and allows users to search that information on demand. The system has made it easierto retrieve knowledge on issues, and causes of issues can be predicted with greater accuracy. This has
enabled us to respond to customers more quickly and more efficiently.

1 Knowledge management:
Management approach to promoteinternal company sharing of tacitknowledge held by individuals, inorder to encourage innovation and to
improve overall productivity

For certain equipment that customers want to purchase even though it may have been released 20 ormore years ago, we offer remodeled equipment. Without changing the function of the equipment andby replacing old units and parts with the latest components, we can meet the demands of customers
who want to continue using their equipment for a long time, while maintaining compatibility withexisting processes.
We also offer a new upgrade kit, whereby the functions of latest 300 mm equipment are added
to refurbished equipment. Doing so has enabled us to make productivity and other performance
improvements that outstrip existing models.

Flow of remanufactured equipment
Procurement

Work-time management
We have adopted a global timesheet covering about 3,000 field engineers worldwide. Under this system,
work involved in starting up equipment, repair work and other tasks are managed by entering the typeof task performed and the time required for that task in accordance with certain rules. Introducing thissystem has allowed us to visualize services. By analyzing the work data accumulated through the global
timesheets, we are intent on improving the efficiency of our work and the quality of our service.

Disassembly

Production

Modified parts

Our products
Customers

Respond to
new customer needs

Customers

Skills management
With a goal of upgrading the skills of field engineers and improving the competitiveness of our services, webuilt a company-wide skills management system in accordance with standards established by SEMATECH(a U.S. consortium for the joint development of semiconductors). The system became operational in fiscal
year 2018. By understanding the individual skills of our field engineers, we have been able to systematicallyupgrade the skills of our company as a whole. Moreover, since the skills of each engineer can beascertained objectively, we are able to place our human resources to match the needs of our customers.

Executive message

Meeting diverse needs

The era of the Internet of Things (IoT) has broadened the range of semiconductor applications, and has further
diversified the demands on manufacturing equipment. In response to such needs, we have developed our field
solutions business based on more than 60,000 delivered equipment. Our service commitment is to provide service
that all customers can use our equipment with peace of mind. We will enhance infrastructure that maximizes
the performance of equipment, and through the reuse and recycling of products and through high-value-added
maintenance services, we will support the stable operation of equipment for all generation utilized in a variety of
applications. This business is critical for TEL’s medium- to long-term growth, and I am confident it can also be of
benefit to society by reducing environmental impact.

With the dawning era of the Internet of Things (IoT), demand for semiconductors is becoming progressively
polarized. Amid advances to miniaturize semiconductors and to further increase their density for MPU2 andDRAM,3 demand is also increasing for general-purpose semiconductors in a wide range of fields, such as
medicine, finance, transportation and manufacturing. Extending the life cycle of products is another challenge,
evidenced by demand for the long-term stable operation of semiconductors for automobiles and industry.
In view of these trends, TEL has developed an organizational structure focused on the aftermarket. We
have developed systems to better understand the needs of our customers, and to share them internally as
feedback so they can be reflected in product development.
Based on these systems, a major pillar of our business expansion has been the supply of equipment,
centering on 200 mm equipment. Leveraging our strength in having delivered more than 66,000
machines as one of the largest suppliers in the industry, we procure equipment from end users or fromthe used equipment market and sell them as TEL-certified used equipment. We are also putting a great
deal of effort into remanufactured equipment. Remanufactured equipment refers to equipment build bytaking the TEL used equipment we have procured and disassembling them into modules, modifying thoseparts that are still usable, and adding new parts where they are needed. Doing so enables us to provide
equipment according to customer demand.

23

New parts

Equipment

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

2 MPU (Microprocessing unit):
Microprocessors or semiconductor
chips that mainly provide thecomputing power for computers

Kiyoshi Sunohara
Senior Vice President and General Manager,
Field Solutions Business Division

3 DRAM (Dynamic random accessmemory): A type of semiconductor
storage element for computers, etc.

TOKYO ELECTRON SUSTAINABILITY REPORT 201824

Responsiveness to customers
Ensuring safety for customers

Improvement of customer satisfaction

Information provisionTokyo Electron (TEL) is committed to providing relevant safety information to customers to enable thesafe handling of products.
All products purchased by customers come with a standard TEL Safety and Environmental Guidelines
manual. This manual describes the potential risks associated with the use of our products together withthe methods for averting those risks, divided into such categories as chemical, electrical, mechanical andergonomic. It also describes safety measures applied to products and recommended methods for productdisposal. The manual has been translated into 10 languages to ensure that our customers around the world
can accurately understand the information and use our products safely. To assist customers in using TEL
equipment safely, we also provide a manual detailing the procedures for avoiding risks associated with therelevant equipment and for ensuring its correct operation and maintenance.
Close attention must also be paid to safety when delivering TEL products that involve the use ofhazardous chemicals or high voltage electricity. Particularly when delivering our products to a customer’s
new production line, we check their facilities, equipment and workplace safety standards beforehand
according to our internal rules to ensure a safe environment.

Customer Satisfaction Survey* 10 languages: Japanese, English,
German, French, Italian, Dutch,
Russian, Korean, Traditional Chinese,and Simplified ChineseTokyo Electron (TEL) conducts a Customer Satisfaction Survey (TEL CS Survey) every year, with the goal of
making continual improvements based on customer feedback. The survey started in 2003, aimed at justa limited number of departments. It was expanded to include all semiconductor production equipment
departments in 2014, and later the FPD production equipment division and overseas subsidiaries in 2016,
making it into a company-wide undertaking.
Once a year, customers are sent a questionnaire with specific questions designed to lead to practicalimprovements. Results from the survey are given as feedback to customers. In addition, results analyzed
by product, account (customer) and function (software, development, etc.) are shared with the relevant
divisions for action to be taken, thus leading to interdivisional improvement activities. Improvements
are also constantly made to all aspects of the actual survey method, from the questions asked, to theanalytical methods and overall operation of the survey activities.
In the customer satisfaction survey for fiscal year 2018, responses were received from approximately
1,300 individual customers which is 62.1% of all customers. We received 3 points* or higher on 64.9% of allquestions asked. Based on this valuable feedback and analytical results, our entire company will work todrive improvements initiated from the customer perspective.

* On a 4-point scale, 3 points or
higher represents “Very Satisfied orSatisfied”

Training
TEL provides its customers with training on equipment operation and maintenance procedures toensure they are able to handle TEL products correctly and safely. Centered around our manufacturing
sites, we have established training centers worldwide, with approximately 80 instructors conducting
practical training courses using actual TEL equipment. So that the training we provide is always of thehighest quality, we use our own certification system for instructors to ensure that training is delivered bypersonnel recognized as having the necessary skills. In addition to practical training, we also provide webbased training and on-site training at customer sites. In fiscal year 2018, we provided customers with a
total of approximately 9,500 days’ worth of training.
At the end of a training course, TEL also surveys participants to collect and analyze their feedback on our
training programs and equipment. Based on the survey results, we implement improvements in an effort
to develop an enriched training environment.

Percentage of responses that indicated customer satisfaction

64.9%
CS Survey activity
preparation

Plan

Do

ActionCheck

Conduct survey ofcustomers

Feedback to customers

Analyze survey results

Implement improvement
activities in each division

Report and investigate
improvement plan

Confirm progress ofimprovement activities

Improvement example
Results of the Customer Satisfaction Survey brought to light a certain issue that would not haveordinarily been identified. In response, the relevant departments and overseas subsidiary took the leadin implementing improvements, backed by the cooperation of all TEL departments. We responded toinquiries with greater accuracy and speed, we delivered products and got it up and running more quickly,
and we revised our allocation of field engineers. These efforts were reflected in the improved evaluation
given by the customer the following year. A request received from another customer suggested thatthey wanted more enhanced support for software operated across multiple pieces of equipment. We
implemented a variety of measures, and consequently, the evaluation score received from that customer
also improved.

25

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201826

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.

27

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Marketing

Development

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 offices

Relevant 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
Education

Initiatives 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 the
QM/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: A
method for solving problems inquality improvement through eight
disciplines 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

29

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 the
EU 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 of
semiconductor 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 diagnostic
service. 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 has
regularly 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 the
supplier 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 to
implement 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 (general
recall notice)

TEL Group

Permanent measures

31

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 design
standards

Establish
implementation plan

Revise standards
Notify revision

Operations and information flow:

TOKYO ELECTRON SUSTAINABILITY REPORT 201832

Human resource management
Human resource management system

People andworkplaces

Tokyo Electron (TEL) regularly conducts a global engagement survey which aims to enhance employee
work satisfaction and motivation, achieving growth for both the company and its employees.
Questions on issues such as pride in the company and work, and awareness and evaluation of the work
environment help us to grasp the current situation. We use a continuous improvement cycle based on thecharacteristics of each region and workplace. We thereby aim to improve the workplace environment sothat employees can work more actively.
In fiscal year 2018, we introduced a global human resources system that forms the basis of employee
work styles. In fiscal year 2019, we will focus on the four topics of diversity, career development, work-lifebalance, and health and safety, driving initiatives to these ends.
Implementation ofEngagement Survey
Reviewing of
circumstances

Improvement for
further improvement

Improvement of
measures

Implementation ofEngagement Survey

Confirmation ofeffects

Planning formeasures

Consideration of
measures toaddress issues

Implementation of
Implementation of measures, deployment
measuresin the workplace

Diversity
Approach to diversity

Maximize dreams and drive

Our business extends globally, with overseas sales accounting for over 80% of total sales, placing us incircumstances requiring extremely fast technological innovation. Furthermore, it is essential that diverse
talent plays an active role for a company to generate innovation and continue to grow. By developing aworkplace where anyone, irrespective of gender, nationality, age, background or ability, can work easily
and feel motivated, we will promote creation of an environment where the diversity of talent leads togreater competitiveness.

Priority themes
The business environment is changing significantly, withthe acceleration of globalization and diversificationof needs, and shrinkage of the productive population
caused by changes to the population structure. In thesecircumstances, companies must hire, maintain and utilize
outstanding human resources to realize sustainablegrowth. For this reason, Tokyo Electron is creatinga workplace where a diversity of talent can flourish
regardless of gender, age or value system, through fair
employment, promotion, evaluation and remuneration,and promotion of work-life balance. At the same time, weare promoting career path development and nurturing
human resources able to think and act independently.
Employees who feel motivated to work and who are proudof the company will create new value and contribute toresolving society’s problems.

33

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Systems and initiatives

Diversity

Careerdevelopment

Work-life
balance

Health andsafetyRelevant SDGs

Decent work andeconomic growth

Reducedinequalities

At Tokyo Electron (TEL), the corporate director in charge of human resources is responsible for promoting
diversity activities. In fiscal year 2018, we started operation of a global human resources system where
employees can clarify the roles and responsibilities expected by the company, and whereby evaluation andremuneration correspond with the level of achievement of targets. We have established an environment
which promotes diversity where everyone receives fair assessment and opportunities to grow and which
realizes a global work approach.
Furthermore, we are putting greater effort into harassment prevention education in order to realizea workplace where diverse employees can have greater mutual understanding. We are implementing
e-learning for all executives and employees concerning matters including power, sexual and maternity
harassment and LGBT issues, and seminars are being conducted by occupational physicians aimed atmanagement. Prevention of harassment in the workplace is one of the goals of our action plan based onJapan’s Act on Promotion of Women’s Participation and Advancement in the Workplace.
We are establishing an environment where employees with disabilities can work with peace of mind,
and are driving efforts to hire such people. In fiscal year 2018, people with disabilities accounted for 1.91% of
employees in Japan operations overall.
In addition, in an effort to increase the ratio of women in management positions, we have set a target to
double the number of women in management roles by fiscal year 2021 based on fiscal year 2018 levels, andwe are striving to achieve this with our global human resources system.

TOKYO ELECTRON SUSTAINABILITY REPORT 201834

People and workplaces

Conference for Women Engineers

Human resource development initiatives

In February 2018, we held our Second Conference for Women Engineers, linking our Akasaka headquarters
with offices throughout Japan via a video conferencing system. Women engineers discussed theirrespective field of specialty and work style as well as activities to promote women’s participation. Groupdiscussions were also conducted on topics including “How does a female engineer work?” and “Whatmust be done to accelerate and promote creation of an environment where all employees can work more
actively?” On this occasion, 104 employees, including men, participated. Lively discussions were held, andfeedback was received to the effect that the active participation of men allowed them to understand andrealize women’s situation and feelings.

Leader programs
TEL conducts programs to discover and systematically nurture people who will advance into management
to realize medium- to long-term improvement of corporate value. In fiscal year 2018, TEL conducted training
in the basic management skills required of leaders for selected mid-level employees. We also organizednetworking with internal and external business leaders, and proposed solutions to business problems. In the
future, we are also planning a practical program to improve their perspective as management executives.

Manager programs
The role of managers is important to enable value creation by each individual. In fiscal year 2018, in orderto nurture managers, we conducted training that helps trainees to understand managerial roles andresponsibilities, required behavior, how to utilize managerial organization and nurture employees, together
with practical workshops.

Voice Participation at the Conference for Women Engineers
Following on from last year, I took part in the Second Conference for Women Engineers. At this conference, wewere able to share a variety of examples and concerns, whereby we were able to reconsider our own careers. It
provided a reference for developing work styles for women in the future. We also managed to build a network withthose engaged in promotion activities at each of our bases. Through this conference, we hope for the opportunity
to consider for ourselves how to boost the number of women engineers and promote participation, and to be well
prepared to engage in activities that transcended barriers within the workplace.

Nanako Shinoda

1st Group, PF Engineering Department
Tokyo Electron Technology Solutions Limited

Career development

Voice

Human resource development system
Tokyo Electron (TEL) has established TEL UNIVERSITY as an educational facility for all the company withthe aim of helping employees to independently develop their career and realize their personal goals. The
curriculum of TEL UNIVERSITY includes courses that provide world-class knowledge and skills, with training
programs adapted to different levels and goals.
Management education costs¥62 M

It was an opportunity to realize that people grow by working in the field, by tackling work with topics themes
and issues in mind, and by taking on challenges.
ЈЈ I was surprised to see the young employees identify problems and focus on action with such keen insight, andthat they were in just their second year career since joining the company. I look forward to their future success.

Young andnew employees

35

New hiretraining

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Mid-level employee
programs
Step-up activities
Follow-up of
new employees

Technical programs

Business skills programs

Global communication programs

Mid-level
employees

Manager
programs

Leader programs

Mid-career recruits training

Seniormanagement

Goal-based programs

Web-based training required company-wide

Level-based programs

I tackled the activities with the aim of acquiring certification thatusually take three to four years in just two. I experienced repeated
failure in the challenging tasks, but by sharing the goals within
the department, I received support from my boss and was able toachieve the goal and much more. Through these activities, I learned
that we cannot grow unless we continue to take on challenges.
(Tomohiro Ajiki, Tokai FE Department, Tokyo Electron FE)

Feedback from an executive who participated in the activity presentation

Corporate education system (TEL UNIVERSITY)
Introductory programs

Step-up activitiesЈЈ(excluding travel costs for participation)

Managers andsenior specialists

Step-up activities
TEL is implementing step-up activities for about half a year from the summer of employees’ second year incompany with the aim of encouraging autonomous young employees. The young employees set their own
topics and targets in the workplace, and plan activities, which they advance, involving their superior andcolleagues, providing opportunities to develop awareness of learning and growth.

Life design seminar
Each year, TEL provides career development support to employees appropriate to their age. Within
Japan, for employees aged 51 or above, we conduct a life design seminar every year to provide necessary
knowledge and information for retirement. We also conduct programs to help with the next step incareer and life planning, such as financial planning.

Visionary Talk
We have presented a Visionary Talk since fiscal year 2016,encouraging experts in various fields to talk about the future withthe aim of nurturing the vision and creativity of employees. In
December 2017, the lectures were presented by leading experts
in the technology, design and management fields. Approximately
800 employees took part worldwide, providing them withgreat stimulation and making a deep impression. It was a good
opportunity for them to assess themselves and gain new ideas.

TOKYO ELECTRON SUSTAINABILITY REPORT 201836

People and workplaces
Work-life balance
Work-life balance concept and systems
Tokyo Electron (TEL) believes that harmony between work and life for each employee produces asynergistic growth effect both of employees and the company, and we are building structures for this.
Our vision is to realize a truly global company that creates high added value and profit. We recognizethat in order to achieve this, it is necessary to reduce overtime through efficient work techniques and tohave mechanisms in place to evaluate the outcomes. In fiscal year 2018, we began global operation ofa new unified human resources system. It clarifies the roles and responsibilities for each employee, sets
appropriate targets and challenging targets, provides absolute evaluation of degree of achievement,
awards performance bonuses and provides further career opportunities. We aim to encourage greater
engagement by evaluating the proactiveness of employees. Furthermore, we will realize creative
work styles through awareness of more efficient working, where time gained can be used for learning
opportunities and can provide further benefit to our business.

Childcare and nursing systems
TEL has established a support system, in addition to that which is legally defined. In Japan in particular, we
are working to enhance work styles for employees dealing with childcare and nursing.
In addition to allowing extension of the childcare leave period until the child reaches three years of age,
we also expanded measures to reduce working hours for childcare to employees raising children until theirgraduation from elementary school. We have also established leave to care for a sick or injured child andchildcare support leave. As a result, in Japan, we have achieved a return to work rate of 93.6% and 40% of
female TEL employees are working mothers.
Furthermore, in addition to allowing paid nursing care leave up to the fifth day, we are also improving
the nursing care system to make it possible to take nursing care leave three times per person requiring careand to allow nursing care leave of a total of one year.
Percentage of those who returned towork after childcare leave (Japan)

93.6%

Features of the global human resources system�

Rating system
The system clarifies duties (the roles and responsibilities required of the employee) supporting a global way of working

�

Evaluation system
The system is designed to establish performance goals appropriate to employee level and stretch goals designed todevelop the employee, and it assesses the employee based on achievement of (or contribution to) those goals�

Flexible work styles
We are actively seeking new work styles for employees. In addition to introducing flextime system fromfiscal year 2018, in some sales and administrative divisions we tested a teleworking system that allows
employees to utilize time more effectively by eliminating commuting time.

Remuneration system
In addition to a level of remuneration that is competitive in the market, the system provides the employee with career
opportunities as well as a productivity-linked bonus proportionate to their degree of achievement (contribution)
Leave and other support systems for childcare and nursing care
System

Supporting flexible work styles
TEL is implementing various initiatives to allow each employee to adopt a flexible approach to work
according to their individual lifestyle and stage in life.

Leave-related systems
We are endeavoring to increase annual paid leave take-up rate among employees in order to realize a
comfortable workplace environment for all employees. Regular monitoring of leave and efforts to raiseawareness for planned use of leave resulted in a domestic take-up rate of 64.3% in fiscal year 2018. In fiscal
year 2019, we aim for a take-up rate of 70%, and are therefore promoting management to improve thisrate, such as planned of 5 days paid leave each half year.
In addition, we have introduced a unique refreshment leave system. Refreshment leave aims to provide
refreshment for employees and to thereby boost their motivation to work. The system grants special(paid) leave from two weeks to one month for each five years of service to employees who have worked
for more than 10 years. In fiscal year 2018, 639 employees in Japan took refreshment leave.

Overview
Allows work start times and finishing times to be moved forward or back by a maximum of
one hour each day

Pregnant female employees who are under
instruction from their doctor

As per the legal requirement

Childcare leave(1) Allows leave to be taken up until a requested date but no later than the end of April after
the child turns 18 months of age(2) If the child cannot gain admission into a nursery school, leave may be extended from theend of April after the child turns 18 months of age until the child turns three years of age(i.e. the day before their third birthday)

Employees with a child who will be less than 18
months of age at the end of the following April

More than the legal requirement(up to a maximum of three yearsof age)Childcare time

Allows an employee to request time to care for their infant for two 30-minute periods per day, Female employees with an infant under one
in addition to prescribed rest periods (treated as paid leave)
year of age

Flextime forchildcare andnursing care

Allows work start times and finishing times to be moved forward or back by a maximum of 90
minutes per day

More than the legal requirement(paid component)

Employees with a child who has not graduatedelementary school, or who are caring for afamily member requiring nursing care

More than the legal requirement(up until the child finishes
elementary school)

Allows leave to be taken for up to a maximum of five days for employees with one child, andLeave to care for a
10 days for employees with two or more children, per business year (up to five days treatedsick/injured childas paid leave)

Employees with a child not old enough tocommence elementary schoolMore than the legal requirement(paid component)Childcare support
leave

Employees with a child not old enough tocommence junior high school

Unique system

Allows leave to be taken for up to a maximum of five days for employees with one family
Short nursing caremember requiring nursing care, and 10 days for employees with two or more family members
leaverequiring nursing care, per business year (up to five days treated as paid leave)

Employees with a family member requiring
nursing care

More than the legal requirement(paid component)

Allows an extended period of leave to be taken for up to three times per person requiring care,up to a maximum of one year in aggregate

Employees with a family member requiring
nursing care

More than the legal requirement(up to one year of leave)

Extended nursing
care leave

Special leave to care for a child for up to a maximum of five days per business year (unpaid)

Executive message

64.3%

Tatsuya Nagakubo

Senior Vice President and General Manager,
Human Resources, General Affairs,
CSR Division

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Notes

Relief forcommutingdifficulties

Take-up rate of annual paid leave (Japan)

37

Eligible employees

Since its founding, TEL has consistently valued employee motivation. In order for employees to go about their daily
work with a positive attitude, it is important that: (1) they have hope for the company’s future, (2) they see theircareer taking shape within the company, and (3) the workplace environment allows them to make the most of theirtalents. TEL has put effort into cultivating cheerful and open workplaces, such as through a points-based personnel
system focused on roles, responsibilities and contribution, as well as through providing opportunities for employees
to challenge themselves in new jobs, with colleagues who support each other in developing personal careers andachieving goals, and supervisors who understand different work styles. We will continue to step up efforts to ensurethat TEL remains a company full of dreams and vitality.

TOKYO ELECTRON SUSTAINABILITY REPORT 201838

People and workplaces
Example initiative
WELLatTEL, a Tokyo Electron U.S. program, provides resources for employees and their families to improvetheir health. Employees are provided a tracking device to increase awareness of their physical activity.
Multiple locations have access to onsite gym equipment. Access to online financial education resources
increases understanding of financial security. Rewards are provided for physical challenges, such as Step
into Spring, and for completing sections of the financial awareness training. The WELLatTEL program
contributes to the “Good health and well-being” for all employees and aligns with SDGs.

Health and safety
Tokyo Electron (TEL) clearly states in its Management Policies that the highest consideration is given to thehealth and safety of every person connected with its business activities. Based on these policies, we are
increasing our global efforts to improve the health and safety of our employees.

Philosophy for health
So that employees can realize a fulfilling life’s work, and at the same time, contribute to the advancementof TEL’s business by harnessing their full capacity, it is important that each and every employee canmaintain their health and dynamism while at work. By putting systems in place, we have built anenvironment where employees can work with peace of mind. We also believe that to maintain health,
it is important that employees are aware of their own state of health and take self-directed steps for
improving it. Based on our wellness declaration announced in February 2012, we have conducted a numberof ongoing initiatives to support employees in this pursuit.

Executive message
A key ingredient to TEL’s success has been to instill a spirit of challenge and pride in the hearts and minds of
our employees. This comes to life in our workplace in many facets. We strive to create an environment where
employees feel free to challenge new ideas while taking on new and bold projects. We recognize employees fortheir success and their willingness to explore new horizons. We view development as a shared responsibility. We
accomplish this through an open door policy allowing employees to seek guidance from management on their
Barry Mayer

Systems and initiatives for healthSenior Vice President and General Manager,
Global Strategy, Chairman, Tokyo Electron U.S.
Holdings, Inc.

Support systems for health
We have built systems that are mindful of employee health. Besides conducting various medical checkups
in accordance with the law, we also offer face-to-face consultations by doctors for employees who work
long hours. We have also set up health help desks supported by doctors so that employees and theirfamilies can seek advice if they have any health concerns. We also offer counselling services supported
by external industrial counselors if requested by an employee. Regular “line-care”1 seminars are also held,
targeted at line managers.

1 Line-care: A workplace measure formental health, in which managers
and supervisors take a lead role inresponding to requests by workers
for advice, with an aim of improving
the workplace environment

Stress checks
Within Japan, we have implemented comprehensive measures for mental health. Using a questionnaire
recommended by the Ministry of Health, Labour and Welfare, employees complete a stress check oncea year, and if determined to be under high stress, they are put in contact with a public health nurse or
occupational health physician for in-depth face-to-face support. During fiscal year 2018, the stress check
was taken by 92.7% of employees in Japan.

vibrant and productive working environment.

Safety management framework
Based on a culture of “Safety First,” TEL carries out ongoing activities for safety promotion. Safety andoccupational health are managed using a management system based on OHSMS.1 We also strive to raise
the overall level of safety and occupational health by following the PDCA cycle to reduce the potential
risk of work-related accidents. Moreover, by sharing information of any issues with the EHS council andthe manufacturing company presidents’ council, we promote safety management as a company-wide
initiative.

Safety and health committee meetings, and safety inspections
At each factory 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 inspections. TEL has also
set up a system for autonomous problem-solving at manufacturing sites, with safety inspections byrepresentatives from appropriate departments at least once per month.

92.7%

Support the security operations
Increasing the safety awareness of individual workers is crucial for providing worksites where all workers
can work safely. Therefore, before starting work at TEL manufacturing sites, all workers discuss the detailsof the job and the risks involved in an effort to prevent accidents. In addition, effort is also being directedto safety managers giving advice on how to manage hazards, as well as to the Stop Work Authority(SWA) program designed to compel workers to stop work and take corrective action in the event of an
unforeseen incident while on the job.

Wellness declaration
Based on the wellness declaration announced in 2012, we have promoted the improvement of employees’
exercise habits based on a program of Eat-Rest-Walk-Talk. At nine of our factories and offices in Japan,
we offer activities that allow employees to stay healthy every day, by giving employees small reminders
in their day-to-day life, such as healthy food choices at company cafeterias and body composition
measurement sessions.

2 Health age: An indicator showing
risk of lifestyle diseases, calculated
based on the results of an employee’s
medical checkup. The difference inyears with the employee’s actual
age is displayed, helping themunderstand their equivalent age interms of their health conditions.

Safety education
TEL promotes the creation of safe work environments by implementing two education programs globally.
Our program on basic safety targets all employees and is provided as introductory training for new hires
as well as refresher training every third year of employment. In total, more than 40,000 employees havecompleted this program. Our other program, advanced safety, targets employees working in clean rooms
and on production lines, and must be completed every year. To eliminate accidents, we also provide risk
assessment training and web-based training at offices and factories in Japan and overseas. Finally, we also
provide safety information to suppliers as part of our support for initiatives to prevent accidents.
As a result of having maintained a high priority on creating
safe work environments, TCIR2 has been maintained at or
below our target of 0.5, with 0.38 in fiscal year 2018.

39

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

1 Occupational Health and Safety
Management System (OHSMS): A
management system to improve
the overall level of safety andoccupational health

Initiatives for safety

Stress check take-up rate (Japan)

Self-care platform
We have introduced the Pep Up personal healthcare platform, enabling employees to get healthier bymonitoring their own state of health. The platform allows employees to easily check the results of their
medical checkups, and to record their daily health management data, such as weight, blood pressure andbody fat ratio. Other functions of Pep Up include offering employees information and suggesting activities
suited to their state of health. Health age2 is also displayed, incentivizing employees to improve their own
health.
Making the most of the platform, during fiscal year 2018, as well as holding walking events, we
distributed an activity tracker to help employees in managing their diet and exercise.

career aspirations and partner with them to grow their knowledge, skills, and abilities. All of these actions lead to a

TCIR

0.38

2 Total Case Incident Rate (TCIR): The
number of workplace accidents per
200,000 work hours

TOKYO ELECTRON SUSTAINABILITY REPORT 201840

Corporate governance
Governance framework

Managementfoundation

In order to become a truly global company that realizes sustainable growth, Tokyo Electron (TEL) takes into
consideration medium- to long-term perspectives on matters including the ESG and strives to strengthen
its management and technology base to establish a global level of profitability. Furthermore, we believethat it is important to build a governance structure to achieve this.
TEL adopts the Audit & Supervisory Board System, consisting of a Board of Directors and an Audit &Supervisory Board. The Board of Directors works to achieve sustainable growth and increase corporate
value over the medium- to long-term based on their fiduciary responsibility to shareholders. The current
Board of Directors meetings achieve an appropriate sense of productive tension and constructive debate
due to the presence of executive directors, essential for making operational decisions, and outside
members, who provide objectivity.
The Audit & Supervisory Board is part of a structure that enables its board members to obtain sufficient
information necessary for audits by collecting information through on-site surveys conducted by full-time
Audit & Supervisory Board members, and by maintaining appropriate coordination with the Internal Audit
Department and Independent Auditors. In addition, the balanced composition of Audit & Supervisory Board
members provides the knowledge required for operational audits and accounting audits, and we believethese board members are able to perform the company’s auditing functions effectively.

Initiatives to strengthen systems
Our Board of Directors strives proactively to resolve various issues related to sustainability with the aim ofenhancing corporate value. As one aspect of this, in addition to anti-corruption and compliance education
for members of the Board of Directors, we significantly increased the description of ESG initiatives as key
non-financial information in the Notice of Convocation for the Fiscal Year 2018 Annual General Meeting of
Shareholders.
Diagram of the corporate governance framework, internal control system and risk management system

Build a management foundation for increasing value

Shareholders' Meeting
Appointment or
dismissal

Board ofDirectors

Priority themes
The role played by companies in the realization of asustainable society is growing. Tokyo Electron (TEL)
recognizes the challenges in our social and businessenvironments, and our role, and will build a strong
management foundation that supports business activities.
We recognize that corporate governance is essential tosustainable growth for companies, and we strive not only
to comply with laws and implement compliance, butalso to build a world-class governance structure and tooperate an effective Board of Directors. In recent years,
climate change and abnormal weather conditions havebecome more serious on a global scale, therefore we arealso trying to further reduce the environmental impact of
our operations. TEL is promoting initiatives based on global
standards to realize sustainable operations not only within
our company but also in our supply chain.

41

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Appointment or
dismissal

Nomination Committee

Chief Business Ethics Director

Compensation Committee

Chief Internal Control Director

Chief CSR Director

Audit

Appointment or
dismissal

Audit &
Supervisory Board
Audit

Independent Auditors
Cooperate
Cooperate

Business execution
Representative
Directors
Audit

Internal Control & Compliance Executive Officer

Governance andcompliance

HumanrightsEnvironmental
management

Supply chain
management

CSS & Executive
Officers

Internal Audit Dept.
(Global Audit Center)

Ethics Committee
Information Security Committee
Export Trade Control Committee
CSR Management Council

Relevant SDGs

Audit

Risk Management Function(General Affairs Dept.)
Compliance Function (Legal Dept.)
Monitoring

Business Execution Organization

Decent work andeconomic growth

Climate action

Peace, justice andstrong institutions（All Division / All TEL Group companies)

TOKYO ELECTRON SUSTAINABILITY REPORT 201842

Management foundation

Board of Directors

Evaluating the effectiveness of the Board of Directors
TEL discusses and evaluates the effectiveness of the Board of Directors every year in accordance with the
TEL Corporate Governance Guidelines. This fiscal year, we again conducted a questionnaire of all directors
and Audit & Supervisory Board members regarding the effectiveness of the Board of Directors, theNomination Committee, and the Compensation Committee, covering June 2017 to April 2018. In addition
to the results of this questionnaire, exchange of opinion and deliberation was held, mainly among outside
directors and outside Audit & Supervisory Board members, which was shared with the whole Board of
Directors in order to evaluate the effectiveness of the Board of Directors.
The Board of Directors undertakes vigorous discussion by directors and Audit & Supervisory Board
members with a diversity of opinions and experience. Regarding important matters, we also undertake
close examination from the viewpoint of risk, and conduct frank discussion and careful consideration. Asidefrom the official Board of Directors meetings, we held off-site meetings, where we undertook deliberations
focused on topics related to management strategy and vision. In addition, the Board of Directors has
internal committees—the Nomination Committee reports to the Board of Directors on activities basedon the succession plan, and the Compensation Committee makes proposals to the Board of Directors
regarding the compensation system to enhance correlation with medium-term performance.
Based upon this, we believe that the Board of Directors, including the Nomination Committee andCompensation Committee, is functioning effectively and fulfilling its role as stipulated in the TEL Corporate
Governance Guidelines “to demonstrate the management strategy and vision” and “to make decisions
concerning important business administration based upon strategic orientation.”

The roles and responsibilities of TEL’s Board of Directors are “to demonstrate the management strategy
and vision,” “to make decisions concerning important business administration based upon strategicorientation,” and “to undertake open and constructive debate.” Members of the Board of Directors are
selected with emphasis placed upon diversity together with a balance of knowledge, experience andcapabilities within the Board overall. The 17 participants in the Board of Directors meetings, which consistof 12 Corporate Directors and 5 members of the Audit & Supervisory Board, is comprised of 6 members,
or over 30%, independent outside directors or outside Audit & Supervisory Board members, in order tosupport strong governance.
In the selection of executive directors, we seek people with outstanding execution capabilities backed byexperience, knowledge and achievements as a manager. They must also possess high sensitivity and theability to accurately analyze and judge all risks. Furthermore, they are required to believe in themselves andto be able to express their opinions directly in meetings.
With regards to independent outside directors or outside Audit & Supervisory Board members, they
are expected to express frank opinions from an independent standpoint and to guide discussion within
the Board of Directors in an appropriate direction so that the company can be competitive and succeed
globally. In making these selections, we aim to assemble talented people with a balance of expertise inglobal business, a wide range of knowledge concerning related industries, a diverse personal network, anobjective perspective in relation to society and capital markets, knowledge of finance, accounting and thelaw in general. In addition to requirements under the Company Act, TEL has established separate criteria to
avoid conflicts of interest with general shareholders, and to ensure the independence of outside directors
and outside Audit & Supervisory Board members.

Compensation policy

Formation of structure of directors and auditorsA

TEL emphasizes the following points in its compensation policy.
(1) Composition and levels of compensation with global competitiveness(2) Link with business performance in the short term, sustainable growth, and medium- to long-term
increase of corporate value(3) Securement of transparency and fairness in management and appropriateness of compensation
Based on the above policies, TEL has adapted a director compensation system that is closely linked toperformance and shareholder value. However, we have introduced a new medium-term performancebased compensation from August 2018 in order to better link director compensation to medium-term
performance and thereby achieve further growth. As a result of this, director compensation will consist of
fixed basic compensation, annual performance-linked compensation, and medium-term performancelinked compensation. Audit & Supervisory Board members’ compensation consists only of a basic fixedcompensation to maintain independence from management. Payment of retirement allowances, whichconstituted a significant portion of fixed compensation to Corporate Directors and Audit & Supervisory Board
members, was abolished in and after year-ended March 2006.

Nomination Committee

Board of Directors

B

C

D

F

G

H

E

I

J

K

L

Chairmanof the Board

Non-executive
officers

C

G

H

O

Compensation Committee

Audit & Supervisory Board

G
M

N

O

P

I

K

Q

Tax policy

InsideOutsidecompany company

In March 2018, TEL established its global tax policy. We are working hard to ensure transparency in our tax
affairs, by maintaining and improving our compliance structure, responding appropriately to changes inthe environment surrounding our international tax affairs.
As specific measures for our tax policy, we are working on the following:
1. Building of a tax risk management system, headed by the Chief Executive Officer (CEO)2. Payment of appropriate taxes in regions where value is created based on business strategies andbusiness activities, specifically without the purpose of tax avoidance
3. Building of relationships of trust with the tax authorities of each country

Executive message
In corporate management, I see creating and maintaining an appropriate system of governance as key to sustaining
and maximizing corporate value. True corporate governance, I believe, entails the building of a system which verifies
that all review processes and decision-making processes related to management policy and business strategy
contribute to the sustained improvement of corporate value, and which also monitors the implementation ofthese processes and provides feedback and feedforward for a better direction. It is also important that, in addition
to compliance, globally accepted standards of fairness and transparency, and a high level of business ethics beestablished as part of the corporate culture. Going forward, we will continue working over the medium- to long-termto ensure a world-class governance framework is created and that the Board of Directors operates effectively.

43

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

Tetsuo Tsuneishi
Representative Director
Chairman of the Board

TOKYO ELECTRON SUSTAINABILITY REPORT 201844

Management foundation
Risk management

ComplianceApproach to risk management

Approach to compliance

Along with changes to society and the business environment, the risks facing businesses have become
increasingly complicated and diversified. At Tokyo Electron (TEL), as we conduct our business, weunderstand the risks that we may face as well as their impact and we manage them appropriately, which
we consider to be a crucial factor in a company’s sustainable growth.

Stakeholder trust is essential to business activities. In order to maintain this trust, it is essential tocontinuously implement compliance and enhance corporate ethics. The Fundamental Policies concerning
Internal Controls within the Tokyo Electron (TEL) Group also stipulate that all TEL Group executives andemployees must act with high ethical standards and awareness of compliance.

Risk management system

Compliance systems and initiatives

In order to promote more effective risk management, TEL is working to strengthen its systems throughout
the entire company. TEL has established a dedicated risk management organization within the General
Affairs Department at our headquarters to promote enterprise risk management. This organization
identifies key risks by analyzing various risks in our business activities such as compliance risk, humanresource and labor risk and business continuity risks. Once critical risks have been specified, it can monitor
the respective departments responsible and support risk management activities. Their status is regularly
reported to the Board of Directors and the Audit & Supervisory Board.

Internal control & compliance system
TEL has appointed an Internal Control and Compliance Executive Officer as we strive to further boost
compliance awareness and implementation throughout the company. From April 2018, the Legal Department
operates as the main department overseeing compliance within the company and is working to further
strengthen the compliance system under the guidance of the Internal Control and Compliance Executive
Officer.

Auditing by the internal audit department
The Global Audit Center, which is the internal audit department for the entire company, implements auditing
based on the audit plan. With issues discovered through audits, they give instruction for making improvements,
follow up the state of improvements and provide support. For fiscal year 2018, we received assessment fromthe accounting auditors that internal control evaluation related to financial reports was effective.

Corporate ethics
TEL has established our Code of Ethics as the standard which employees should abide by, and has
produced booklets in Japanese, English, Korean and Chinese for distribution to employees in order toensure awareness. We revise the content when necessary in response to the changing demands of society.
TEL has also appointed a Chief Business Ethics Director and has established an Ethics Committee in orderto spread corporate ethics throughout the operations of our organization.

Initiatives for risk
In fiscal year 2018, we monitored risk management activities focusing on the following risks, andencouraged improvement.

Business Continuity Plans (BCP)
Following the experience of the Kumamoto Earthquake, reinforcement work was conducted for buildings
at bases in Japan to improve their seismic resistance above the Japanese standards. We are also working toestablish an alternative production structure using the company’s network and developing a multi-source
system for suppliers of important parts.

Mental health, long work hours and harassment
TEL is promoting measures to address employee mental health and long work hours. We are also
conducting harassment education and building mechanisms to manage mental health. Furthermore, wehave introduced a mechanism to check excessive workloads that lead to health risks, and we will continue
their implementation.

Compliance regulations
Based upon our Code of Ethics, TEL has established compliance regulations within the company in Japan andabroad to raise awareness of compliance. The compliance regulations are intended to ensure that all individuals
who take part in the business activities of the company clearly understand the pertinent laws and regulations,international standards and internal company rules, and consistently apply these rules in all of their activities.

Compliance education
We conduct online education for all employees concerning topics including the basics of compliance,
export compliance and the Subcontract Act. In addition, with the worldwide strengthening of enforcementof anti-corruption laws in recent years, in fiscal year 2018, we incorporated anti-corruption and antibribery aspects and implemented testing to check the degree of understanding among employees.
Furthermore, we conducted face-to-face training focused on the prevention of bribery of foreign public
officials for department heads, and another training emphasizing overseas subsidiary management for
directors and executive officers in order to deepen their understanding.

Internal reporting system
An ethics hotline and a compliance hotline have been established to receive internal reports from thecompany. From fiscal year 2018, we established an external contact point and another contact point
which suppliers can use, to create a system where it is easier to make a report. All of these hotlines accept
anonymous reports and guarantee that the caller will not suffer disadvantage from reporting.

The result of these initiatives is that there have been no reports or cases of noncompliance with laws,
regulations, or the Code of Ethics that could have had a material impact on the company’s business or
local communities.

45

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201846

Management foundation
Respect for human rights

Supply chain management

Our stance on human rights

Procurement principles and system

Conscious of its corporate social responsibility, Tokyo Electron (TEL) recognizes that it is important to
conduct itself with a strong sense of integrity. Based on this recognition, we have firmly upheld humanrights since our founding as reflected in the spirit of our Corporate Philosophy and Management Policies.
For us, respecting human rights means a significant undertaking, not only to fulfill our responsibility foreliminating adverse impacts on people caused through our business activities, but to respect those people
who support our business activities, and contribute to the realization of a sustainable dream-inspiring
society. We incorporate the concept of respect into every aspect of our business activities, and strive tonurture a dynamic corporate culture where each person can realize his or her full potential.

The high-value manufacturing that Tokyo Electron (TEL) strives for is based on the functions of
all materials and components that make up the products and the pursuit of high quality. We valuecommunications with suppliers and seek to grow manufacturing on a global scale with our suppliers basedon ongoing trusting relationships.
We engage in procurement activities in line with a procurement policy which we formulated based on
the laws, regulations, and social norms of each country as well as the RBA code of conduct, and which wehave disseminated internally and to our suppliers. Under the leadership of the TEL Representative Director,
President & CEO as the top of the procurement system, issues identified during procurement activities
are shared with the manufacturing company presidents’ council and the purchasing department manager
council for consideration of specific improvements.

Human Rights Policy
Amid growing demand for companies to respect human rights as a corporate social responsibility, we
published our Human Rights Policy in September 2017 as a summary of our approach to human rights
in business. With reference to the United Nations’ Guiding Principles on Business and Human Rights inaddition to the International Bill of Human Rights and the ILO Declaration on Fundamental Principles
and Rights at Work, we have specified the human rights we believe are particularly important in ourbusiness 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. We will establish assessment and remediation processes for dealing practicallywith human rights issues, such as identifying and assessing human rights risks and impacts, responding
to those risks and impacts, and reviewing the effectiveness of those responses. In addition, we will also
operate a whistle-blowing system, and establish effective human rights initiatives at the operational level.
In March 2018, we also implemented a human rights e-learning program targeting all TEL executives andemployees in an effort to facilitate communication on the basic principles and initiatives related to respectfor human rights. Moreover, we believe it is essential for our suppliers to also conduct their businessactivities with respect for human rights, and so ask them to comply not with only laws and regulations but
also with the RBA Code of Conduct.

Procurement initiatives
CSR procurement
With an aim of keeping track of its suppliers’ engagement in CSR activities, TEL has conducted a CSR Survey
since fiscal year 2014. The survey we conduct is in accordance with the RBA code of conduct. We analyze
the responses and provide feedback to suppliers in an effort to build on improvements. During fiscal year
2018, we surveyed key suppliers accounting for more than 80% of our procurement spend. Improvementsin overall rating level were observed at 21% of suppliers and improvements in overall raw scores were seenat 62%. No suppliers were engaged in any of the practices given particular emphasis in the RBA code of
conduct, namely child labor, forced labor, bonded labor, inhumane treatment, false reports, falsificationof records, or bribery. Neither were any suppliers of a sufficient size1 to be considered high risk in terms ofcompliance. Our endeavors also included strengthening partnerships by providing training programs on
the RBA code of conduct and confirming supplier agreement.
Supply chain CSR process

Executive message
Tokyo Electron Group’s Management Policies and Code of Ethics reflect the group’s commitment to acting ethically,
with integrity and respecting human rights in all our business relationships. In recent years, because of the emerging
concern within the various industries for better treatment of workers in supply chains, we publicly announced in June2015 that it joined the RBA® (Responsible Business Alliance formerly the EICC) and committed that we will be fullycompliant with the RBA Code of Conduct. Our European operation in line with our global standards is committed tochains with a continuous improvement approach.

47

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

STEP 1

STEP 2

STEP 3

Appeal for CSR activities
to suppliers

Supply chain
CSR assessment

Provision of feedback
based on the results, andrequest for improvements

Conflict minerals
TEL regards taking action against conflict minerals (3TG2) obtained through illegal exploitation, including
sources with human rights violations or poor working conditions, an important part of corporate social
responsibility. Our resolute goal is to eliminate the use of raw materials made from these conflict minerals
as well as any parts or components containing them.
In fiscal year 2018, we conducted our fourth annual survey on countries of origin and smelters ofpotential conflict minerals, using the reporting template (CMRT3) developed by the RMI.4 As a result, we
identified 249 RMAP5 conformant smelters, providing us confidence that 3TG sourced from these smelters
were conflict-free. None of the materials procured were found to contain conflict-affected 3TG.

Source: United Nations Human Rights Office of the High Commissioner

pursuing socially responsible practices and advocating respect for human rights in our operation and in our supply

1 500 employees or moreDavid BroughSenior Vice President and General Manager,
Global Strategy, President and Managing
Director, Tokyo Electron Europe Ltd.

2 3TG: Tantalum, tin, tungsten and gold
3 CMRT: Conflict Minerals Reporting
Template
4 Responsible Minerals Initiative (RMI):
An organization that inspects 3TG
smelters to certify they do not haveconflict minerals
5 Responsible Minerals Assurance
Process (RMAP): A program
promoted and led by the RMI for
auditing smelters/refiners that do
not use conflict minerals

Procurement BCP
As part of its Business Continuity Plan (BCP), TEL collaborates with suppliers for disaster preparation.
We maintain a database of suppliers’ production sites so that if a crisis arises, we can promptly identify
impacted suppliers and quickly collaborate in recovery efforts. During fiscal year 2018, about 17,000
supplier sites were registered, and post-disaster impact surveys were conducted six times.
We also conduct a BCP survey of key suppliers accounting for more than 80% of our procurement
spend. We analyze their responses and the results are given as feedback to suppliers to promotefurther improvement. In the fiscal year 2018 survey, as well as the regular questions on earthquake
countermeasures, questions on fire prevention measures were also set. Improvements in overall ratinglevel were observed at 21% of suppliers and improvements in the overall raw score were seen at 48%.

TOKYO ELECTRON SUSTAINABILITY REPORT 201848

Management foundation
Environmental management
Environmental risks and opportunities

Initiatives to prevent global warming and save energy

Climate change and other environmental issues require action by humanity as a whole. Physical risks, suchas rising temperatures, increased heavy rains and water shortages caused by abnormal weather, heighten
the risks to business, such as damage to assets, increased operating costs and impacts on the supply chain.
In terms of legal risks, tougher environmental laws and regulations require action at business sites and withproducts. At the same time, promoting environmental initiatives leads to more opportunities to provide
outstanding environmentally friendly products, reductions in operating costs, and further improvements incorporate reputation. Based on the requirements of ISO 14001, Tokyo Electron (TEL) identified and analyzed
internal and external issues in relation to the environment, namely, its relationship with the climate, air quality
and water quality. We also identified the environmental needs and expectations of customers, suppliers,
governments and employees, as well as the company’s compliance obligations. From this information, we
have set the following as our risks and opportunities to address: (1) environmental management by reducing
the environmental impact of our business activities, (2) compliance with applicable laws, and (3) enhancing
product competitiveness with the environmental contribution of products.

Each TEL factory and office has an established goal of reducing energy consumption by at least 1%
year-over-year. Initiatives to achieve this goal include energy-saving clean room operation, appropriate
temperature settings for office cooling and heating, the introduction of highly energy-efficient equipment,
and the adoption of renewable energies.
As a result of these initiatives, in fiscal year 2018, we reduced energy consumption per unit sales at ourfactories and offices by 21% year-over-year. However, an increase in our volume of production and anincrease in energy consumption associated with product development and evaluation resulted in power
consumption of 282 GWh in fiscal year 2018, up 11% year-over-year; and energy-derived CO2 emissions*of 152 kilotons, up 8% year-over-year. Based on the correlation between business operations and energyuse, we changed to an appropriate metric at factories and offices in Japan, and standardized it across thecompany. Specifically, we adopted a metric calculated using a complex weighting of data from each areaon the number of evaluation units used in development, the number of units produced, total floor area andman-hours. Of all 11 of our factories and offices, both those overseas plus those in Japan that had set goals
based on this method, goals were achieved at 6 of them.

Environmental management system* In calculating CO2 emissions, theemission factor for TEL’s electricity
consumption in Japan in fiscal year2018 was substituted by adjusted
emission factors for the electrical
power providers concerned. The
emission factor for TEL’s overseas
electricity consumption was
substituted by estimated factors
calculated by the Federation ofElectric Power Companies of Japan
based on values published by theInternational Energy Agency (IEA).

Energy consumption reduced at business sites

To continuously improve its environmental activities, TEL has operated an environmental management
system based on ISO 14001 since 1997, primarily at its manufacturing subsidiaries. In March 2017, we
acquired multi-site ISO 14001 certification for our factories and offices in Japan that had previously
acquired certification separately. Coinciding with the multi-site certification, we have developed astandardized company format for environmental impact assessments, the identification of usefulenvironmental aspects, environmental management programs and internal audit checklists. During fiscal
year 2018, we established approximately 100 environmental goals for different levels across the entire
company and carried out these improvement activities. We also set up a system at our Head Office for
confirming the progress of activities at each of our sites in Asia. Progress of activities and compliancewith laws and regulations are confirmed through internal audits and third-party audits. In May 2018, we
obtained ISO 14001 certification for our TEL Epion and TEL NEXX sites in Massachusetts in the UnitedStates. The issues identified through these activities are reviewed by the EHS Council, reported to the
Manufacturing Company Presidents’ Council, and used in promoting environmental activities across theentire TEL Group. Under such a management system, fiscal year 2018 was again free from environmental
incidents, accidents, violations and associated legal proceedings.
ISO 14001 certified factories and offices
Company nameFactory/Office name

Certification dateTokyo Electron

Q-EHS Promotion Center(Fuchu Technology Center)

Tokyo Electron Technology Solutions

Yamanashi Office (Fujii/Hosaka),
Tohoku Office

Tokyo Electron Kyushu

Koshi/Ozu Office

Tokyo Electron Miyagi

Taiwa Office

Tokyo Electron (Kunshan)�March 2013

TEL FSI�March 2013

Tokyo Electron Korea

Balan Factory

July 2014

TEL Epion�

TEL NEXX�

21% reduction(compared to FY2017, per unit sales)

Example initiative
As a way of conserving energy and combatting global warming, we are proceeding to switch to LED
lighting. During fiscal year 2018, we progressively replaced the lighting at our factories and offices in Japan.
As a result, we estimate that this has a reduction effect equivalent to power consumption of 1,350 MWheach year, or approximately 600 t-CO2 of energy-derived CO2 emissions.

Renewable energy initiatives
We promote the use of renewable energies. At the Taiwa and Yamanashi Offices, renewable energy generated
from solar panels is used to power the factories, and monitors displaying their energy profile have been set
up at the entrances to the factories. At our Koshi Office, generated energy is sold, helping to prevent global
warming. In fiscal year 2018, we generated a total of 4,414 MWh of renewable energy in Japan.
In addition, Tokyo Electron U.S. Holdings has continued to purchase green power, 3,458 MWh in fiscal
year 2018.

May 1998

May 2018

Yamanashi Office49

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201850

Management foundation

Initiatives to reduce water consumption

Management of chemical substances

Recognizing that the preservation of water resources is a social issue, TEL has established a goal of keeping
water consumption at the same level or below that of the baseline year (fiscal year 2012 for factories andoffices in Japan and a fiscal year of their choosing for each overseas operation). Our ongoing efforts toachieve these goals include reusing pure water from our manufacturing operations, installing water-saving
devices, watering lawns with rainwater, and implementing intermittent operation of cafeteria faucets.
During fiscal year 2018, an increase in our volume of production and an increase in water consumption
associated with product development and evaluation resulted in water consumption of 1,135,000 m3, up
7.6% year-over-year. Compared to the baseline year, though, this represents a 4.7% decrease. Moreover, weachieve 11 of the 14 goals at our sites worldwide. We also discharged an estimated 905,000 m3 of wastewater.

TEL uses chemical substances in its product development and manufacturing phases. The use and release ofchemical substances subject to the Japanese PRTR* law are constantly monitored and managed. Whenever
we introduce a new chemical substance or change the way an existing substance is used, we check forenvironmental, health, and safety risks beforehand. We dispose of substances properly after use, either
through expert waste disposal contractors or by using in-house processing equipment. In response to the Act
on Rational Use and Proper Management of Fluorocarbons, we conduct simple, regular inspections based on
the law in an effort to monitor the amount of fluorocarbons used and recovered. During fiscal year 2018, no
TEL factories or offices exceeded the level of ﬂuorocarbon leakage that requires reporting.

* Pollutant Release and Transfer
Register (PRTR): A framework for
tracking, tabulating, and disclosing
quantitative data on chemical
substances that may be hazardous
to human health and the ecosystem,
including the amounts used anddischarged into the environment
and the amounts transferred (as partof waste) off the original business’s
premises

Material balance of substances regulated under the PRTR Law

Water consumption at business sites

4.7% reduction

Amount handled

100 tons per year(compared to baseline year)

Example initiative
A cooling tower is utilized to remove heat from coolant used in a turbo refrigerator, which is used toair-condition clean rooms. At the Tokyo Electron Kyushu Koshi factory, we have promoted a reductionin blow-off water1 by installing a system in the cooling tower to prevent scale2 from building up. It isestimated that introducing this system has had a reduction effect equivalent to about 5,000 m3 per year.
Added benefits of the system are that it also lengthens the life of pipes by preventing corrosion, and it
reduces time spent cleaning by controlling algae.

1 Blow-off water: Water that is drained
from equipment and pipes to preventan overconcentration of impurities in
the water

Waste

2 Scale: An inorganic salt compound(calcium, magnesium, etc.) containedin water, which hardens on thesurface of equipment and pipes

Initiatives to reduce waste

Consumption

In an effort to curb the amount of waste generated and to recycle it wherever possible, TEL promotes
initiatives for reducing waste. In addition to participating in the electronic manifest system3 to ensure
proper waste management, we are also engaged in maintaining an appropriate amount of parts inventory
and in reusing cushioning material. We are also achieving lower waste processing costs, by promoting
waste sorting activities and by modifying and increasing the capacity of space used for storing waste so
as to reduce the frequency that it is collected. In fiscal year 2018, we generated 133 tons of incinerated andlandfill waste in Japan. As a result of our waste-reduction initiatives, the recycling rate4 at sites in Japan in
fiscal year 2018 was 99.0%, achieving our goal of maintaining a recycling rate of 97% or higher for the 12th
consecutive year since fiscal year 2007. We have also maintained a high level of recycling at our overseas
factories and offices of 87.7%.
Recycle rates at business sites in Japan
Achieving goal: 12th consecutive year

99.0%

95 tons per year

3 Electronic manifest system: A systemfor electronically tracking the flowof industrial waste instead of using
paper-based manifests (i.e. paper
forms for tracking industrial waste).
The system uses a communications
network of data processing centers,
businesses that generate waste, andwaste collection/disposal companies.
4 Recycling rate: (Recycled amount /Amount of waste generated) x 100

Note: Transferred to sewage, onsite landfill, removed,
recycled, released into the air, and released into
the water are omitted because those amountare less than 100 kg

5 tons per year

Biodiversity

URL

www.tel.com/csr/environment/office/In a global environment, a wide variety of organisms exist, interacting and engaging with each other. In
carrying out its business activities, the TEL Group has a not insignificant impact on biodiversity, and yet
without the benefits yielded from biodiversity, the company could not sustain its activities. In recognitionof this, we will develop a framework for promoting initiatives in an effort to conserve biodiversity.

Environmental communication

URL

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

TEL’s environmental policy requires that, based on a shared understanding with a broad range ofstakeholders, we promote cooperative partnerships with them, and we take appropriate steps to live up
to their expectations. In promoting initiatives for the environment, we will maintain close communication
with all our stakeholders.

Green procurement

URL

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

In cooperation with our suppliers, TEL promotes green procurement, prioritizing the purchase ofenvironmentally friendly parts, products and materials.

51

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201852

Social contribution activities

Initiatives around the world
Tokyo(Head office)Approach to social contribution activities
The aim of social contribution activities by Tokyo Electron (TEL), are to contribute to the development of local communities and theresolution of social issues through various initiatives while deepening stakeholder trust. With Innovation and Technology, Education,
Environment, and Community Involvement as our four focus areas, we conduct activities according to the United Nations SDGs.*

TEL FOR GOOD is the new brand name that represents TEL’s social contribution activities. From fiscal
year 2019, we are using it as a collective term for social contribution events and various programs,
donations and volunteer activities sponsored by our company around the world.

The Tohoku Forum for Creativity(TFC) is an international visitor
research institute located within
Tohoku University. TEL has been
providing comprehensive support
to the TFC ever since the House of
Creativity was established in 2013.
At the TFC, specific strategic themes
are selected from various scientificdisciplines by weighing the challenges
facing mankind and the trends inworld affairs. Nobel laureates and other globally prestigious researchers are theninvited, and students and junior researchers are provided with an opportunity to
deepen their research over a period of one to three months.

Tokyo(Head office)Education

Environment

Tobitate! (Leap for Tomorrow) Study Abroad Initiative

The Tobitate! (Leap for Tomorrow)
Study Abroad Initiative is acollaborative project between the
Ministry of Education, Culture, Sports,
Science and Technology (MEXT)
and the private sector with a goalof sending 10,000 high-school anduniversity students abroad to study
by 2020. TEL has been supporting
this initiative from its launch in 2013,
based on the belief that nurturing talented people over the long term is a source of
momentum to business and society.

4 focus areas and relevant SDGs

Innovation andTechnology

Tohoku Forum for Creativity at Tohoku University

Tokyo Electron Forest

Tokyo Electron Technology Solutions’
Yamanashi Office conducts treeplanting activities at the Tokyo
Electron Forest. In July 2017, 135 people
including the employees and theirfamilies banded together to plant
some 1,200 konara oak and maple
saplings. This ongoing event has been
held since 2010 as an initiative to bothrespect biodiversity and to pass on therich natural and cultural resources of the forest to future generations.

EuropeSupport for areas affected by the
Kumamoto Earthquake

Support activities provided by Tokyo Electron Kyushu in response to the April 2016 Kumamoto
Earthquake include matching donations collected from TEL Group employees and donating emergency
supplies to nearby municipalities. At the request of local governments, we donated and distributed
some 8,000 disaster protection hoods to nearby elementary schools, with advice to children on theimportance of always being prepared for emergencies. Other activities included donating 5,000
emergency medical information kits for people requiring evacuation assistance, and helping to set
up container storage facilities for evacuees living in temporary housing to store their household
possessions.
In February 2017, we also initiated support for construction of a well to assist residents of Minamiasomura in rebuilding their lives. After drilling a deep well, an aquifer containing drinking-water was reachedin May, and a suite of necessary equipment was donated in July 2017, including a pump capable of drawing
300 tons of groundwater per day.

SEMI High Tech U

Tokyo Electron America hassponsored and partnered withSEMI High Tech U for many years.
Over 30 students from highschools around the area are invited
to Austin campus, where they
participate in a 3-day program ofpresentations, laboratory work andother events. Through hands-on
learning, students are given theopportunity to think about careers in high-tech.

Korea

Korean Conference on Semiconductors

Looking to contribute to developmentof new technologies and growth of
the semiconductor industry, Tokyo
Electron Korea has been sponsoringand participating in the Korean
Conference on Semiconductors—thecountry’s largest industry event—since 2015. Attracting about 1,300
researchers and students every year,
the conference features presentations
on the latest studies and encourages the exchange of information.

Community
involvement
Yamanashi

SPECIAL TOPIC

U.S.

Crawley Christmas charity days

At Tokyo Electron Europe’s Crawley Headquarters, theproceeds from its 2017 Christmas raffle were used tosupport the charity, Home Start CHAMS. Home Start
CHAMS helps parents of socially excluded children
to provide the children with opportunities to change
their life. We also support Christmas Jumper Day,1 an
event planned by Save the Children.2

TaiwanBeach cleanup for preserving a beautiful coastline

In June 2017, Tokyo Electron Taiwan helda charity event to coincide with its beachcleanup in Hsinchu City, pledging to makea donation proportionate to the numberof participants and the volume of waste
collected. On the day of the event, many
ordinary residents who happened to beat the beach joined with the more than150 employees and volunteers, collecting
over 300 kg of waste. This resulted in a donation of TWD 450,000, which was given to the
National Nantou Special School.

China

Liver Transplant Program for Children

The Liver Transplant Program forChildren aims to help children withliver disease and to increase awarenessof this area. In 2017, Tokyo Electron(Shanghai) donated 20,000 CNY tothe program. Since the start of the
program, the associated foundation
has helped 170 children to receive an
operation and begin a new life.

1 Christmas Jumper Day: an event in which employees donate 2 pounds and wear their Christmas jumper towork
2 Save the Children: a global, non-governmental charity which provides healthcare, education, protection andfood to millions of children around the world

53

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201854

Performance summary (Social)

Composition of employees

Employee retention (Japan)
FY2014FY2017FY2018FY2014

10,531

10,306

10,92011,696

Japan

6,985

6,853

6,737

6,967

7,268

Rest of Asia

1,443

1,386

1,543

1,850

2,218

955

670

440

448

492

1,652

1,622

1,586

1,655

1,718

Europe and Middle East
North America

FY2014

Employees(Employment type/Japan)

FY2016

11,035

Number of employees

Regular employees(Region/Group)

FY2015FY2015FY2016FY2017

Men

Employee retention

FY2018

7,271

7,166

7,060

7,288

7,516

Regular employees

6,985

6,853

6,737

6,967

7,268

Men

6,100

5,982

5,874

6,079

6,292

Women

885

871

863

888

976

286

313

323

321

248

Men

162

183

201

209

181

Women

124

130

122

112

67

Turnover

167

154

73

24

72

163

Men

132

65

20

70

131

Women

22

8

4

2

32

30–49 yrs old

3

0

1

0

4

Men

3

0

1

0

4

Women

0

0

0

0

0

Over 50 yrs old

0

0

0

0

0

Men

0

0

0

0

0

Women

0

0

0

0

0

14.0

11.0

16.0

2.8

19.2

34

62

66

279

262

5

11

17

102

102

Men

0

3

13

85

85

Women

5

8

4

17

17

30–49 yrs old

Under 30 yrs old

Female managers (Group)

Reemployment system

27

45

47

170

156

Men

16

29

31

155

135

Women

11

16

16

15

21

Over 50 yrs old

2

6

2

7

4

Men

2

4

2

6

3

Women

0

2

0

1

1

Percentage of women

47.1

41.9

30.3

11.8

14.9

Percentage hired (TEL)

1.80

2.00

1.96

2.13

2.22

Percentage hired (Group)

1.90

1.94

1.98

1.98

1.91

Number of people

30

32

39

42

20*

Percentage

1.2

1.3

1.5

1.6

1.8*

Number of users

68

74

101

125

156

Men

68

74

98

123

155

Women

0

0

3

2

1

82

69

49

34

31

Number of users

Second career support
system

FY201872

Number hired

Employees withdisabilities

FY201725

Percentage of women

Career-track recruits

FY2016
73

Under 30 yrs old

New graduates hired

FY2015

Men

68

59

43

30

30

Women

14

10

6

4

1

100.0

100.0

100.0

100.0

100.0

Percentage of regular employees who received regularperformance and career evaluations* Grade resetting through global human resources system

55

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

FY2018

95.0

94.2

93.6

92.9

93.4

95.8

95.0

94.1

94.1

94.3

90.3

90.2

85.2

87.1

16 yrs.4 mos.

17 yrs. 0 mos.

17 yrs. 1 mos.

17 yrs. 1 mos.

Men

15 yrs.9 mos.

16 yrs.6 mos.

17 yrs. 2 mos.

17 yrs. 4 mos.

17 yrs. 4 mos.

Women

14 yrs.3 mos.

15 yrs.3 mos.

16 yrs. 0 mos.

15 yrs. 5 mos.

15 yrs. 7 mos.

122

198

131

102

103

Men

89

164

94

82

82

Women

33

34

37

20

21

1.6

2.7

1.8

1.4

1.4

Work-life balance (Japan)
FY2014
Annual paid leave

Paternity leave

157

FY2017* Average in recent five years

Recruitment/employment (Japan)
FY2014FY2016

91.3

Turnover percentage

Refreshment leave

Number hired

FY201515 yrs.7 mos.

Women
Average service years

Employee turnover

Number of employees

Non-regular employees

Retention after three years of
joining TEL*

Shorter working hoursystem

61.8

62.6

64.1

64.3

772

1,285

1,045

586

639

Men

663

1,091

926

499

556

Women

109

194

119

87

83

Number of those who took leave

211

192

172

179

180

Number of those who took leave

70

52

42

44

41

3

3

2

2

4

67
(94.6)

49(94.5)

40(93.3)

42(95.7)

37(93.2)
44

Women (percentage who
took leave)
Number of those who
returned to work after leave

53

46

46

44

Men

3

2

1

2

6

Women

50

44

45

42

38

Percentage reinstated

93.0

88.5

85.2

93.6

93.6

Retention rate

97.4

94.3

91.3

95.7

90.0

Number of those who used

159

183

188

170

176

Men

8

11

13

23

24

Women

151

172

175

147

152

435

460

453

464

455

Men

240

246

245

263

281

Women

195

214

208

201

174

92

96

103

106

120

Men

17

24

15

16

19

Women

75

72

88

90

101

2

2

0

2

3

Men

0

0

0

1

2

Women

2

2

0

1

1

22

20

31

50

47

Men

13

11

10

31

25

Women

9

9

21

19

22

1

1

0

0

0

Men

1

1

0

0

0

Women

0

0

0

0

0

Number of those who took leave

Extended nursing care
leave

Number of those who took leave

Short nursing care leave

Number of those who used

Shorter working hoursystem for nursing care

FY201859.6

Number of those who took leave

Childcare support leave

FY2017

Number of those who took leave

Number of those who used

Leave to care for a sick/injured child

FY2016

Take-up rate

MenChildcare leave

FY2015

SafetyFY2014
Percentage of employees who received training on basic
safetyPercentage of employees who received training on
advanced safety

FY2015100

FY2016100

FY2017100

FY2018
100

100

100

100

100

100

100

Lost time incident rate (LTIR)

0.82

0.53

0.42

0.46

0.77

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

0.37

0.24

0.21

0.28

0.38

TOKYO ELECTRON SUSTAINABILITY REPORT 201856

Performance summary (Social)

Performance summary (Environment)

Energy consumption/generation

Products/Innovation
FY2014FY2015FY2016FY2017FY2018FY2014

Total number of incidents of non-compliance withregulations and voluntary codes concerning the healthand safety impacts of products and services

0

0

0

0

0

Number of active issued patents

Active issued patents(country)

16,376

16,421

16,30016,023

16,767

Japan

5,227

5,288

5,172

4,984

5,091

North America

4,299

4,326

4,361

4,224

4,321

Europe

439

354

241

199

185

Korea

2,875

2,847

2,784

2,672

2,864

Taiwan

1,889

1,983

2,131

2,387

2,675

China

1,647

1,623

1,611

1,557

1,631

CY2012Global patent application rate
Patent application
success rate

CY2013

CY2014

CY2015

70.3

69.5

68.0

70.0

76.1

74.0

78.0

66.5

71.5

North America

66.8

62.8

71.2

72.3

78.0

* Calendar year when patents were filed/granted

Customers
Percentage of customers who said they were satisfied in
the customer satisfaction survey

�

FY201680.5

FY2017
81.1

Electricity

Gas

82.6

Green power

Total number of critical incidents notified to Board of
Directors
Total number of incidents subject to legal action on thebasis of anti-competitive conduct, anti-trust activity,
or monopolistic practices where the governance body’s
involvement was revealed
Number of executive officers who received training on
anti-corruption*
Total number (percentage) of directors who provided
instructions on the body’s policies and procedures inrelation to anti-corruption*

�

FY2016
�

0

FY2017
�

0

0

0

0

�

�

PV power generation
system

58,92754,97352,002

52,67659,670Overseas

20,432

18,44815,497

14,781

15,419295,215274,368

254,201

253,300

282,275

Japan

222,976

208,753

198,404

200,547

226,748

Overseas

72,23965,61555,79752,75355,527

3,877

3,501

2,748

2,877

3,141

Japan

2,027

1,929

1,602

1,666

2,006

Overseas

1,850

1,572

1,146

1,211

1,135

1,160

871

706

797

874

1,156

870

706

796

873

4

1

0

1

1

2,618

2,405

3,833

3,334

3,458

0

0

0

0

0

2,618

2,405

3,833

3,334

3,458

4,724

4,559

4,486

4,436

4,414

4,698

4,536

4,486

4,436

4,414

26

23

0

0

0

1,439

1,337

1,331

1,346

1,386

1,439

1,337

1,331

1,346

1,386

0

0

0

0

0

Power sales (MWh)*Japan
Overseas* Heating, cooling and steam not sold��

11 (100)

12 (100)

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

�

�

�

9 (81.8)

9 (75.0)

Payment to industry groups, etc. (thousand yen)

�

�

�

�

16,616

Payment to political affiliated organizations (yen)

�

�

�

�

0

Average tenure of directors

�

�

�

�

8.04

Average rate of attendance for board meetings

�

�

�

�

99.46
* Scope: Japan

Compliance
FY2014
Percentage of employees who have received web-based
training on business ethics and compliance
Percentage of employees who have consented to theinformation security agreement
Significant fines and non-monetary sanctions for noncompliance with laws and regulations in the social andeconomic area

FY2015FY2016FY2017

Environmental impact of logistics
FY2014Emissions (kt)
CO2

Japan
Overseas

Proportion of marine transport (international)

FY2015FY2016FY2017FY2018

54

74

65

97

122

3

5

6

7

12

51

68

59

90

110

42.2

31.0

36.1

31.9

36.4

FY2018

100

99.7

98.4

98.0

99.4

100

100

99.9

99.9

99.9

0

0

0

0

0
* Scope: Japan

Procurement
FY2014FY2015FY2016FY2017FY2018Percentage of new important suppliers screened usingsocial criteria

�

�

100

100

100

Rate of improvement after supply chain CSR assessment(including green procurement survey from fiscal year 2016)

�

25.3

33.8

16.9

20.7

Rate of improvement after supply chain BCP assessment

�

41.2

26.5

32.3

21.2

Number of identified RMAP conformant smelters

�

117

204

237

249

Electricity consumption

CO2 emissions from logistics and the proportion of marine transport(Million kWh)

(kt)

223.0

FY2014
Spending on social contribution (million yen)

FY2015FY2016FY201772.2

FY2018

259

184

277

242

238

Charity donations (providing
donations/relief supplies tocharity organizations)

5

2

14

17

13

Community investment(charitable expenses for longterm cause for community)

38

47

52

43

38

Commercial initiatives (charitable
expenses with anticipated effects
on business growth)

57

51

34

40

49

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

208.8

198.4

200.5

226.7

2014
Japan

2015
Overseas

55.8
2016

52.8
2017

55.5
2018

5

3

68

51
(FY)

2014
Logistics in Japan

65

2015

36.4

31.9
97

54
65.6

36.1

31.0

42.2

74

Social contribution

57

Japan

Overseas13�Cash donations
breakdown

75,089

Japan

0

12

67,457

Overseas

Power sales�

67,499Power generation (MWh)FY2018
1

73,421Japan

Governance
FY201579,359Purchase (MWh)* Change from last year’s report: Boundaries changed to all products

FY2014

0.66

Overseas81.2

FY20180.84

Japan

FY2018FY2017
1.02

Consumption(crude oil equivalent) (kL)FuelFY2016
1.20

Consumption (MWh)CY2016*78.0

FY2015

EnergyFY20151.30

Consumption(crude oil equivalent) (kL)Japan

FY2014

Consumption metric(energy consumption/sales)(kL/billion yen)Consumption(crude oil equivalent) (kL)

6

122

12

7
110

90

59
2016

Overseas logistics

2017

2018

(FY)

Proportion of marine transport ininternational logistics (%)

TOKYO ELECTRON SUSTAINABILITY REPORT 201858

Performance summary (Environment)

Amount of waste generated

Greenhouse gas consumption/emissions
FY2014

CO2 from energy
consumption

FY2016FY2017FY2018FY2014Emissions metric (sales)(t/billion yen)

2.57

2.61

2.22

1.77

1.34

Emissions (kt)

157

160

148

141

152

121

Japan

115

110

119

35

33

31

11

10

8

8

9

Japan

8

7

6

6

7

Overseas

4

3

2

2

2

33

146

151

140

133

143

Japan

113

119

109

104

112

Overseas

33

31

30

29

31

3,651

3,566

3,491

4,028

5,855

21

22

33

28

26

HFCs

3

2

1

3

3

PFCs

7

6

8

8

11

Scope 22 emissions (kt)

Scope 33 emissions (kt)
Emissions (kt) (Japan)

Non-energy-derived
greenhouse gas

126

36

Overseas
Scope 11 emissions (kt)

CO2 by scope

FY2015

SF6

11

14

17

9

4

Other

0.01

0.01

6

8

8

Waste
Specially controlledindustrial waste
Recycling

14,435

Japan

8,780

8,858

7,721

11,393

13,694

Overseas

1,185

1,206

663

925

741

Amount generated (t) (Japan)

2,627

2,842

2,125

3,683

4,904

Recycled amount (t)

9,421

9,828

8,182

12,128

14,211

8,608

8,764

7,599

11,281

13,561

813

1,064

583

847

650

544

236

202

190

224

Japan

172

94

122

112

133

Overseas

372

142

80

78

91

Amount of waste (t)Water discharge volume(thousand m3)

�

�

904

874

905

Japan

�

�

750

709

759

Overseas

�

�

154

165

146

Chemical substances consumption/emissions (Japan)
FY20142 Scope 2: Indirect GHG emissions from use of electricity, steam and heat purchased by TEL
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

PRTR Class I designatedchemical substances

Resource consumption
FY2014

Copier paper

FY2016FY2017FY2016FY2017FY2018Volume handled (t)

94

48

35

64

100

Ferric chloride

82

38

21

33

82

Hydrogen fluoride and its
water-soluble salts

6

7

9

25

12

Methylnaphthalene

4

2

4

5

5

Other

2

1

1

1

1

90

46

31

59

95

Amount transported(waste amount) (t)FY2018FY2015

1,670

1,546

1,076

1,055

1,135

4

2

4

5

5

1,058

1,043

896

861

958

NOx

Emissions (t)

9.7

12

7.5

7.9

11.5

Groundwater

297

327

226

177

233

SOx

Emissions (t)

2.8

2.7

2.2

2.5

2.7

Tap water

471

416

368

385

379

Industrial water

Japan
Water

FY2015FY201812,318Overseas

Water discharges

FY2017
8,384

Japan

Incinerated and landfillwaste

FY2016

10,064

1 Scope 1: Direct GHG emissions from use of fuel and gas owned or controlled by TEL

Consumption (thousand m3)

FY2015
9,965

Amount generated (t)

290

300

302

299

346

Overseas

612

503

180

194

177

Use (t) (Japan)

116

162

128

157

194

Consumption (t)Other
FY2014
ISO 14001

Biodiversity

Environmental laws andregulations

FY2015FY2016FY2017FY2018

Number of certified offices

10

8

7

8

9

Japan

7

4

4

5

5

Overseas

3

4

3

3

4

Number of ecosystem tours*

16

13

15

18

22

42

69

281

396

718

0

0

0

0

0

0

0

0

0

0

16,331

13,596

17,342

20,445

Number of ecosystem tour
participants*
Number of breaches ofenvironmental laws
and regulations
Amount of fines onlegal breaches

Total product shipment (t)*34,110* Scope: Japan

CO2 emissions from energy consumption

Water consumption(kt)(thousand m3)

126

121

115

1,058
297

612
36

35

33

31

471

33

Japan

2015

2016

Overseas

2017

2018

(FY)

2014

TOKYO ELECTRON SUSTAINABILITY REPORT 2018

896

327

503

302
2015

Industrial water (Japan)

180
2016

Tap water (Japan)

299

98.4

2017

346

94

177

Groundwater (Japan)

(FY)

2014

100
2
4
6

64
48

172

2018

99.0

Target: Maintain recycling rate of
97% or more

379

194

99.0

94

233

385

368

98.9

958

861
177

226

300

Overseas use

59

1,043

416

290
2014

Volume of PRTR Class I designated chemical substances handled in Japan
(t)

98.0

119

110

Recycling rate/generation of incinerated and landfill waste in Japan

2015

122

2016

112

2017

82

133

2018

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

(FY)

2014

1
2
7
38

2015

35

2016

1
4
9
21

1
5
25

1
5
12

82

33
2017

2018

Ferric chloride

Hydrogen fluoride and its water-soluble salts

Methylnaphthalene

Other

(FY)

TOKYO ELECTRON SUSTAINABILITY REPORT 201860

Corporate Profile

Corporate profile
Company name: Tokyo Electron Limited
Address:		Akasaka Biz Tower
3-1 Akasaka 5-chome, Minato-ku, Tokyo
107-6325, Japan

Established:

November 11, 1963

Representative: Toshiki Kawai
Representative Director,
President & CEO

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

Capital:54,961 million yen

Number of employees: 12,373 (consolidated)		
1,455 (non-consolidated)
Number of locations:
		
		
		
		

Japan: 7 companies at 27 locations
Outside Japan: 27 companies at 49 locationsin 15 countries and regions
Worldwide total: 34 companies at 76 locationsin 16 countries and regions(as of April 1, 2018)

Financial data
Earnings Release:
URL

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

Securities Report:
URL

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

Tokyo Electron’s logo
Our logo was created as a symbol for Tokyo Electron’s 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 Tokyo Electron’s leading-edge advanced technology.
We contribute to the development of a dream-inspiring society through ourleading-edge advanced technology and reliable service and support.

61

TOKYO ELECTRON SUSTAINABILITY REPORT 2018TOKYO ELECTRON SUSTAINABILITY REPORT 201862