TOKYO ELECTRON

Sustainability
Report 2016

Cover art, “reflectwo (green)” by Haruka Kojin, is one of the exhibits of the solaé art gallery project.

Editorial policy
With the publication of the fiscal year 2016 edition, the title of the report has been changed from “Environmental andSocial Report” to “Sustainability Report”. Efforts are also being made to communicate more clearly about TEL’s roles
and responsibilities in promoting sustainable society and about specific activities toward achieving this goal.
Recognizing the importance of stakeholder communication, we made every effort to improve the quality andorganization of the report, so readers can understand the positioning of CSR (Corporate Social Responsibility) at TEL
and the policies and initiatives for advancing CSR. In this edition, we explain the connection between society andTEL’s medium- to long-term management plans. We also clearly describe the goals and activities of each department
to demonstrate our commitment to solving social issues through business operations and enhancing overall corporate value. To find out more, please visit us at www.tel.com.
TEL will continue to promote CSR, including the disclosure of information in a transparent manner. Your candid
opinions and inputs on this report are highly appreciated.
[Scope of disclosure]
Updatefrequency

Website:http://www.tel.com/environment/index.htm

Sustainability
ReportAmount of information

Organizations covered
Although some content covers only TEL subsidiaries in Japan, this report covers the entire TEL Group, 38 consolidated
companies around the world. In April 2014, the status of Tokyo Electron Device Limited changed from being a consolidated subsidiary to an equity-method affiliate.

Period covered
Although some content covers fiscal year 2017, this report principally covers fiscal year 2016 (from April 1, 2015 toMarch 31, 2016).

Publication dateCurrent report: July 2016
Next report:
Scheduled for July 2017
Previous report: July 2015

Reference Guidelines
The G4 Sustainability Reporting Guidelines, GRI（Global Reporting Initiative）
Environmental Reporting Guidelines 2012, Ministry of the Environment, Government of Japan

Contact
Tokyo Electron Limited
CSR Promotion Department
Akasaka Biz Tower, 3-1 Akasaka 5-chome, Minato-ku, Tokyo 107-6325, Japan
Tel: +81-3-5561-7000
URL http://www.tel.com/contactus/index.htm

2

TOKYO ELECTRON Sustainability Report 2016

Table of contents
Editorial policy
Table of contents

23CEO’ s message

4

CSR operations

TEL’ s Corporate Philosophy and CSR
Stakeholder communication
Social issues surrounding our businessBusiness opportunities and mid-term vision
Materiality assessment

6
7
8
9
10

Innovation

Innovation management
Protecting and using intellectual property

12
13

SafetyHighlights, Goals and results, Framework
Improving employee safety
Improving customer/Product safety

15
16
17

QualityHighlights, Goals and results, Framework
Product quality
Streamlining operations
Consideration for customers

19
20
21
22

Procurement

Highlights, Goals and results, Framework
Sustainable supply chain
Supply chain communication

25
26
27

Our people and workplace

Highlights, Goals and results, Framework
Realizing an engaging work environment

2930

Environment

Highlights, Goals and results, Framework
Product initiatives
Factory and office initiatives

33
34
36

Social contribution

Highlights, Principles, Policy, Goals and results
Toward a sustainable global society
Working with local communities

39
40
41

Corporate governanceCorporate governanceInternal control and risk management
Compliance

42
46
47

Report review
Awards and recognition
Performance summary
Corporate profile

48
49
50
55

TOKYO ELECTRON Sustainability Report 20163

CEO’ smessage

4

TOKYO ELECTRON Sustainability Report 2016

Toward realizing the growth of a dream-inspiring society
In January 2016, I was given the privilege of serving as Representative Director, President, and CEO of Tokyo
Electron Limited (TEL). On behalf of TEL, I would first like to express my sincere gratitude to all stakeholders
for their continued support and patronage.
As is well known, the United Nations General Assembly unanimously adopted the Sustainable Development
Goals (SDGs) in September 2015. In December, the parties to the United Nations Framework Convention on
Climate Change held the 21st conference (COP21) and formally adopted an agreement on the international
plan for dealing with global warming from 2020 onward (the Paris Agreement). These developments represent broad participatory efforts by global partnerships to achieve a sustainable society. On the social front,
the IoT (Internet of Things) is almost upon us. Soon, not only personal computers and mobile devices, butalso almost everything in our society will be connected to the internet. The arrival of this new era is accelerated by semiconductors, which are supported by manufacturing systems featuring advanced technologies.
With these developments in mind, TEL set forth a medium-term management plan in July 2015, laying out
the business goals for the period leading up to the fiscal year ending March 2020. In addition to our scrupulous adherence to the “customer first” principle that has been TEL’s legacy since its founding, we haveunified our development organizations, enabling a fusion of technologies held by our diverse business units.
The plan will lead to the creation of high value-added products, raising us to the world-leading position in
the customers’ minds and giving us even greater earnings power.
In December 2015, we established the Tokyo Electron Corporate Governance Guidelines. The main featuresof our corporate governance include：
An emphasis on free, open-minded discussions in the Board of Directors
Management that is fair, effective, and transparent
The establishment of Corporate Senior Staff (CSS) as the body that formulates and advances corporate
strategy.
Under this growth-oriented governance structure, we are determined to achieve further growth.
Our corporate philosophy urges us to “contribute to the development of a dream-inspiring society throughour leading-edge technologies and reliable service and support.” As the leading manufacturer of semiconductor and flat panel display production equipment, TEL is determined to contribute to the solution ofdiverse social issues.
Your continued support and encouragement is very much appreciated by all of us at TEL.

Toshiki Kawai
Representative Director, President & CEOTokyo Electron Limited

TOKYO ELECTRON Sustainability Report 2016

5

CSR
operations

TEL’ s corporate philosophy and CSR
Corporate philosophy

We strive to contribute to the development of a dream-inspiring society
through our leading-edge technologies and reliable service and support.
TEL considers CSR to be the embodiment of its corporate philosophy, which has been firmly upheld since TEL’s founding. TEL pursues sustainable operations from the viewpoints of corporate governance, legal and regulatory compliance, and business ethics
while creating new value through its products and services. Based on these efforts, TEL implements CSR activities to help solve
social problems. TEL will continue to pursue CSR activities to build stakeholder trust, improve corporate value, and promote thegrowth of a sustainable and dream-inspiring society.

Corporate
Philosophy

Sustainable operations
Material
issuesManagement
Policies
CSR Policy

Business operations
Creation of new value

Contribution
to the solutionof socialproblems

Advancement ofdream-inspiring
society

Increasing
corporate value

TEL Values

CSR policy
TEL has developed a CSR policy that outlines the principles and values that form the foundation of its CSR activities.

61

Corporate Activities

TEL provides safe, high-quality products and services to customers around the world and works toward theenrichment of society.

2

Business Ethics

TEL acts in compliance with the laws and regulations of the countries in which it operates, observes international regulations, and acts in accordance with strict business ethics. We do not engage in any conductthat impedes fair and open market competition.

3

Respect for Individuals

TEL respects the character and individuality of each person. We value the diversity of employees, share astrong sense of mission, and promote the development of a vibrant work environment.

4

Environment

TEL seeks to achieve harmony with the global environment. By developing and providing eco-friendly products, we strive to reduce our own impact on the environment and help our customers reduce theirs as well.

5

Communication with
Stakeholders

TEL discloses information in a fair, impartial, and timely manner; strives to engage in two-way communications; and works to meet stakeholder expectations.

6

Social Contribution

As a good corporate citizen, TEL promotes the development of local communities and the betterment ofsociety worldwide.

TOKYO ELECTRON Sustainability Report 2016

CSR promotion framework
Through the end of fiscal year 2016, TEL semiannually convened a CSR promotion committee, consisting of the CSR Promotion Corporate Director, CSR Promotion Executive Officer, and the heads of related departments. The committee discussed CSR, set goals,
and checked the progress of ongoing action plans. TEL held CSR monthly meeting to share information about departmental CSR
issues and promote improvement. Starting in fiscal year 2017, TEL semiannually convenes the CSR management council, comprising
the CEO, corporate directors, and division general managers. At the same time, the CSR promotion committee has been reorganized
into the CSR global promotion committee to further enhance CSR activities at the global level.
Theme
Sustainable
management

Goals for fiscal year 2016●

CSR
management●

Effectively use and maintain CSR management
system.
Regularly report on CSR activities at management meetings.

Results for fiscal year 2016
Convened management council joined by CSR Promotion Corporate Director and CSR Promotion Executive Officer to review CSR activities and set
goals for the next fiscal year.
●
Reported on primary CSR activities at the corporate management council.
●

Stakeholder communication
Business activities are based on good communication with stakeholders and society at large. That is why TEL considers building
stakeholder trust essential to its operations. Accordingly, TEL discloses information on the progress of its initiatives and future
direction of its business in a fair and timely manner through regular briefings and its corporate website. In addition, TEL interacts
with stakeholders on many occasions and through various contact points. This helps us accurately understand their views and expectations, and allows TEL to quickly reevaluate and adjust its course of business as appropriate.
Through these efforts, TEL is reducing the latent impact of social and environmental issues on its business while seeking to improve its competitiveness and market position to maintain sustainable business operations.
Theme
Communication

Goals for fiscal year 2016
Stakeholder
engagement●●

Disclosure

Formulate company-wide stakeholder engagement policy and execution plan.
Expand the scope of communication on main social
contribution activities.

Results for fiscal year 2016●●

Evaluated the positions and priorities of stakeholders. The formulation ofengagement policy and execution plan will continue in fiscal year 2017.
Enhanced communication on TEL’s social contribution activities in Japanand abroad.

TEL’s keystakeholders

Divisions in charge

Key communication methods

Shareholders/investors

Management, IR

Earnings announcement (quarterly), Medium-term management plan briefing, Interviews, Factory tours

Customers

Sales, R&D, Marketing

Interviews, Executive meetings, Customer satisfaction survey (annual), Technology conferences

Suppliers

Procurement, Purchasing

Production update briefing (semiannual), Partners day (annual), STQA1 audit, Interviews

Employees

Management, HR

Employee meetings, Technology conference, Interviews, Global engagement survey (annual)

Local communities

Local administration teams

Factory tours, Participation in local activities, Visits to/interviews with local authorities, Social contribution
activities

Governments/associations

Local administration teams

Legal and regulatory compliance/notification/monitoring/advocacy, Industry group activities, Alliances withexternal organizations

1 STQA: Supplier Total Quality Assessment

Examples of initiatives
Technology conferences
TEL holds technology conference meetings of various sizes throughout the year,
addressing the needs of specific business units, markets, regions, and so forth.
These conferences serve as venues for information sharing and multifaceted communication and have received positive reviews from customers, TEL employees,
and other participants. Through these networking events, TEL is effectively sharing information to support innovation and the development of high value-added
products and services.

TOKYO ELECTRON Sustainability Report 2016

7

CSR operations
Participation in international CSR initiatives
TEL is taking an active part in international CSR organizations, such as the United Nations Global Compact
and the EICC®*, a CSR alliance of the electronics industry.
In fiscal year 2016, we assigned EICC promotion personnel at TEL locations in Japan and in the U.S. to promote effective compliance with the EICC Code of Conduct. These personnel also reinforce operational compliance for the Asian, European, and U.S. regions where TEL conducts business. For major suppliers, those whose
total business with TEL accounts for over 80% of our procurement spending, we have implemented a Supply
Chain CSR Assessment to ensure control over our supply chain based on the EICC Code of Conduct.
* EICC® is a registered trademark of Electronic Industry Citizenship Coalition Incorporated.

Theme
Sustainable
management

Goals for fiscal year 2016
EICC●

Results for fiscal year 2016

Build a global framework for EICC compliance promotion
and implement training.

●

Appointed EICC promotion personnel to overseas bases to build andreinforce compliance. Initiated training programs.

Evaluations by external organizations
To enhance medium- to long-term corporate value, TEL is using evaluations by external organizations
as benchmarks of its operations. In fiscal year 2016, TEL was chosen as a Sustainability Yearbook Member and an Industry Mover by RobecoSAM AG1, a research institute that cooperates with the Dow Jones
Sustainability Indices (DJSI). Since 2003, TEL has been a part of the FTSE4Good Global Index, a prominent
index for social responsibility investment (SRI). TEL has also been selected by Morgan Stanley CapitalInternational (MSCI) for the MSCI ACWI ESG Index and the MSCI World ESG Index.
1 RobecoSAM AG: An investment specialist founded in 1995 focused exclusively on Sustainability Investing

Social issues surrounding our business
International initiatives to realize a sustainable society, such as the UN Sustainable Development Goals (SDGs) and the Paris Agreement, have begun to be implemented. Businesses are also being requested to leverage their operational strength to help resolve
diverse social issues on a global level.
The semiconductor production equipment industry, which TEL is a part of, has made remarkable contributions to people’s lives
through constant technology innovation. This advancement and diversification of semiconductor process technologies comes withthe risk of higher development costs. In addition, any delay in responding to customer needs can lead to lost opportunities for entering markets. Insufficient compliance with climate change related laws and regulations in the countries where TEL operates can
put its marketing opportunities as well as its reputation at risk. There are many other social issues surrounding TEL’s operations,as listed below. We believe being prepared for and proactively responding to these issues is critical to both ensuring our businessgrowth and attaining a sustainable society.
Social issues most relevant to TEL

Risk prevention and countermeasures

Technical differentiation and innovation

Continued investment in R&D, Open innovation
Environmentally friendly products, Prevention of global warming, energy-saving initiatives

Climate change
Unpredictable risks to business continuity: natural disasters, war, terrorism, infectious diseases
Anti-corruption measures and fair business practice

BCP programs

Health and safety

Continued initiatives to reinforce governance, Education on ethics and compliance
CSR-based procurement, Participation in conflict minerals initiatives, Green procurement, BCP of suppliers
Achieving an invigorating workplace, Reinforcement of diverse programs, Human
resource development
Safety initiatives, Improvement of employee health and workplace environment

Tightening of legal restrictions by governments and others

Information gathering on related laws, Policy advocacy initiatives, Legal compliance

CSR in the supply chain
Securing human resources worldwide, retention of key personnel

Policy advocacy initiatives
It is essential for a business that its products and technologies earn public acceptance in a manner that does not disregard requirements of society. Creating synergy between businesses and society can lead to greater advancement of the semiconductor industry and bring solutions to many social issues, TEL, as a member of SEMI2 and other industry organizations, is engaged in advocacy.
These initiatives involve lobbying governments and local authorities for public policies and regulations that benefit society in apractical and rational way. TEL believes that when backed by a good grasp of regulatory trends, active participation in advocacy
initiatives can reduce the sustainability risk of manufacturing operations, not only for TEL itself but also for its customers.
2 SEMI: A global industry association serving the supply chain of manufacturing equipment, raw materials, and related services in such fields as semiconductors, flat panel displays(FPDs), nanotechnology, MEMS, photovoltaics, and related technologies

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TOKYO ELECTRON Sustainability Report 2016

Business opportunities and mid-term vision
The IoT-enabled future
From a medium to long-term perspective, the electronics industry is about to enter the age of the Internet of Things (IoT), where
everything is connected to the internet. The number of devices with internet connectivity is expected to reach 50 billion in 2020,
and the volume of data exchanged across the global networks is predicted to soar at an average annual rate of 23%. The demand for
greater data processing capabilities, faster transfer rates, less power consumption, and higher screen resolution will only continue
to rise.
Due to these trends, TEL is simultaneously pursuing R&D into more sophisticated miniaturization, new structures and new materials technologies, new memory chips based on new device technologies, and new packaging technologies. Being a semiconductor
production equipment manufacturer with diverse technologies, TEL’s diverse capabilities will be in much greater demand in thenear future.
2025 Economic impact of IoT$11.1T($900B in 2015)2020 Number of things with
Internet connectivity:

50B

2020 Market size for semiconductors(14.2B in 2014)

Automobiles$391B

Traffic($335B in 2015)
Datacenter
Smart home

MemoryProcessor
SensorCloud

Smart cityAI(artificial
intelligence)

Datacenter

Datacenter

Big data analytics
Industrial equipment

Wearable devices

2020 Market size for WFE

IP traffic

CAGR 23％$36.6B1(2014-2019)

Mobile devices

Medical treatment and healthcare($31.5B in 2015)

Source: CISCO, McKinsey & Company,
Semiconductor and WFE2 markets (worldwide): Gartner, Forecast: Semiconductor Wafer-Level Manufacturing Equipment, Worldwide, 1Q16 Update. April 14, 2016
１ CAGR: Compound Annual Growth Rate
２ WFE：Water Fab Equipment

Mid-term vision
A truly global company generating high added value and profits in the semiconductor and flat panel display industries through innovative technologies
and groundbreaking proactive solutions that integrate diverse technologies.
There are some factors that are required to integrate TEL’s diverse capabilities asa semiconductor production equipment manufacturer and provide innovative
solutions to customers. These include advanced technology development capability, services and technologies for speedily addressing customers’ problems,
and world-class earnings power. To attain the goals of our Medium-term management plan by the fiscal year ending March 2020, TEL has chosen these threefocus areas to drive the implementation projects.

Enhancingproduct
competitiveness

Reinforcing
customer
responsivenessStrengthening
earnings power

TOKYO ELECTRON Sustainability Report 2016

9

CSR operations
Materiality assessment
Process for identifying material issues
TEL identifies material issues based on the following process:Step 1.

Identifying social issues
Various departments concerned with CSR examined the variety of social issues from thestandpoints of SDGs, the UN Global Compact,
GRI, and so on. They worked with departmentsin charge of risk management and organization strategy to select social issues that are ofgreat significance to TEL.

Step 2.

Assessment of relevant business issues
and prioritization
After the social issues were identified in Step 1,
their relevance to our business issues was assessed and key issues were prioritized.

Step 3.

Verification of feasibility
Inviting external experts as advisors, theMateriality Review Council was convened to<External ideas and assessments used for reference>
UN Sustainable Development Goals
The Ten Principles of the UN Global Compact● EICC Code of Conduct● GRI G4 Guidelines● Expectations from SRI and TEL’s ranking● Social norms and interest of the citizenry● Inputs from stakeholder communication● Views and requests given in response to our reports andthrough the Internet● Advice of third-party support organizations on analysis ofmateriality●●<TEL’ s principles, business environment,
and policies used for reference>
Corporate Philosophy
Management Policies● CSR Policy● Underscored items in the medium-term vision● Investment trends● Plans for new businesses● TEL Values● Social issues and opportunities surrounding our operations● Benchmarks of competitors in the industry●●<Principal views and suggestions obtained>●

evaluate the feasibility of each material issue identified in the previous fiscal year. The
principal views and suggestions gained at
the Council were as follows:

●

●

●

●

Materiality Review Council

10

TOKYO ELECTRON Sustainability Report 2016

A review of the material issues for fiscal year 2016 revealed
that, in order to improve the choice of issues for the next
fiscal year, more emphasis should be placed on the perspectives of management strategy and social issues. In addition, operational priorities should be made clearer.
With regard to customer responsiveness, opportunities are
growing at every stage of operations from equipment design through post-sales service. Customer engagement is
becoming more important than ever before.
In step with the advancement of technology, market expectations on innovation, new technologies, and speed, areincreasing and must be addressed.
Value creation in supply chain management is essential, andwe need to maintain good relationships with our suppliers.
As the labor force in Japan is shrinking, we need to take aglobal approach to HR management and provide an environment that enhances intellectual productivity regardlessof the employees’ nationality and culture.

Identifying material issues
TEL fulfills the roles and responsibilities of a corporate citizen in the international community through its support for the UN Global
Compact and by endeavoring to solve social issues identified in the UN SDGs. In determining the materiality of the corporate issues
at hand, TEL sought to thoroughly understand its business environment and risks, while also placing an emphasis on clarifying theconnection between the social issues and TEL’s operations.
As a manufacturer of semiconductor production equipment,
Materiality matrix
TEL believes it can contribute to the advancement of technoloPerspective of
stakeholders
Enhancing productgies that support and enrich people’s lives by fully understanding
competitivenessmarket changes and real customer needs and by continuously
Reinforcing customer
responsivenessdelivering innovative next-generation products. TEL also considStrengthening earnings
ers it important to streamline its operations and gain world-classpower
earnings power. This will allow us to attain sustainable growth
Maximizing dreams
and driveand medium- to long-term improvements in the enterprise valEstablishing sustainable
ue and to realize a dream-inspiring and engaging workplace with
operations
fully functional compliance and governance systems. In addition,
this approach will continue to show TEL’s focus on human rights
and labor issues, as we continually offer challenging opportunities
for personal growth.
Based on this position, and mindful of the need to be comprehensive and concise, TEL chose the material issues for fiscal
Perspective of business continuity and growthyear 2017 while also keeping the previous year’s material issues
in perspective.

CSR goals for fiscal year 2017
For fiscal year 2017, TEL has set 16 goals related to 5 material issues and is working to achieve them.
Material issues
Enhancing productcompetitiveness

Reinforcing customer
responsivenessStrengthening
earnings power
Maximizing dreams
and drive

Establishing sustainable
operations

ThemesGoals

Innovation

Maintain development costs at the fiscal year 2016 level.

Environmental contributionof productsContinue initiatives to reduce per-wafer consumption of energy and pure water by 10% by
fiscal year 2019 (as compared with fiscal year 2014).

Customer satisfaction

Get 3.0 points or more on a 4.0 scale for every item in the customer satisfaction survey.

Quality

Implement PDCA1 training and disseminate the TEL 6-Step model (8D problem solving
method2).

Information security

Ensure all target employees take a training course in information security.

Improve profitability

See Annual Report 2016

Streamline operations

Maintain the number of TPM programs at the fiscal year 2016 level.

Create an invigorating
workplace

Provide a work environment that supports continuous growth while ensuring performance-responsive, scrupulously fair treatment of employees.

Social contribution

Maintain the number of social contribution programs at the fiscal year 2016 level.

Corporate governanceImprove the operation of the Board of Directors through annual effectiveness evaluations.

Compliance and ethics

Ensure all employees complete training courses in business ethics and compliance.

Business continuity
management

Provide business continuity plan (BCP) training at principal manufacturing sites and headquarters, revise the BCP manual and implement safety confirmation system training (all tobe performed annually).

SafetyTCIR3: Less than 0.5.

Environmental management

Reduce energy consumption by 1% on a per-unit basis4 from the fiscal year 2016 level.
Maintain water consumption at the fiscal year 2012 level (on a per-unit basis).
Reinforce supply chain management through supply chain CSR assessment*.

Supply chain management* Targeted at high-ranking suppliers whose aggregate business with Tokyo Electron accounts for 80% of
its procurement.

1 PDCA: A method for continually improving operations by iterating the four steps of Plan, Do, Check, and Act
2 8D problem solving method: A method for solving problems in quality improvement through eight disciplines or processes
3 TCIR: Total Case Incident Rate (the number of workplace injuries per 200,000 work hours)
4 Per-unit basis: Energy consumption (environmental burden) divided by values closely associated with energy consumption, such as production volume, number of employees or
total floor area

TOKYO ELECTRON Sustainability Report 2016

11

Innovation

Innovation management
With the IoT just around the corner, demand for greater processing power, faster data transfer, lower power consumption,and higher screen resolution continues to increase. Against this backdrop, new semiconductor structures and new material
processing technologies are being introduced, prompting the pursuit of innovative memory chips based on new devices andprocessing technologies that enable further miniaturization. As these issues become increasingly harder to solve with any
single piece of processing equipment, semiconductor production equipment manufacturers must offer more comprehensive solutions.

Development of innovative STT-MRAM chip technology
Partnership with Tohoku University
TEL participates in Tohoku University’s Center for Innovative Integrated Electronic Systems (CIES) which opened in October
2012, with the goal of accelerating the development of STT-MRAM (Spin-Transfer Torque Magnetoresistive Random Access
Memory) manufacturing equipment and chip integration technology.
STT-MRAM is a magnetoresistive random access memory device that uses a data rewrite method called “magnetization
reversal induced by spin injection.” Being a non-volatile device, it can significantly reduce power consumption, has large
capacity and fast data transfer rates, and can rewrite an unlimited number of times. These characteristics are ideal for semiconductor memory.
Using manufacturing equipment developed by TEL, the development of STT-MRAM manufacturing technology has been
moving along at an excellent pace. We expect that STT-MRAM device properties will prove suitable for next-generation
memory chips in the very near future. Going forward, we intend to apply the research results of the CIES to the developmentof our own equipment, so we can deliver TEL products that our global customers can rely on in a timely manner.
STT-MRAM
Bit Line

STT-MRAM cell mechanism
Low resistivity: “0”(spins are aligned in parallel directions)High resistivity: “1”(spins are aligned in antiparallel directions)Free layer(ferromagnetic)

Source Line

Word Line

Tunnel barrier layer

Direction of spins (magnetic moment)

Reference layer(ferromagnetic)

STT-MRAM rewrites information
by passing currents throughmagnetic thin films and changing
the directions of spin (magnetic
moment) in the free layer, whichalters the resistance in a memory
cell. This method, called spin
torque switching, is ideal for
scaling and reducing power
consumption of memory devices.

EXIM™ sputtering system wins Award for Excellence at Semiconductor of the Year 2015
TEL has been developing equipment for manufacturing STT-MRAM, which is attracting
attention as an energy-saving memory device. One example is the EXIM™ sputteringsystem for next-generation semiconductor devices, which won the Award for Excellence in the semiconductor manufacturing equipment category at the Semiconductorof the Year (sponsored by Sangyo Times, Inc.) in June 2015.
The EXIM incorporates advancements in thin film deposition technology, which isconsidered to be crucial to the manufacture of STT-MRAM, featuring an MR ratio1 ashigh as 230%, enabling production of large-capacity memory chips. The EXIM’s uniqueand flexible modular design allows the system to be freely reconfigured for various
purposes, ranging from development to mass production.
1 MR (magnetoresistive) ratio: The ratio of the resistance change that occurs when the magnetization directions between free and reference layers switch from parallel state to anti-parallel state, and vice versa. Higher MR ratio isessential for manufacturing large capacity memory devices.

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TOKYO ELECTRON Sustainability Report 2016

Miniaturization initiatives
Evolution of semiconductors has been driven by miniaturization, which enabled faster processing, less power consumption,and less cost. Now, as the industry is reaching 10nm node, TEL is making extensive efforts to achieve further miniaturization.
In addition to the conventional scaling method that shortens wavelengths of exposure, TEL is applying innovative technologies through the use of process tools, such as film deposition, coating, etching, and cleaning. Self-Aligned Multiple
Patterning (SAMP) technology, for instance, forms a film on the sidewalls of an existing pattern to double the patterning
density without changing the original pitch. By repeating this process, it further enables the doubling of the pattern density
on a chip. TEL is also developing high precision tools for other self-alignment technologies to improve alignment accuracy
in multiple patterning processes and improve etch consistency across wafers.
TEL is also conducting joint research and development with IMEC, a world-leading nanoelectronics research institutebased in Belgium, to develop advanced patterning technologies. Backed by these efforts, TEL is working to introduce original
patterning schemes using new semiconductor structures and materials, and contribute to advancements of miniaturization
through our comprehensive process technology expertise.
Self-aligned multiple patterning (SAMP)
1. Patterning by
photolithography

Form pattern (core) by
photolithography.

2. Deposition

3. Etching

Form oxide film on the core.

Remove oxide film on top of
the core.

4. Etching

5. Mask formation

Remove the core.

Double density patterns areformed within theconventional pitch.

Principal systems supporting advanced patterning technology

TELINDY PLUSTM

TactrasTM VigusTM

Certas LEAGATM

CLEAN TRACKTM
LITHIUS ProTM Z

CELLESTATM -i

NS300Z

Protecting and using intellectual property
TEL’s fundamental tenet for intellectual property (IP) is to contribute to an increase in corporate revenues by supporting operations in both existing and new market sectors through IP protection. In line with this fundamental direction, TEL allocates
IP personnel to product development centers and manufacturing facilities where research and development are performed,
as well as to corporate headquarters where its sales and marketing departments are concentrated. These employees work
closely with their departments to develop an IP portfolio in line with TEL’s technological and product strategies. They also
work to minimize the risk of IP disputes by monitoring the competitive environment.
To protect and use IP effectively in regions where TEL and its customers operate, TEL files patent applications in appropriate countries. The global application rate* at TEL has remained at around 70% for five consecutive years. In 2014 its patentapplication success rates in Japan and in the United States were 78% and 71.2%, respectively.
The strength of this IP portfolio strategy allows TEL to boost revenues by differentiating its products and enhancing its
competitiveness.
* Percentage of applications for inventions filed in multiple countries

TOKYO ELECTRON Sustainability Report 201613

SafetyThrough our “Safety First” culture, we focus on
keeping everyone safe and continually improving
our working environments.
As a manufacturer of semiconductor and flat panel display (FPD) production equipment, TEL places
the highest priority on the safety of everyone involved in its operations. Our objectives include
providing safe products, continually improving the working environments, educating them about
safety, and eliminating workplace accidents.
14

TOKYO ELECTRON Sustainability Report 2016

Highlights
TCIR*

Percentage of employees
completing basic and advanced
safety refresher training

0.21

100

* Total Case Incident Rate (thenumber of workplace accidents
per 200,000 work hours.)％

Goals and results for fiscal year 2016
Theme

Goals

Results

Appropriately address equipment
safety compliance requirements
through customer request for quotation (RFQ) process.
●Develop knowledge and skills of
product safety engineers.
●
Verify safety compliance of newly
developed equipment.
●

Product
safetyComply with local safety laws andregulations in a timely manner.

Responded to customer inquiries on specifications of emergency stop, material safety standards, remote operations,etc.
●
Expanded service areas of product safety engineers to extend safety support.
●
Continued safety compliance support for evaluation equipment.
●

Attained a 38% reduction in TCIR.
Number of incidents that could lead to serious injury: 12 infiscal year 2016 compared to 8 in fiscal year 2014 (figures include incidents that did not result in serious injury or disease).
●
Conducted safety monitoring and new fab safety checks
globally.
●
Disseminated preventive measures through Global Safety
Council, Field Safety Council, Manufacturing Company Presidents’ Council, etc.
●

Reduce Total Case Incident Rate
(TCIR) by 38% over fiscal year 2014.
●
Reduce incidents that could lead toserious injury by 50% over fiscal year
2014.
●
Continue safety patrols, new fab
safety checks, and dissemination of
preventive measures.
●

Accident
prevention

Prevent accidents. If accidents
occur, perform root cause analysis
and share this information toprevent similar accidents.

Safetyeducation

Improve overall safety skills throughpractical training, etc.

●●

Provide basic and advanced safety refresher training to all employees.
Provide web-based accident prevention training to over 15,000 employees (cumulative).

Implement the PDCA continual
improvement cycle through theglobal EHS Council and through eachcompany’s Safety Council.
●
Check and revise safety activities in all
TEL companies.

●

●

●

Provided basic and advanced safety refresher training to all
employees globally.
Provided web-based accident prevention training to 47,000
employees (cumulative).

●

Safetymanagement

Clarify policies and set organizationalframework for sustainability program.

●

Evaluated the current situation of safety at TEL and implemented remedies and improvements through the global EHS
Council.

Framework
Increasing the safety awareness of individual workers is crucial
for providing worksites where everyone can work safely. To
fully support our “Safety First” culture, TEL has established theequipment safety promotion meeting and the work safety promotion meeting under the supervision of the EHS council. The
equipment safety promotion meeting revises TEL’s design rules
based on international laws and local regulations for equipment safety. It also determines TEL’s compliance with new
regulations and administers corrective measures. The worksafety promotion meeting investigates work safety issues atcustomer sites and TEL Group locations and implements appropriate remedies. These meetings also examine incidents involving
personal injury or property damage, determine whether the incidents were caused by equipment trouble or other work-related
factors, and take measures to ensure similar incidents do notoccur in the future.

Representative Director, President & CEO

Senior Executive Vice President, General Manager,
Development & Production Division
Development & Production Division
Manufacturing companies presidents’council

EHS council

Equipment
safetypromotion
meetingWorksafetypromotion
meeting

Product
environment
value
meeting

Product
environment
compliance
meeting

Operation
environment
value
meeting

TOKYO ELECTRON Sustainability Report 201615

Safety
Improving employee safety
Initiatives for safety improvement
To ensure the safety of its employees, customers, and all others involved in its operations, TEL places astrong focus on preventing work-related accidents.
At each TEL factory and office, monthly safety and health committee meetings are held to discuss safety
monitoring and to manage any workplace safety or employee health issues. In addition, representatives
from appropriate departments monitor safety performance at least once a month at each manufacturingsite as part of an overall systematic effort to solve problems at their sites.
Also, TEL has implemented a management system based on OHSMS1 to identify and analyze potential
workplace hazards. The knowledge obtained from this system is shared throughout TEL. Before starting
work, all workers discuss the risks involved and the required actions to prevent mistakes. The group leader
oversees the work at all times to eliminate any unsafe conditions or behavior that could lead to accidents.
In addition, whenever employees perceive that workplace safety is at risk due to lack of preparation or an
unplanned event, they are encouraged to stop work and implement any needed corrective action. Additionally, safety managers regularly give advice on how to manage hazards, further raising worker safety
awareness.
As a result of these initiatives, the TCIR (Total Case Incident Rate) improved from 0.24 to 0.21.

1 OHSMS: Occupational Healthand Safety Management System. A management system
to reduce the potential risk ofwork-related accidents andimprove the overall level ofsafety and occupational health.
Based on the policy set by senior management, a series of
PDCA (Plan, Do, Check, Act)
processes for safety and occupational health management isdrawn up and implemented on
the employees’ own initiative.

Safety education
To improve employee safety awareness, TEL provides a wide variety of web-based training.
In fiscal year 2016, TEL provided basic safety refresher training to all employees. Advanced safety refresher training was also provided. This advanced training used actual incidents as learning examples with a goalof preventing similar incidents from happening again.
To eliminate accidents, TEL also provides risk assessment training and 13 additional web-based training
courses2 (statistically proven to be effective) at offices and factories worldwide. TEL also provides safety
information to suppliers as part of ongoing activities to prevent accidents.

Response to workplace accidents
When a workplace accident occurs, TEL analyzes the cause, or causes, and takes appropriate countermeasures. In addition to the principal cause, further causes are also identified through multi-faceted analyses ofthe state of injured persons , facilities, environment, co-workers, and the actual work. The results are sharedwith the entire company through safety promotion meetings and other forums to prevent recurrence.
Workplace accidents that could lead to serious injuries are classified as critical workplace accidents, andtheir circumstances, causes, and remedies must be reported to the executive in charge. When concern ishigh, the accident is also reported to the President. Information about these accidents is shared at the global EHS council meetings to ensure organization-wide prevention efforts.

16

TOKYO ELECTRON Sustainability Report 2016

2 Web-based training courses focus on 13 themes: preventing
equipment confusion; preventing falls from openings; stop work
authority (SWA); preventing being caught in a drive unit; preventing work-related back pain;
pointing and calling; preventing exposure to liquid chemicals;
work safety rules; detailed worksafety instructions; rules for accident reporting; assessing risks;measures against ergonomic incidents; and criteria for SWA.

Improving customer safety
Giving assurance to customers
Because TEL’s products often require the use of hazardous chemicals and high voltage electricity, TEL provides the relevant safety information to customers.
All products supplied by TEL come with a standard TEL Safety and Environmental Guidelines manual. Thismanual describes the risks associated with the use of TEL products by category, such as chemical, electrical,
mechanical, and ergonomic, together with the methods for averting those risks. The manual also describes
the safety measures built into the products and the recommended methods of product disposal. The manual is prepared in 10 languages including Japanese, English, five EU languages1, and three additional Asian
languages2 to ensure the content is understood by a wide range of customers. Also, each product comeswith a manual detailing the procedures for avoiding product-specific risks and securing safe operation andmaintenance, thus providing an additional safeguard for customers.
TEL also assists customers in learning how to operate and maintain the equipment. Our training centers
located in Japan and abroad offer practical skills training for TEL equipment. TEL also provides on-site training at customer sites.
When we deliver our products to new customer plants and production lines, we check the facilities,
equipment, and workplace safety standards beforehand, as dictated by internal TEL rules. This process allows TEL to resolve any safety concerns and secure a safe working environment.

1 EU languages: German, French,
Italian, Dutch, Russian
2 Asian languages: Korean, Chinese (traditional characters),
Chinese (simplified characters)

Improving product safety
Initiatives for improving work safety
Taking the entire product life cycle into consideration, TEL carries out product risk assessments as earlyas possible in the development phase. Based on the assessment results, TEL implements intrinsically safe
equipment design3 to reduce the risks posed to humans. TEL also examines and ensures compliance withchanging laws and regulations around the globe, abiding by all safety regulations of the regions where ourequipment is shipped, and allowing inspections by safety certification organizations as required.

3 Safe equipment design: Innovative machinery designs eliminatescauses of machinery-related
hazards posed to humans.

Safety education
In recent years, it has become increasingly important for TEL to ensure compliance with international safety
standards and guidelines early in the equipment design and development processes. Since fiscal year 2008,
TEL has been offering its engineers web-based training on safe equipment design. Through risk assessment
exercises and examples of actual accidents, the participants acquire basic safety knowledge for equipment
design. In fiscal year 2016, we revised the education program using updated information, including new
safety standards. In addition to the training for design engineers, we are also promoting equipment safety
education for all workers in areas such as manufacturing, start-up, service, and off-site logistics. This allows
these employees to apply the knowledge to the handling of equipment as well as assist in the developmentof safer equipment. For fiscal year 2017, lectures and training by outside experts are also being planned.

TOKYO ELECTRON Sustainability Report 201617

Quality

Knowing our customers’ real needs enables us
to attain world-leading product quality.
Winning the trust and satisfaction of our customers requires precise understanding of their criticalneeds. TEL attentively listens to customers and uses this feedback to continually improve all aspects
of operations, resulting in even higher quality products and services.
18

TOKYO ELECTRON Sustainability Report 2016

Highlights
Customer satisfaction
surveyPercentage of wafers with no-defect after
introduction of TELeMetricsTM

62

Up 2.3％

Receive 3.0 or more points (VerySatisfied or Satisfied) on a 4.0 scale for
62% of questions.

percentage points

Goals and results for fiscal year 2016
Theme
Quality
improvement

Improvingcustomersatisfaction

Compliance

Goals
Reduce accidents that resultin property damage.

Improve quality of equipmenttraining.

Improve customer satisfaction.

Compliance●

Results

Reduce product-related accidents resulting in property damage by 20%
year-over-year across the organization.

●

●
●

●

●

Score an average of 4.0 points or more on a 5.0 scale in trainee feedback.

Receive 3.0 points or more on a 4.0 scale for all questions in the customer
satisfaction survey.
Implement the PDCA continual improvement cycle to check compliancewith regulations and processes in TEL .

●●Reduced these accidents by
14.5% year-over-year.
Scored an average of 4.6 points,
receiving 4.0 points or more forall questions.
Received 3.0 points or morefor 62% of questions.
Implemented compliancechecks at 8 key sites.

Framework
TEL has a quality assurance framework headed by the Representative Director and President and supported by the Senior Executive
Vice President in charge of Development and Production. Quality improvement, as well as other important quality issues and othershared concerns, are addressed through collaboration amongst TEL presidents and the Quality General Managers (GMs). To ensure
efficient and stable quality control, TEL has five working groups in place, including the Quality council, Engineering council, Production
council, Purchasing council, and EHS council. These working groups collaborate to pursue organization-wide quality assurance
activities across all divisions.
To constantly maintain high quality standards, TEL has also been working since 1997 to acquire ISO 9001 quality management
system certification at various sites. Ten sites (primarily manufacturing operations) have achieved this certification to date.
Thanks in part to our efforts under this framework, there were no legal or regulatory violations of TEL’s products and services infiscal year 2016.

Representative Director, President & CEO

Senior Executive Vice President, General Manager,
Development & Production Division
Presidents of Group companies
Heads of Council

Quality Promotion Dept.

TEL Quality Committee

Quality council

Engineering council

Production council

Purchasing council*

EHS council* Official name: Purchasing department manager council

TOKYO ELECTRON Sustainability Report 201619

Quality
Product quality
Initiatives for improving quality
TEL is continually improving the quality of its products to win customer satisfaction and trust. An important statement from the quality policy is that “We build quality into every TEL product during the designphase by focusing on leading-edge technology. By bringing quality into our processes early and focusing
on quality throughout all processes, we succeed in providing high quality products and services.” This is thefoundation of our quality assurance activities.
Specifically, we have adopted the front-loading approach. This involves identifying and solving problems
early in the product development and design processes to enhance design quality. In addition, we have
expanded our training programs and established a system to verify skill levels in order to improve individual
skills and design quality, ultimately ensuring proper identification of problems and appropriate analysis.
In addition, we implement in-process quality control1 during each process̶from development and design to shipment. Semiconductor production equipment consists of various components and modules,
and assembly involves multiple processes. Making each of the manufacturing processes responsible forcomponent quality is very effective, significantly reducing production costs and defects. Each of our process
teams constantly seeks improvement, helping to produce superior products by taking ownership of quality
assurance within a given process.
Because the quality of each component can affect the overall quality of the end product, we also focus on
the quality of components early in the design phase. TEL’s development and quality assurance divisions exchange information among themselves and with suppliers in order to improve the quality of drawings andpurchase specifications. This also enables early sharing of component information. As a result, the quality ofcomponents has improved, leading to fewer component defects.

Education
To promote high-quality manufacturing in alignment with customer needs, TEL continually carries out
cross-functional quality improvement activities with involvement of not only its development and design
departments but also other departments such as planning, sales, administration and field service. As part ofthese efforts, we encourage TEL employees to obtain external quality certification. Administered by the Japanese Standards Association and the Union of Japanese Scientists and Engineers, the QM/QC Exam (Quality
Management and Quality Control Examination) is a major quality certification, with more than 363,000
certification holders in Japan as of September 2015. The certification enables employees to improve theirknowledge and skills in the area of quality control, improve the quality of their work, and provide customers
with high-quality products. Starting in fiscal year 2012, this initiative has increased the number of certified
employees each year to a total of 1,273 as of March 2016.
In addition, we are also educating our employees in the Plan, Do, Check, Act (PDCA) cycle. Although PDCA
is most frequently used to improve management of production and quality, we have chosen to employ thismethod in every aspect of our business, not just in production activities. PDCA is already being used in many
areas, driving process efficiency and greater value for our customers.

Response to quality problems
Despite our efforts to produce high-quality products with the front-loading approach, in-process quality
control, and employee education, unforeseen quality problems occur from time to time. When any suchproblem is reported by customers, the information is fed into our proprietary Q-VICS knowledge management system. This information is distributed to the departments concerned, enabling information sharing
and quick problem resolution. If disclosure of defect information is deemed necessary based on our internal
criteria, we issue necessary technical documents and inform our customers.

20

TOKYO ELECTRON Sustainability Report 2016

1 in-process quality control: The
idea that, at each process, employees take responsibility toensure product quality with nodefects

For particularly serious problems, we employ the TEL 6-Step problem-solving model, a customized version of the eight discipline (8D) problem solving method1 widely used in quality management. The TEL
6-step model enables systematic and highly reliable analysis of a problem to determine the root cause,
leading to quick implementation of countermeasures and preventing recurrence of similar problems. We
are currently training our personnel to actively use this method.
When a quality issue occurring in one business unit has the potential to affect other business units, weuse a proprietary system called QABOX to prevent the problem from spreading. The system allows relevant information to be centrally managed on our secure network. The information is shared with quality
assurance managers at TEL manufacturing companies and with the corporate quality division to discussappropriate resolution. Following the discussion, critical information is reported to the corporate executive
officer in charge of quality to quickly determine the future actions on the issue.

1 8D problem solving method:
A quality improvement method
for solving problems througheight disciplines or processes

Streamlining operations
Quality and productivity improvement through TPM
TEL has been implementing TPM2 for over ten years. The purpose of TPM is to eliminate inefficiencies,
waste, and loss, and thereby improve productivity. The TPM approach is playing a role in employee education and skill development and has been successfully integrated into our production lines. TPM activities
that have produced outstanding results are shared with the rest of TEL at the annual TPM presentation. In
fiscal year 2016, the participants included not only teams from Japanese manufacturing sites but also thefirst overseas presenters from Tokyo Electron (Kunshan) Limited (established in 2012).

2 TPM: Total Productive Maintenance or Total Productive Management

Production division initiatives
At Tokyo Electron Miyagi Limited, the standard practice was to hold shipment of the equipment until all component modules were available. Because of this, many of the finished modules had to be kept in the clean
room for an extended period, taking up precious production space. Accordingly, the team in Miyagi revised
the process management practices during the production planning phase. They adopted a module-based
rather than product-based logistics approach, ensuring no deterioration in the quality level. The change
allowed the modules to be packaged and shipped as they were finished. At the same time, improvements
were made in the loading area layout as well as in shipping list preparation and cargo packaging. This freed
up even more production space and improved productivity while reducing lead time. Additionally, the new
approaches have made it easier to respond to any changes in specifications that customers might require.
Administrative division initiatives
TEL is pursuing TPM not only at its production sites but also in its factory administration and sales departments. As a manufacturer of production equipment, we need to communicate our customers’ technologicalneeds for improving productivity (including system modifications and enhancements) to the Development &Production Division as quickly as possible. This allows us to share the information and respond with actual products. Accordingly, we have established a system capable of processing customer requests within 24 hours ofreceipt. We have also standardized the system modification formats and request forms in an effort to remove
ambiguity in the requests. This has enabled the departments concerned to share highly specific information
and respond more quickly to customer requests. To better manage requests for substantial modifications
to our equipment, we have also improved the ordering system for products with long lead times to achieve
faster delivery.

TOKYO ELECTRON Sustainability Report 201621

Quality
Consideration for customers
Customer satisfaction
Improving customer satisfaction
Accurately assessing customer needs is critical to providing quick, innovative solutions. TEL’s policy on quality and service states, “TEL strives to understand the true needs of our customers to achieve customer
satisfaction and secure customer trust while continuously improving quality and service.” Under this policy,
TEL has a customer satisfaction system headed by the President. This enables TEL to engage in various activities to offer high value-added products and services to meet customer needs now and in the foreseeable
future.
Customer satisfaction survey
TEL conducts a customer satisfaction survey every year, with the goal of making continual improvements
based on customer feedback.
The survey started in 2003 with a limited number of sales departments. Since then, TEL has made numerous improvements in the questionnaire, survey method and analysis, feedback to customers about
targeted improvements, and overall management of the program. The survey grew to include all semiconductor production equipment departments in 2014. The FPD production equipment division and overseas
subsidiaries were added in 2016 to make the survey a key organization-wide initiative. The questions aredesigned to allow multi-faceted analyses of customer opinions, so the feedback can directly lead to practical improvements in the sales, development and production, and service divisions.
In the survey for fiscal year 2016, over 1,000 individual customers responded, and the results were satisfactory. On a 4-point scale (from 0 to 4), TEL received an average of 3 points or higher (Very Satisfied orSatisfied) on 62% of the questions. For questions that were rated below 3.0, we have analyzed the results
to further improve the quality of our products and services.
Responding to customers’ suggestions for improvement
Each year, we receive many important suggestions from our customers through this survey. The results
are shared in a timely manner, not only by the management team but also by the sales, development andproduction, and service departments. When improvements are identified from the customer responses, weassign a responsible department for each area and implement corrective actions. In this manner, we makefull use of the responses to the survey̶both positive and negative̶to improve our services and productdevelopment. We also regularly communicate the results of the survey and our plans for improvement toour customers.
By engaging in organization-wide PDCA activities on an ongoing basis, TEL provides comprehensive andinnovative solutions to its customers.
Conceptual image of understanding customer needs

Planning and sales

Customer needs
Requests

Development and design

Expectations

Compile and analyze

Grasp customer needs
Procurement and manufacturing
Services
Enhance quality through continual improvement

22

TOKYO ELECTRON Sustainability Report 2016

Improving customer productivity
In addition to providing high quality products to customers, TEL also recommends ways to operate theequipment most efficiently at customer fabs and offers optimization services.
TEL has introduced TELeMetrics, a service that connects the equipment installed at customer sites with
TEL via a communications network, enabling TEL to monitor and analyze data to improve equipment performance. Specifically, the service takes advantage of TEL’s unique technological insights and specialized
analytic tools to multilaterally analyze data such as equipment functionality, component degradation overtime, and product variability. This allows TEL to identify problems in real time and offer appropriate solutions. This service can significantly reduce the costs for installation, operation, and management of facilities
and equipment. TELeMetrics also has a proven record of improving the overall efficiency of facilities atcustomer fabs.
For example, one customer reported that TELeMetrics successfully reduced the percentage of nonuniform wafers from 2.8% to 0.5%. As the yield improved, the customer could also reduce the impact on
the environment and reduce costs.

Effects of TELeMetrics on the rate of wafer non-uniformity (%)*

2.8
0.5
BeforeAfter* In low-pressure chemical vapor deposition (LP-CVD) processes

TEL receives Intel’ s prestigious SCQI award
TEL received Intel Corporation’s prestigious Supplier Continuous Quality Improvement (SCQI) award in March 2016.
The SCQI award is part of Intel’s Supplier Continuous Quality Improvement program to encourage Intel’s key suppliers to strive for excellence andcontinual improvement. Only the highest performing suppliers receive this honor. TEL provides coater/developers, dry etch systems, wet etch systems, thermal processing systems, deposition systems, and test systems, all essential to Intel’s success. TEL was selected as one of eight companies
to receive this honor. The award illustrates TEL’s exceptional performance in attaining Intel’s goals in 2015 and demonstration of industry-leading
commitment across all critical focus areas measured: quality, cost, availability, technology, customer service, labor and ethics systems, and environmental sustainability. This was the 16th consecutive time that TEL received this quality award, and we intend to keep demonstrating stellar performance on cost competitiveness, leading-edge technology, quality programs, and outstanding customer service.

Intel and the Intel logo are trademarks or registeredtrademarks of Intel Corporation or its subsidiaries in
the United States and other countries.
* Other names and brands may be claimed as theproperty of others.

Photo: Chip Holley Productions

TOKYO ELECTRON Sustainability Report 201623

Procurement

We value a trust-based relationship with our
suppliers and collaborate together formutual growth.
Manufacturing high value-added products is TEL’ s unwavering goal, achieved only if all components
and materials function as planned to enhance overall product quality. We seek to be fair with our
suppliers, and value mutual trust and growth.
24

TOKYO ELECTRON Sustainability Report 2016

Highlights
Percentage ofsuppliers who showed
improvements inthe supply chain CSR
assessment

34

Number of
CFSP-certified
smelters

Percentage ofsuppliers who showed
improvements in the
supply chain BCP
assessment

204

27

companies％％

Goals and results for fiscal year 2016
Theme

Goals

Promotion of
CSR program●

Conflict minerals●

Conduct the third Supplier CSR Survey with key suppliers, those
suppliers that account for more than 80% of our procurement
spend.

Results
●

●

●

●

BCP

Conduct the second conflict minerals survey.
Improve data accuracy.

Conduct the fifth procurement BCP survey with key suppliers, those accounting for more than 80% of our procurement
spend.

●

Conducted Supply Chain CSR Assessment with key suppliers, those accounting for more than 80% of procurement spend. Improvements were observedin 34% of suppliers.

Conducted a conflict minerals survey with our principal suppliers using the
CFSI1 reporting template. Identified 204 CFSP2-certified smelters.
Improved the percentage of known CFSP-certified smelters covered in ouroperations (99.5%).

Conducted a Supply Chain BCP Assessment with key suppliers accounting for
more than 80% of our procurement. Improvements were observed in 27% of
suppliers.
●
Implemented improvement activities at suppliers with low scores.
●

1 CFSI: Conflict-Free Sourcing Initiative. Founded by members of the EICC and GeSI (Global e-Sustainability Initiative),
the CFSI inspects 3TG smelters to certify they do not have conflict minerals.
2 CFSP: Conflict-Free Smelter Program. The CFSP is promoted and led by the CFSI.

Framework
To maintain a robust supply chain capable of supporting streamlined product manufacturing, TEL has instituted a procurement
policy and established a system for administering fair procurement practices based on mutual trust with suppliers. Under the
TEL Representative Director and President as the top of the procurement system along with the Senior Executive Vice President
in charge of development & production, the manufacturing
companies presidents’ council and the purchasing department
manager council are convened to share information on various
procurement issues.
The council also serves as a venue to address current problems
and discuss approaches to improve partnership with suppliers.

Representative Director, President & CEO

Senior Executive Vice President, General Manager,
Development & Production Division

Development & Production Division
Manufacturing companies presidents’council

Purchasing department manager council

TOKYO ELECTRON Sustainability Report 201625

Procurement
Sustainable supply chain
BCP framework
As part of its business continuity plan (BCP), TEL collaborates with its suppliers for disaster preparation.
When crises arise, a database of our suppliers’ production sites plays a major role in our response. The database is updated annually to help promptly identify impacted suppliers and quickly take recovery steps
following a disaster. The system was introduced in 2011 and is now firmly established with our suppliers. In
fiscal year 2016, the database contained information about 14,000 locations. The information was used toassess the impact of six disasters that occurred during the year.
TEL also conducts an annual survey on our suppliers’ business continuity plans. In fiscal year 2016, key
suppliers, accounting for more than 80% of our procurement spend, were asked to participate in a procurement BCP survey. We found that 27% of suppliers showed improvement over the previous year. Survey
results were shared with suppliers to promote further improvement.

CSR procurement
TEL aims to build and maintain a robust and sustainable supply chain. To achieve this goal, we have established a procurement policy that requires strict compliance with labor laws and regulations and respect
for fundamental human rights (including prohibitions against child labor and forced labor). Suppliers are
required to abide by this policy. Additional documents regarding our compliance with the EICC Code of
Conduct are posted on the TEL website where information about our “green” procurement guideline-based
environmental activities is also available.
In fiscal year 2016, we conducted a Supply Chain CSR Assessment for our key suppliers, who account for
more than 80% of our procurement spending. The assessment, which evaluates the compliance with the
EICC Code of Conduct, showed year-over-year improvements in 34% of suppliers. The assessment included
a questionnaire on child labor, forced labor, bonded labor, inhumane treatment, false reports, falsification ofrecords, and bribery. The answers we received indicated that none of our suppliers were engaged in thesepractices. Also, none of our suppliers had a sufficient number of employees* to be considered high risk interms of compliance. As with the BCP survey, the assessment results were shared with suppliers to encourage additional improvement.
* 500 employees or more

Conflict minerals
TEL considers taking action against conflict minerals1 an important part of its corporate social responsibility.
Conflict minerals are illegally mined and give rise to poor working conditions and human rights violations.
Our goal is to eliminate the use of raw materials and components containing conflict minerals.
In fiscal year 2016, we conducted our second annual survey on countries of origin and smelters of potential conflict minerals (3TG: tantalum, tin, tungsten, and gold), using the CFSI reporting template. As a result,we identified 204 CFSP-certified smelters, providing us confidence that 3TG sourced from these smelters
were conflict-free. None of the materials that TEL procured were found to contain conflict 3TG. This survey
will continue every year, with the cooperation of our suppliers, to further improve the quality and accuracyof the survey.

26

TOKYO ELECTRON Sustainability Report 2016

1 Conflict minerals: Minerals minedin the Democratic Republic of theCongo (DRC) and neighboring
countries used to finance armed
groups or minerals mined inother conditions where humanrights abuses and labor problems occur. The term commonly
applies to four minerals: tantalum, tin, tungsten, and gold.

Supply chain communication
Cooperation with suppliers
In addition to daily communications, TEL holds Production Update Briefings and a TEL Partners Day toenhance relationships with suppliers. At these events, we present and exchange information on the management plans, market trends, business policies, and CSR initiatives. We also ask for continued cooperationin strengthening our supply chain, and honor outstanding suppliers to express our appreciation for theirconstant support.
Strong quality management at suppliers is essential to improve product quality. Since 2000, we have regularly conducted a Supplier Total Quality Assessment (STQA) to clarify what is expected of our suppliers interms of maintaining and improving quality. Before starting business with new suppliers, an STQA is conducted to evaluate their handling of product quality, cost, information security, and CSR issues (including humanrights, ethics, safety, and the environment). The entire management system is comprehensively assessed.
After we have an existing business relationship with suppliers, they are asked for a similar self-assessment
every three years. If the results do not meet TEL standards, TEL-certified auditors visit the supplier to explain the problems revealed by the assessment. Once the supplier understands the issues, they are asked to
implement improvement measures in line with our written requests for improvement. TEL internally keeps
track of all requests and improvement measures, offering continual support to suppliers until all necessary
improvements have been made.
TEL is also partnering with our suppliers to implement a TPM program. The production of any piece ofequipment involves a number of supplier processes. In the TPM program, supplier shop floor improvement
teams collaborate with TEL employees to enhance productivity and product quality. In one example, theprogram led to a 30% reduction in the number of steps required to assemble modules and systems. The
program also plays a key role in educating supplier improvement team members.

TEL Partners Day

Cooperation with industry organizations
In June 2015, TEL joined the EICC, an electronics industry coalition on CSR. EICC participation includes
adopting the EICC Code of Conduct, a set of standards to improve labor practices, health and safety, environmental impact, and ethics in the electronics supply chain. TEL adheres to the EICC Code of Conduct tomaintain and strengthen its supply chain, in cooperation with other EICC member companies.

TOKYO ELECTRON Sustainability Report 201627

Our people
andworkplace

TEL provides a workplace filled with dreams
and vitality where employees can reach theirfull potential.
We strive to create a workplace where employees are engaged and collaborate as a cohesive teamof creative and responsible individuals. We also provide challenges to develop our employees anddistribute compensation in a fair manner based on performance. We respect basic human rights
and have mutual respect for our diverse values. This allows us to utilize the full potential of ouremployees and build a dynamic organization.
28

TOKYO ELECTRON Sustainability Report 2016

Highlights*
Percentage of qualified
employees who took childcare leave

Number of employees
who took
refreshment leave

93

1,045

％

people* Target: All TEL companies in Japan

Goals and results for fiscal year 2016
Theme

Goals
●

Diversity

Work-life
balancePursue diversity management;
understand and respect different
values.

Support work-life balance.

Results

Leverage diverse workforce and help individuals unleash
their full potential.

●

Understand and respect cultural values in global operations.

●

Provide work environments that empower women.

●

●

●

●

Offer support systems to improve working behavior toachieve a better balance between work and personal life.

●

Planned and implemented the Global HR Project.

Implemented employee training in management
and communication skills.

Analyzed issues related to empowerment of womenand formulated an action plan.

Conducted a self-declaration questionnaire.

Framework
TEL maximizes its corporate value by maintaining an open anddynamic organization that enables all employees to apply theirabilities to the fullest extent. TEL is also optimally structured to
be flexible and respond quickly to any changes in the operating
environment.
The HR (human resources) departments at the head office andin the various TEL companies work closely together on personnel
issues, convening the Japan HR leaders meeting1 every month andGlobal HR leaders meeting2 twice a year. These meetings serveas the forum for sharing corporate missions, setting goals, communicating activities, and discussing key issues. Under this management framework, our HR departments identify risks from anorganization-wide perspective and make sure appropriate measures are implemented throughout TEL.

Representative Director, President & CEO

Executive Vice President
Corporate Administration Division

VP & General Manager
Human Resources, General Affairs

Japan HR leaders meeting(6 group companies in Japan)

Global HR leaders meeting(12 group companies worldwide)

1 Japan HR leaders meeting: A meeting comprising the heads and principal managers of
HR departments at Japanese Group companies
2 Global HR leaders meeting: A meeting comprising the heads and principal managers
of HR departments at worldwide Group companies

TOKYO ELECTRON Sustainability Report 201629

Our people and workplace
Realizing an engaging work environment
Principles on diversity
TEL operates globally through 38 subsidiary companies (at 74 locations in 16 countries and regions), withoverseas sales of semiconductor production equipment accounting for over 80% of our total sales. In thisoperating environment, TEL is making every effort to enhance our energy and creativity by ensuring thatour diverse workforce can realize its full potential regardless of gender, age, race, special needs, or religion.
As part of this endeavor, TEL is focused on establishing an inclusive working environment for people withdisabilities, and implemented a project to promote their employment in fiscal year 2016. As a result, theproportion of employees with disabilities in fiscal year 2016 was 1.96% at TEL headquarters and 1.98% at all
TEL companies in Japan.

Initiatives for work-life balance
TEL has a refreshment leave system that offers employees with 10 years or more of continuous service a
special paid leave every five years, ranging from two weeks to one month*. The purpose is to encourage
employees to refresh their body and mind so they can fully utilize their abilities when they return to work.
In fiscal year 2016, 1,045 employees in Japan took the leave.
TEL has also enhanced our family and medical leave systems, enabling employees to navigate throughvarious life events and maintain their employment and careers.
TEL’s childcare support system in Japan allows employees to extend their leave until a child’s third birthday. Also, TEL gives guardians of children an option of taking reduced work hours until their children finish
elementary school, which goes significantly beyond the legal requirement. As a result of these measures, 42
employees (or 93% of those eligible) took childcare leave in fiscal year 2016, and 46 returned to work after
taking childcare leave during previous years. About 35% of female TEL employees in Japan are successfullybalancing work and family as working mothers.
* Employees with 10, 15, 20, and 25 years of continuous service can take a leave of two weeks, three weeks, two weeks, and one month, respectively.

Employees’ voice: On child care leave for men
When my first baby was born, I took a leave of absence to care for our child for about a month. My colleagues
were supportive by helping the transition and allowed me to go on leave with few worries.
The fact that I was taking child care leave was very reassuring for my wife as she faced the challenge of giving
birth. I was also able to spend a lot of time with my wife and our newborn, and could help with household chores.
It is great that TEL not only has a program for child care leave, but also an environment that encourages
men to take it. I recommend my male colleagues take advantage of this benefit and participate more actively
in raising their children.

Employee motivation
Highly motivated employees are essential to a workplace filled with dreams and vitality. That is why TEL
provides a wide range of HR development programs, including career building for individual employees.
The Global Engagement Survey is conducted annually for all TEL employees. The anonymous survey
results help improve the organization and ensure proper use and management of our human resources.
To improve engagement, a self-declaration questionnaire on desired career paths and reassignment isprovided to all employees once a year. Private consultation is offered to those who request it.
In addition, each year TEL presents the Employee Excellence Award. The award recognizes employees
who have achieved outstanding results during the year, based on nominations by respective departments.
In fiscal year 2016, 17 TEL employees both in Japan and abroad received the honor.

30

TOKYO ELECTRON Sustainability Report 2016

Toyohiro Kamada
Development Department 1,
Tokyo Electron Tohoku Limited

Human resource development
TEL UNIVERSITY
To enhance its HR development and organizational capabilities, TEL has established a corporate educational
institution called TEL UNIVERSITY. Its curriculum includes courses that provide world-class knowledge andskills, training programs for next-generation leaders, and courses for developing managerial and organizational capabilities.

Example of programs
hosted by TEL UNIVERSITY
Number of participants byprogram for fiscal year 2016
English conversation classes
2,775 in total

Main activities in fiscal year 2016
In fiscal year 2016, a number of on-demand programs for learning English were introduced for employees
whose work involves global interactions. Examples include: consultations in work-related practical English,
team-based classes in English, self-paced online courses, and a learning method seminar. In addition to language courses, support for e-learning and correspondence courses on other subjects was also made available.
The TEL University also organized workshops by TEL’s experts in specialized technologies, and training for
new employees was enhanced by taking full advantage of internal skills and talents. A joint group training
course for young employees offered an opportunity to reflect on their current work and to take their careers to the next level.
Life design seminars were offered for employees who were aged 51 or over as they neared retirement.
The program used concrete examples and Q&A sessions to show what preparations were needed before
the retirement is reached, helping the participants to clear up any doubts and worries they may have on
the subject.

Support for self-learning
language study
440
Workshop for engineers
183
Semiconductor seminars(12 classes)

141

Training for young employees
215
Life design seminars
276

Improving employee health and work environment
Initiatives based on wellness declarations
TEL places the highest priority on the health and safety of its employees, and issued a wellness declarationin February 2012. Based on this declaration, TEL is conducting a number of ongoing wellness promotion
programs, including walking events, healthy food choice initiatives for company cafeterias, and body composition measurement sessions.
Other ongoing initiatives for workplace wellness promotion include health help desks, supported by doctors, and regular counseling services supported by clinical psychologists.
In fiscal year 2016, various events were organized according to the specific needs of each location. Of
these, a nutrition seminar held for employees in the Akasaka area (Japan headquarters) was particularly wellreceived, as it helped them to understand the importance of improving their diet.
Introduction of stress checks
Effective December 2015, Japanese companies were mandated by law to offer stress checks to employees.
This involves testing the employees’ stress levels regularly and informing the employees of the results toraise their stress awareness. The goal is to reduce mental health risks and improve working conditions
through analysis of aggregate results. TEL is planning to implement the first stress check in July 2016, and iscurrently preparing the implementation plan, methods, and manuals.

Long Term Disability insurance coverage
In fiscal year 2016, TEL started providing Group Long Term Disability (GLTD) insurance coverage to companies in Japan. Under this plan,workers who become unable to work due to illness or injury can receive partial income replacement benefits, allowing them to focus on
recovery.
All TEL employees, excluding part-time and temporary workers, are covered in this plan. It includes both standard coverage, paid for by
TEL, that provides 50% of the employee’s standard monthly remuneration to qualified employees, and optional coverage that provides
additional monthly benefits of 10% to 30% of standard monthly remuneration that can be purchased by individual employees.

TOKYO ELECTRON Sustainability Report 201631

Environment

Under the slogan of “Technology for Eco Life,” wehelp solving environmental issues through ourleading-edge technologies and services.
In the world today, there are various environmental concerns, including climate change, depletionof energy and natural resources, pollution by chemicals and waste, and decline in biodiversity. TEL
helps solving these issues through our leading-edge technologies and services.
32

TOKYO ELECTRON Sustainability Report 2016

Highlights
Energy consumption
level of a new equipment
model compared to aprevious generations

Reduction of water
consumption

Environmental
education

65

40

5,000

％

The Koshi factory in
Kumamoto reduced water
consumption by 65% during
equipment evaluation
process.

％

The latest TiN metallization system
reduced energy consumption by
40% compared to previous model.

peopleAbout 5,000 employees took a
web-based education course on
environmentally friendly design.

Goals and results for fiscal year 2016
Theme

Goals
●

Reduce environmental
impact of products.

Results

Develop a roadmap for understanding the current situation and achieving
the goals for fiscal year 2019*.
* Reduce energy and pure water consumption per wafer by 10%(using fiscal year 2014 as the baseline).

●●

Comply with Chinese RoHS.

●

Implement initiatives globally.

Products
Promote voluntary product compliance with European RoHS.
Comply with the environmental regulations of eachcountry.
Promote energy efficiency.

Factories
and offices

Reducing water consumption
Waste recycling

●

●

●
●

●

Continue to ensure products comply with environmental regulations(including China RoHS, GHS, etc.)

Maintain recycling rate at the fiscal year 2012 level for Japanese sites, andat the base year level for overseas sites.
●
Continue activities.
●
●

●

●

Continue activities.
Plan activities based on analysis of survey results, conduct the third green
procurement survey, and improve evaluation of low-scoring suppliers.

Reducing the environmental
impact of logistics●

Continue activities.

Environmental management system●

Adhere to the revised ISO 2015 standards.

Environmental education●

Provide web-based education on environmentally friendly design.

●

Implement education programs at design and procurement departments.

●

Continue to publish Environmental and Social Report.

Environmental communication

●

●

●

●

●

●

Based on the guidelines, conduct ecosystem tours multiple times at eachfactory in Japan.
●
Hold symposiums.
●
Create a list of conservation activity targets in key areas.
●

Biodiversity●●

In Japan: Attain a recycling rate of 97% or higher.
Outside Japan: Attain a higher recycling rate year-over-year.

Green procurement

Environmental Environmentally friendly
designmanagement●●

Reduce energy consumption by 1% year-over-year.
Continue activities.

●●

Procurement
and logistics

Maintain the percentage of compliant parts in major models of eachbusiness unit at 98.5% or greater.

Completed assessment of current situation of products manufactured in Japan and completed future
roadmap.
Integrated compliance initiatives for Chinese RoHS
with environmental product compliance initiatives inother countries.
Goal was achieved and the results were tallied.
Conducted initiatives on an ongoing basis and expanded the scope of these activities to production
sites outside Japan.
Of the 12 sites in Japan and abroad with an establishedgoal, 7 sites successfully reduced energy consumption
by 1% year-over-year.
Attained 11 out of 15 goals set for Japanese and overseas sites.
In Japan: Attained a recycling rate of 98.4%.
Outside Japan: Attained an increase of 0.3 percentage
point year-over-year at manufacturing sites.
This year’s green procurement survey was integrated
with the Supply Chain CSR Assessment.
Continued activities and monitoring.
Established an in-house project to adhere to the revised ISO 2015 standards and consolidate the environmental management systems for sites in Japan.
Provided web-based education to approximately
5,000 employees.
Programs implemented as part of the environmental
education mentioned above.
Continued to publish the report.

Conducted ecosystem tours in each area.
Held symposiums.
●
Created a list of conservation activity targets in key
areas.
●●

Framework
TEL promotes environmental activities across TEL through its corporate EHS Promotion Department. TEL executives appoint members to the product environment value meeting, the product environment compliance meeting, and the operation environment value meeting, all of which carry out activities to achieve ourenvironmental goals. The EHS council convenes twice a year to assess progress
toward our environmental goals and encourage continued improvement.
Since 1997, we have been working to obtain certification for the ISO 14001 environmental management standards. Seven sites, including many of our manufacturing subsidiaries, are currently certified. In fiscal year 2017, we plan to adhere to
the revised ISO 2015 standards by consolidating the environmental management
systems of our subsidiaries. Our Japanese systems will be consolidated first, followed by the overseas systems.
Through these efforts we continue to assess our compliance with environmental
laws, emission standards, and other voluntary standards. TEL has not been involvedin any environmental incidents or accidents. We have not been in violation of any
environmental laws or subject to any associated legal proceedings in fiscal year 2016.

Representative Director, President & CEO

Senior Executive Vice President, General Manager,
Development & Production Division
Development & Production Division
Manufacturing companies
presidents’council

EHS Council

Equipment
safetypromotion
meetingWorksafetypromotion
meeting

Product
environment
value
meeting

Product
environment
compliance
meeting

Operation
environment
value
meeting

TOKYO ELECTRON Sustainability Report 201633

Environment
Product initiatives
Environmentally friendly products
The total CO2 emissions from the TEL value chain (including raw material procurement and product manufacture, transport, use, and disposal) was calculated according to the greenhouse gas (GHG) protocol.
Emissions arising from product use currently account for 90% of our total emissions. For this reason, TEL
has made it a key corporate objective to promote environmentally friendly product design and has been
striving to lower the energy consumption of its products. In fiscal year 2015, TEL established a goal to reduce energy and pure water consumption by 10% by fiscal year 2019 (using fiscal year 2014 consumption
as the baseline). In fiscal year 2016, TEL expanded the scope of this program to include products produced
by its overseas subsidiaries. TEL also monitored TEL’s global energy use while seeking to improve overallthroughput. In addition, the percentage of sales of energy-saving models* increased to 84.8% of the total
product sales.
To reduce the overall environmental impact of our products at our customers’ sites, we must examine
our primary equipment, peripherals, associated facilities, and management of our own factories. Increasing
the operational efficiency of the entire production system is increasingly important, along with encouraging
energy-efficient operations of our customers’ sites. We will continue to focus on monitoring and controlling
our energy use. We also plan to demonstrate the importance of energy saving measures through compliance with SEMI S23, a semiconductor industry standard for assessing energy conservation.
To meet our goals, we are promoting environmentally friendly manufacturing through development of
new technologies, further reduction in the use of energy, water, and chemicals, and proactive measures tocontain greenhouse gases.

Percentage of energy-saving
model sales in total sales
84.8
72.0
52.0

2014

2015

2016
（FY）

* Based on in-house standards

Customer fabs
Save energy in fab operations(by scheduling and optimization)

Equipment
Reduce equipment energy use

Systems
Operate systems
efficiently
Peripherals
Reduce energy use in peripherals

Energy conservation features of TiN metallization system
Thin film deposition is a key process in semiconductor manufacturing. Conventionally, chemical vapor
deposition (CVD) 1 was the technology of choice for this process; however, the need for continued semiconductor miniaturization from our customers called for development of new equipment based on the
Advanced Sequential Flow Deposition (ASFD)2 process technology. This new technology not only enables
deposition of nanoscale film with highly engineered properties, but can also be implemented at temperatures lower than those for CVD, making it a superior deposition technology in terms of energy conservation.
TEL’s TiN metallization system was developed in response to this shift in process technologies. Due largely
to its low temperature processing and idle-time energy conservation feature, the system achieved a 50%
reduction in per wafer energy consumption in fiscal year 2014 as compared with its performance in fiscal
year 2008.
The latest Triase+TM EX-ⅡTM TiN Plus model features a newly developed reactor chamber and unique gas
injection mechanism to attain significant improvement in throughput while reducing the energy consumption level to 40% of the previous model. As a result, the new model achieved the corporate target of reducing energy consumption per wafer by 10% from the fiscal year 2014 level. This is three years ahead of the
fiscal year 2019 deadline.

34

TOKYO ELECTRON Sustainability Report 2016

1 CVD: A method for depositing
thin films on substrates by decomposing source materials
using thermal and/or chemical
processes.
2 ASFD: Advanced Sequential
Flow Deposition, a low-temperature processing method
for forming nanoscale metal
films with highly-engineered
properties.

Management of chemical substances contained in products
To achieve our goal of manufacturing environmentally friendly products, TEL has set up a system for managing hazardous chemicals in our products. In addition, we proactively collect information on relevant laws
and regulations in Japan and abroad to properly ensure compliance. For example, when any substance ofvery high concern (SVHC) is present in our products at a level of 0.1% or higher, we disclose the information
appropriately, based on EU REACH1 regulations. We also provide safety data sheets (SDS) on the chemicals
we use, in accordance with GHS2 requirements.
To comply more effectively with regulations such as REACH and China RoHS3, in April 2015 we conducteda survey of our Japanese suppliers regarding the chemicals contained in their products based on the JAMP
AIS4.
In fiscal year 2016, we expanded the previous year’s Seminar on Design for Environmental Complianceand offered the course not only to managers but also to staff members from relevant departments. The
seminar consisted of an overview of frequently revised environmental laws and regulations, lectures ontarget chemicals, and comprehension tests. About 5,000 employees took the course during the fiscal year.
We will continue to closely monitor and appropriately respond to relevant laws and regulations worldwide, further increasing our global efforts to reduce hazardous chemical substances.

1 EU REACH: EU Registration, Evaluation, Authorization and Restriction of Chemicals. An EU
regulation pertaining to the registration, evaluation, authorization, and restriction of chemicals.
2 GHS: Globally Harmonized System of Classification and Labelling of Chemicals
3 China RoHS: Chinese regulation
on materials including lead,
mercury, cadmium, hexavalentchromium, polybrominated biphenyls (PBBs), and polybrominated diphenyl ethers (PBDEs).
Businesses are required to provide customers with relevant
information on the use of thesematerials.
4 JAMP AIS: Article Information
Sheet (AIS) promoted by the
Joint Article Management Promotion-consortium (JAMP). This
sheet is used to communicate
basic information on regulated
chemical substances containedin products.

Logistics initiatives
Transport regulations are becoming more stringent due to worldwide environmental concerns such as
global climate change and the rising demand to reduce the environmental burden of logistics activities.
TEL has been implementing modal shifts5 to use less environmentally harmful means of transport whereapplicable. For example, we have adopted ocean shipment for some semiconductor and FPD production
equipment, and we are making efforts to reduce production lead time to compensate for the extra time ittakes to ship by ocean rather than by air. We have extended the use of shelved trolleys from the shipment
of FPD production equipment to semiconductor production equipment as well, thereby improving the loadfactor of trucks and reducing both CO2 emissions and costs.
Our CO2 emissions in fiscal year 2016 were 65 kilotons, down about 11% year-over-year. This is primarily
due to the increase in the ratio of outbound international ocean shipments.
To conserve resources, we are using recyclable cardboard boxes for packaging. After equipment has been
shipped and installed, casters and other specialized transport fixtures are collected and brought back to TEL
factories for reuse. These are only a few examples of TEL’s resource-saving efforts.

5 Modal shift: A change in themode of transport; specifically, switching from conventional freight transport by truck or
aircraft to a means that has alower impact on the environment, such as rail or ocean.

Product reuse and recycling
As the need for more varied semiconductor production equipment increases, TEL is encouraging reuse andrecycling of equipment and components by marketing refurbished TEL equipment and offering modification services to customers who have TEL equipment already installed.
Our refurbished equipment operations start with procuring used equipment from the market. This equipment is then properly tested and refurbished, before being offered to customers as TEL Certified Used
Equipment. Our equipment modification services boost the productivity of installed equipment by maintaining and improving its quality and availability. Through these approaches, we address our customers’cost, speed, and performance needs, while also contributing to waste reduction and resource conservation
and utilization. These efforts help reduce the use of resources and CO2 emissions associated with procuringand manufacturing equipment and components. They are also effective in reducing the costs of production,
logistics, and waste disposal.

TOKYO ELECTRON Sustainability Report 201635

Environment
Factory and office initiatives
Initiatives to prevent global warming and save energy
Each TEL factory and office has an established company goal of reducing energy consumption by at least 1%
year-over-year. Initiatives to achieve these goals include energy-saving clean room operation, optimum temperature settings for office cooling and heating, and the introduction of highly energy-efficient equipment.
Photovoltaic power generation systems have been installed at some of our factories and offices in Japan,
and the renewable energy they generated in fiscal year 2016 totaled 4,486 MWh. Tokyo Electron U.S. Holdings, Inc. has also been purchasing green electricity since 2001. Green electricity usage totaled 3,833 MWhin fiscal year 2016.
Out of the 12 TEL factories and offices worldwide with reduction goals, 7 achieved them in fiscal year
2016. Organization-wide power consumption in fiscal year 2016 was 254 GWh, down 7% year-over-year,
and CO2 emissions from energy consumption* were 147 kilotons, down 8% year-over-year.
* In calculating CO2 emissions, the emission factor for TEL’s electricity consumption in Japan in fiscal year 2016 was substituted by adjusted emission factors for the electrical power providers concerned. The emission factor for TEL's overseas electricity consumption was substituted byestimated factors calculated by the Federation of Electric Power Companies of Japan based on values published by the International Energy
Agency (IEA).

Electricity consumption(Million kWh)

223.0

208.8

72.2

65.6

2014

2015
Overseas

TEL has established a goal of keeping water consumption at the same level or below that of a baseline year
(fiscal year 2012 for factories and offices in Japan, and a fiscal year of their choosing for overseas operations).
In fiscal year 2016, we achieved 11 out of the 15 goals at our sites worldwide. Continued efforts to achievethese goals include installing water-saving devices, watering lawns with rainwater, and implementing intermittent operation of cafeteria faucets. Overall, we reduced water consumption by 30% year-over-year
to 1,076,000m3 in fiscal year 2016, due in part to the closure of some overseas facilities. In fiscal year 2016,
we discharged an estimated 905,000m3 of wastewater.
Example of initiatives
In fiscal year 2016, the Koshi factory in Kumamoto opened a facility for reusing water discharged from thesemiconductor production equipment evaluation process, reducing water consumption by about 65%. The
plant expects to recover its investment for this facility renovation in 1.8 years or less. In another example,
the Fuchu Technology Center in Tokyo installed water-saving devices in the restrooms and the kitchen,
reducing the overall water consumption by 12% year-over-year.

2016
(FY)

Water consumption(thousand m3)

1,043
896

612

503

Electricity consumption(Million kWh)

223.0

180
208.8

198.4

2014

2015

Japan

Overseas

72.2

2014

Initiatives to reduce water consumption

55.8

Japan

1,058

Example of initiatives
The Hosaka factory in Yamanashi installed a new air conditioning control system for its clean room. The
atmosphere in a clean room must be precisely controlled, not only for cleanliness, but also for temperatureand humidity. When controlling temperature and humidity, overcooling should be avoided, because overcooling must be compensated for by heating, which increases wasted energy. The newly installed systemaccurately monitors the atmospheric temperature and humidity inside and outside of the clean room andenables the air conditioning equipment to operate in an energy-efficient manner. As a result, the Yamanashi
Factory saved about 670 MWh of electricity (335 tons of CO2) and 140 kl of heating oil (350 tons of CO2)
in a year, reducing CO2 emissions by 685 tons. The factory estimates that the system upgrade costs can berecovered within three years.

198.4

65.6

2015

2016
(FY)

55.8
2016

Recycling rate and (FY)Japan
Overseas
generation of incinerated
and landfill waste
in Japan(tons)

98.9
98.4
Water
98.0 consumption(thousand m3)

1,058
1,043
Maintain recycling rate of
172 Target:
97% or more
896
122
94
612
503
2014

2015

180
2016
(FY)

Incinerationand land¬fill
2014
2015
2016
(FY)
Recycling rate
(%)
Japan
Overseas

Recycling rate andgeneration of incinerated
and landfill waste
in Japan(tons)

98.0

98.9

98.4

172 Target: Maintain recycling rate of
97% or more

94

36

TOKYO ELECTRON Sustainability Report 2016

2014

2015

122

2016
(FY)

180
2014

2015

Japan

Overseas

2016
(FY)

Initiatives to reduce waste
TEL is contributing to waste reduction and recycling whenever possible by sorting waste, switching towaste-free production processes, and disposing of non-recyclable waste in an appropriate manner. TEL
actively advocates waste sorting, and some of its facilities have participated in the electronic manifest system1 to ensure proper waste management. In fiscal year 2016, the amount of incinerated and landfill waste
generated by TEL in Japan was 122 tons. As a result of our waste-reduction initiatives, the recycling rate2
at sites in Japan in fiscal year 2016 was 98.4%, achieving our goal of maintaining a recycling rate of 97% orhigher for the 10th consecutive year. The recycling rate for TEL’s overseas factories and offices was 87.9%
in fiscal year 2016.
Example of initiatives
TEL FSI, Inc., in Chaska, Minnesota, takes waste recycling measures, such as eliminating the use of disposable
plastic cups and composting paper towels. As a result, TEL’s recycling rate for 2015 increased to 70%, anincrease of 6% from 2014.

Management of chemical substances
TEL uses chemical substances in our product development and manufacturing phases. The use and release ofchemical substances that are under the purview of the Japanese PRTR3 law are consistently monitored andmanaged. Whenever we introduce a new chemical substance or change the way an existing substance is used,
we check for environmental, health, and safety risks beforehand. We dispose of hazardous substances properly after use, either through expert waste disposal contractors or by using in-house processing equipment.
In response to the April 2015 revision to the Fluorocarbons Recovery and Destruction Law, we have been
conducting simple, regular inspections to monitor the amount of fluorocarbons that have been released andhave been used in equipment as a refrigerant and the amount that has been recovered. In fiscal year 2016, ourfactories and offices did not exceed the level of fluorocarbon leakage that requires reporting.

Biodiversity
TEL’s activities impact biodiversity while also benefiting from it. In recognition of this, we are making efforts
to conserve biodiversity and improve the conservation system.
In fiscal year 2016, as in 2015, TEL met our goal of conducting at least two ecosystem tours at our Japanese sites, as part of our biodiversity conservation activities. The Koshi factory in Kumamoto held a lecture on biodiversity and biomimicry4, as well as an ecosystem tour of the property surrounding the plant,
guided by members of the Forest Instructors Association of Kumamoto Prefecture. The tour’s participants
observed nearly 50 different plant species, and learned about the plants’ characteristics. In addition, TEL
drew up a list of targets for its conservation activities for fiscal year 2017, assessing the impact of previous
ecosystem tours and consulting the Red List5 of threatened species in the prefectures where TEL’s offices
and plants are located.

Recycling rate andgeneration of incinerated
and landfill waste
in Japan(tons)

98.0

98.9

98.4

172 Target: Maintain recycling rate of
97% or more

94

2014

2015

122

2016
(FY)

Incineration and land¬fill
Recycling rate (%)
1 Electronic manifest system: A
system for electronically tracking the flow of industrial waste
instead of using paper-based
manifests (i.e. paper forms for
tracking industrial waste). With
this system, data processing
centers, businesses that generate waste, and waste collection/disposal companies can share
information over communications networks to streamline
waste tracking.
2 Recycling rate: (Recycled amount/
Amount of waste generated) × 100

3 PRTR: Pollutant Release and Transfer Register. 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 and discharged into theenvironment and the amounts
transferred (as part of waste) off
the original business’ premises.

4 Biomimicry: An approach to creating innovative technologies byemulating the characteristics ofliving things.
5 Red List: A list of wild plants andanimals facing extinction.

Environmental communication
TEL’s environmental policy requires that we foster a cooperative partnership with our wide-ranging stakeholders to reduce our environmental burden and properly respond to their expectations.
In both 2014 and 2015, the Esashi factory in Iwate invited its neighbors and local government representatives to the 6th Environmental Debriefing for the Local Community. TEL also held lectures at anenvironmental skill-building seminar for local businesses in Oshu City, Iwate Prefecture, and at the 2nd
Environmental Business Seminar in Sendai City, Miyagi Prefecture, to enhance communication with our
stakeholders and provide transparency around TEL’s environmental activities.

TOKYO ELECTRON Sustainability Report 201637

Socialcontribution

We are committed to fulfilling our corporate
responsibilities and contributing to thedevelopment of local communities.
We believe businesses have an important role in collaborating with society to achieve sustainablegrowth. TEL has a goal of developing a company that is engaged in various initiatives to contributeto society and collaborate with neighboring communities, helping them achieve greater prosperity
and enhancing mutual trust.
38

TOKYO ELECTRON Sustainability Report 2016

Highlights
Number of social
contribution programs

Number of student researchteams that participated in a
TEL-supported event

175

176

teams** The number of teams that participated in the 5th
Science Intercollegiate

Our opinion on social contribution activities
Local communities are the foundation of all business operations. TEL intends to fulfill its role as a responsible corporate citizen byworking to solve problems faced by the local communities, thereby nurturing a communal relationship based on solid trust andbuilding a robust partnership. As a member of the global economic society, TEL is striving to protect the irreplaceable environmentof the planet. To achieve the future prosperity of the international community and to attain a dream-inspiring society, TEL is taking a long-term approach to the universal issues affecting the world’s sustainability by leveraging its technological prowess andstakeholder network.
TEL’s social contribution activities are both local and global in nature, because long-term development of society can only beachieved by combining these two aspects.

Social contribution policy●●●

In line with our Corporate Philosophy, we set education, health and human services, the environment, and culture as the focus
areas of our social contribution activities, and choose specific initiatives that best meet the requirements of each locality.
Keeping an eye on the direction of our medium- to long-term management strategy, we operate our business in a manner that
contributes to the mitigation of future risks, industry-wide sustainability challenges, and factory problems that affect the global
society.
We review the suitability of the initiatives every year, weighing such factors as their social impact, budget, and long-term contribution to business operations.

Goals and results for fiscal year 2016
Theme

Goals

Results
Formulated a basic policy for social contribution activities tobe implemented throughout the organization in fiscal year
2017.
●
Provided employees with volunteering opportunities at educational events, among other events.
●

Formulate an organization-wide policy for social contribution
activities and establish standards for implementation.
●
Expand employee volunteer programs.
●

Social contribution activities

TOKYO ELECTRON Sustainability Report 201639

Social contribution
Toward a sustainable global society
Toward solving major issues faced by humanity

The Tohoku Forum for Creativity at Tohoku University
The Tohoku Forum for Creativity (TFC) at Tohoku University is an advanced research program that brings together Nobel Laureates andother world-renowned researchers, junior researchers, and students
in a collaborative setting, with the aim of solving major problems facing humanity and society at large. Tokyo Electron has been providing
comprehensive support to the TFC ever since the pilot program began
in 2013. TEL is committed to developing the leading minds of the next
generation, as well as to supporting the growth and prosperity of the
Tohoku area where its key manufacturing bases are located.
In April 2015, the TFC organized the Spring School event to mark the
beginning of the academic year. Leading researchers, including Nobel Laureate in Physics Prof. Gerard’t Hooft (Utrecht University, theNetherlands), were joined by 60 students in this five-day program. The TOKYO ELECTRON House of Creativity̶the central facility of the
TFC̶was completed in May of the same year, and became operational as a visitor research institute.
Four thematic programs were implemented in the academic year that started in April 2015, including Frontiers of Brain Science, theEffects of Technological Changes on Social Mobility and Income Distribution, Fundamental Problems in Quantum Physics, and Spintronics.
URL http://www.tfc.tohoku.ac.jp/

Supporting a diverse innovation platform

SUNY Polytechnic Institute
In October 2015, TEL agreed to jointly support $262.5 million in new investments over the next five years at SUNY Poly’s NanoTech* megaplex in Albany, NY.
TEL has been a major partner for the advanced R&D center at SUNY Polytechnic Institute (SUNY Poly) and the Colleges of Nanoscale
Science and Engineering (CNSE) since 2003. SUNY Poly and corporate partners across New York State, and enables a diverse mixture ofdifferent kinds of talents into one place where collaboration and innovation happens.
TEL is committed to supporting the finest semiconductor R&D center in the world through contributions
to New York State and to communities developing the
nanotechnology-driven ecosystem.
* SUNY Poly: The State University of New York Polytechnic Institute (SUNY Poly) was formed from the merger of
the SUNY College of Nanoscale Science and Engineering(CNSE) and SUNY Institute of Technology.

URL https://sunypoly.edu/

40

TOKYO ELECTRON Sustainability Report 2016

Working with local communities
TEL is operating from 45 locations throughout the world, including 29 locations in Japan and 15 abroad. One third of TEL employees areworking at its overseas locations. As TEL’s field of operations is spread across the world, gaining the support and understanding of local
communities is essential to the sustainability of its business.

France

Japan

U.S.

SEMI High Tech U
Tokyo Electron Europe Limited provided support to the SEMI Foundation’sHigh Tech U education program for local high school students, in collaboration with our customers and industry
peers. The employees used corporate
training materials to give lectures on
the semiconductor industry and nanotechnology.

Science Intercollegiate
TEL supports the Science Intercollegiate, a competitive event in which
students of natural sciences present
the results of their research. The event
is designed to foster next-generationengineers with skills to advance Japan’s
expertise in science and technology ina sustainable manner. At the competition held in March 2016, 176 teams
who passed the qualifying round gathered from around Japan.

SPARK program
Tokyo Electron America, Inc., has been partnering with
Texas State University to sponsor SPARK, a programfor supporting STEM1 education by providing students
with opportunities to participate in internships, job
shadowing2, plant tours, and mentoring.

China

TaiwanU.S.

ZhangJiang Fun Run
The eighth ZhangJiang Fun Run event
was held in September 2015 in Shanghai, with the objective of making friends,
helping people, and building community. The event drew 2,250 participantsfrom 59 local businesses. Tokyo Electron(Shanghai) Limited has been a regularsupporter in this event ever since its inauguration.

Exchanges with local universities
Tokyo Electron Taiwan Limited has received 102 visitors from local universities so far, including students andprofessors. By communicating information such as an overview of TEL andbriefings on semiconductors, Tokyo
Electron Taiwan is promoting local understanding of the semiconductor industry as a whole.

Partnership for Children
Partnership for Children is a non-profit
organization dedicated to promoting
the welfare of children through various programs including study support. The group also offers caseworkservices and provides children withclothes and school supplies.

1 STEM: Science, technology, engineering, and mathematics
2 Job shadowing: A work experience option where students learn
about a job by walking through the work day as a shadow to acompetent worker.

TOKYO ELECTRON Sustainability Report 201641

Corporate governanceCorporate governance
Basic view on governance that will lead to sustainable growth for TEL
TEL declares in its medium-term vision that we are determined to become “a real global company generating high addedvalue and profits through innovative technologies and groundbreaking solutions with diverse integrated technologies.”
Given that over 80% of our sales now come from overseas, TEL regards building a governance system as essential to becoming a real global company that achieves sustainable growth.
To that end, TEL has built a framework to maximize the use of its worldwide resources and works to incorporate a wide
range of opinions. In addition to strengthening its management platform and technology base, TEL maintains a governancestructure that will enable it to attain world-class profitability.

The corporate governance framework
TEL uses the Audit & Supervisory Board System, which consists of a Board of Directors and an Audit & Supervisory Board.
Effective governance is achieved based on the supervision of management by the Audit & Supervisory Board.
Based on this organizational structure, TEL has also established systems that will facilitate growth-oriented governancedirected at sustainable growth for TEL including the following:
The Board of Directors, whose role is to make major operational decisions and play a supervisory role in the executionof those
The Nomination Committee and Compensation Committee to ensure fair, effective, and transparent management
The Corporate Senior Staff (CSS) to formulate and advance company strategy

Corporate Governance Framework, Internal Control System and Risk Management System
Shareholders' Meeting
Cooperate

Board ofDirectors

Audit & Supervisory Board

Compensation Committee Chief Business Ethics Director
Nomination Committee

Independent Auditors

Chief Internal Control Director
Chief CSR Promotion Director

Confirm the progress ofimprovements and give instructions

Representative Directors

Request for improvement/Report

Audit and
improvement reports

Request for improvement/ReportCompliance & Internal Control Executive Officer
CSR Promotion Executive Officer

CSS & Executive Officers

Internal Audit Dept.
(Global Audit Center)

Committees
Ethics Committee
Information Security Committee
Export Trade Control Committee
Request for

CSR Management Council
CSR Global Promotion Committee

Audit

improvement/
ReportRisk Management &Internal Control Function(General Affairs Dept.)
Request for improvement/Report

Monitoring

Administrative Depts.

42

TOKYO ELECTRON Sustainability Report 2016

Cooperate

Check and balance

Business Depts.

Roles and responsibilities of the Board of Directors
The Board of Directors works to achieve sustainablegrowth and increase corporate value over the medium- tolong-term based on its fiduciary responsibility to shareholders. The roles and responsibilities of the Board of
Directors are as follows:1

Establishing management strategy and vision2

Making major operational decisions based on
strategic direction

3

Engaging in constructive, open-minded debate

The Board of Directors seeks the active participation of
those present in discussions in order to obtain a widerange of opinions, and supervises management and operational execution based on active debate.
The Board of Directors respects opinions even when
they are minority or opposing viewpoints, including opinions voiced by outside directors; revises the conditions
for implementation or the content of proposals as necessary; and engages in extensive debate with the goal ofreaching decisions based on consensus. However, emphasis is placed on making necessary decisions quickly to
avoid missing opportunities.
In the TEL Board of Directors meetings, proactive, frankopinions are indeed continually presented, not only byinternal Corporate Directors, but also by independent
directors and Audit & Supervisory Board members, enabling active debates thereby.

The role of Executive Directors does not end with referring and explaining proposals as the representativeof each division. They also contribute to active debate,
proper decision-making, and supervision of execution
through objective, constructive opinions coming fromdifferent perspectives of each Corporate Director.

Policy on election of Independent Directors andAudit & Supervisory Board Members
By stating their unreserved opinions from an independent perspective, independent directors and outside Audit & Supervisory Board members guide Board of Directors debates in the proper direction for success in global
competition that does not follow the same line of discussion proposed by internal Corporate Directors.
To achieve our previously stated goals, independent directors and outside Audit & Supervisory Board members shallconsist of people who offer a good balance of the following
qualities:
Knowledge of global businessBroad insight into related industries
An extensive network of personal contacts
Objectivity from social, capital market,
and other perspectives
Knowledge of finance and accounting
Broad legal knowledge

View on overall balance of knowledge, experience, andskills in the Board of Directors, its diversity

The reason for Appointing the CEO, individual Corporate Directors and Audit & Supervisory Board members;
status of concurrent duties at other listed companies, arefound in the Appendix of the following document:

Policy on election of Executive Directors

URL http://www.tel.com/ir/policy/cg/document/index_02.pdf

Executive Directors of TEL are required to have superior
executional abilities underpinned by experience, insight,
and a track record in management, high sensitivity to all
possible risks, being able to properly analyze and judge
matters, and frankly state the opinion that they believe
to be correct during debates.
Moreover, in electing Executive Directors, consideration
is given to achieving a balance of Corporate Directors who
are well-versed in each division of TEL, including:Sales and Service
Manufacturing
R&D
Corporate Administrationand other divisions, to the extent possible in order toensure constructive debate in Board of Directors meetings born out of a broad range of backgrounds andknowledge. The current Executive Directors have been
elected in a manner that has achieved such balance.
TOKYO ELECTRON Sustainability Report 201643

Corporate governanceCorporate governanceSize of the Board of Directors, number of Independent Directors and criteria for independence
TEL considers it essential to maintain a Board of Directors
with the appropriate size to ensure high quality, active
debate and the diversity expected of both executive directors and independent directors. The number of Corporate Directors shall therefore be the appropriate number
for the operating environment at the time, considering
a good balance in terms of knowledge, experience, andskills. There is a maximum of 18 directors established in
the Articles of Incorporation.
The current Board of Directors consists of 11 Corporate
Directors, and TEL believes this to be the appropriate,
well-balanced size at the present time.
Number of Independent Directors andcriteria for independence
TEL regards the active expression of opinions, not only
by independent directors, but also by Audit & Supervisory Board members, as the cornerstone that supports
the sound decision-making of the Board of Directors.
Currently, 5 of the 16 participants in the Board of Directors
meetings, including the Audit & Supervisory Board members, are outside members, consisting of two independent
directors and three outside Audit & Supervisory Board
members. TEL believes that the current Board of Directors meetings achieve an appropriate sense of productive
tension and constructive debate due to the combinedpresence of executive directors, essential for making operational decisions, and outside members, who provide
objectivity. TEL actively considers candidates equippedwith the knowledge and character that TEL thinks willcontribute to sustainable growth for TEL for independent
directors and other outside members.
TEL also ensures the independence of independent
directors and independent Audit & Supervisory Board
members through separately specified independence
requirements for outside directors and outside Audit &Supervisory Board members, in addition to the requirements under the Japanese Companies Act.
Details on independence requirements for outside director and outside Audit & Supervisory Board members
can be found in the following document:
URL http://www.tel.com/ir/policy/cg/document/
index_03.pdf

Nomination of Corporate Directors and the CEO
TEL has established a Nomination Committee to ensure
fairness and efficiency in management. No Representative Directors, including the CEO, is a member of theNomination Committee. The authority to propose election or dismissal of the CEO or Corporate Directors is entrusted to a Nomination Committee member who is not
a Representative Director.
Ensuring the independence of theNomination Committee
The Nomination Committee shall consist of three ormore Corporate Directors or Audit & Supervisory Board
members. In order to ensure the independence of thosemembers, Representative Directors may not be electedto the Nomination Committee. Moreover, the Nomination Committee recommends Nomination Committee
members for the next period and the Board of Directors
elects the members based on those recommendations.
This method achieves a high degree of independence andfairness in the election of candidates and ensures the authority of the CEO and other Representative Directors
does not extend to the management of the Nomination
Committee.
The term of Nomination Committee members shall be
one year. Re-election up to a maximum of four years ispermitted.

Ensuring fairness in evaluation
TEL takes the following steps to ensure fair and highly
transparent evaluation of the executive management,
including the CEO.
1

Executive Directors bear the responsibility ofachieving performance goals for the division where
they are in charge based on the budget and Medium-Term Management Plan. The degree to whichthat is achieved is an important factor in personnel
evaluations for performance-linked compensation.

2

The formula for calculating the performance-linked
compensation of the CEO is determined by the
Board of Directors, based on the proposal of theCompensation Committee. It is decided fairly andin a highly transparent manner.

3

In nominating candidates for Executive Director, theNomination Committee will evaluate the appropriateness of the candidate based on past performance,
including an evaluation of performance on assigned
duties, and considering his or her personality, including the character and dignity, as a manager. They
then determine whether or not he or she is capableof shouldering those responsibilities.

44

TOKYO ELECTRON Sustainability Report 2016

Compensation

On transactions among related parties

Policy on compensation
TEL aims to strengthen its global competitiveness andincrease management transparency by adopting a director and executive officer compensation system thatis closely linked to performance and shareholder value.
The compensation of directors and executive officers
comprises a fixed monthly wage and an annual performance-linked bonus.

TEL requires Corporate Directors or Audit & Supervisory
Board members to obtain the approval of the board
when engaging in transactions with TEL or transactions
that are in conflict with the interests of TEL and the Corporate Directors or Audit & Supervisory Board Members.
This includes engagement in competing business with
TEL. Moreover, after such transactions take place, a report must be presented to the board regarding material
matters concerning such transactions.
In addition, irrespective of whether a transaction is between a Corporate Director or Audit & Supervisory Board
member, or a relative of them and TEL, TEL undertakes
regular annual investigations.
Furthermore, in regard to transactions between TEL
and shareholders, there are no major shareholders (defined as a shareholder with at least 10% of voting rights)
in TEL. If a major shareholder emerges, TEL will undertake
procedures to ensure appropriateness of transactions
according to the previously stated policies.

Role of the Compensation Committee
The Compensation Committee, which comprises threeor more directors, including at least one outside director, performs an analysis of industry wage levels insideand outside of Japan, accounting for both monetary andnon-monetary aspects of the total compensation package. Based on this comprehensive analysis, the committee proposes a policy and system for director compensation to the Board of Directors. The proposal includes
specific amounts for individual compensation, including
the CEO’s bonus.
Formula for calculating compensation
In order to better link factors that increase corporate andshareholder value to compensation, TEL has designatedthe actual net income attributable to owners of the parent company and ROE (Return on Equity) for the current
period as the main calculation benchmarks in the performance-linked compensation system for the CEO andother Corporate Directors. These are adjusted, as necessary, for extraordinary income/losses and other special
factors.
In principle, performance-linked compensation consists of monetary compensation and share-based compensation. The composition is roughly 1:1 for Corporate
Directors, and single year performance is appropriatelyreflected in the performance-linked compensation of the
CEO and other Corporate Directors. Share-based compensation is awarded in the form of stock options withthe exercise price set at one yen per share, and the restriction that they may not be exercised for three years
from the date of allotment.

Composition and roles of the Audit &Supervisory Board
Composition of the Audit & Supervisory Board
The Audit & Supervisory Board currently consists of fivemembers and includes three outside Audit & Supervisory
Board members. Three members, including one outside
member, are full-time. The full-time Audit & Supervisory
Board members collect information through onsite surveys, and the board maintains appropriate coordination
with the Internal Audit Department and the independent
auditors as part of a structure that enables Audit & Supervisory Board members to obtain all information necessary for audits.
Moreover, the composition of Audit & Supervisory
Board members provides a good balance of knowledge
required for operational audits and accounting audits, including financial and accounting knowledge, legal knowledge, and audit experience at other companies. TEL thus
believes its Audit & Supervisory Board members are able
to perform the auditing functions effectively.

Evaluating the effectiveness of the Boardof Directors
Based on an evaluation survey filled out by the Board of
Directors and Audit & Supervisory Board members, theBoard of Directors discusses, analyzes, and evaluates its
own effectiveness, and discloses a summary of the results from the end of the current fiscal year.
URL http://www.tel.com/news/2016/0512_006.htm

TOKYO ELECTRON Sustainability Report 201645

Corporate governanceInternal control and risk management
Basic stanceIn order to enhance the Tokyo Electron Group’s corporate value and remain accountable for our actions to our stakeholders,
we are making efforts to strengthen effective internal control. This involves implementing practical measures that are in linewith the Fundamental Policies concerning Internal Controls within the Tokyo Electron Group, set out by Tokyo Electron’s
Board of Directors. We are also annually evaluating our internal control over financial reporting based on the Financial Instruments and Exchange Act of Japan.

Risk management system46

To more effectively strengthen the internal control andrisk management systems of the entire Group, Tokyo
Electron has established a dedicated risk management
and internal control function within the General Affairs
Department of the corporate headquarters. This function
manages and reduces risks through appropriate measures, such as by analyzing the risks that could affect theGroup, and instructing responsible departments to conduct self-assessments of major identified risks. The function also regularly reports the status of risk management
activities to the Audit & Supervisory Board Members andthe Board of Directors.
In fiscal year 2016, the Group thoroughly reevaluatedthe material risks surrounding its operating environment
in order to improve the effectiveness of its risk management. Based on this reevaluation, the Group is redefining
material risks and clarifying each risk owner to enhancethe efficacy of its risk management framework.

Business continuity management
Since 2012, the Group has been improving its Business Continuity Plan (BCP) for large-scale earthquakes. The BCP is being updated at the headquarters, local offices and plants so that it will work
effectively in the event of a disaster, facilitating earlyrecovery and alternate production.
In fiscal year 2016, the Group focused on revising
the manuals and plans, as well as on implementing
BCP drills and employee education.
In addition, emphasis has been placed on improving early emergency response with top priority given to securing employee safety, including stockpiling emergency supplies (including food and drinking
water), and reinforcing essential infrastructure.
As a result of these preparedness initiatives, wewere able to smoothly implement the BCP to respond quickly to the Kumamoto Earthquake in April
2016.

Auditing by internal audit department

Information security management

The Global Audit Center of the corporate headquarters
is the Group’s internal audit department. This Center is
responsible for auditing business activities, complianceand systems at domestic and overseas Group companies
and business units (BUs) in accordance with each fiscal
year’s auditing plan. The Center also annually evaluates
the effectiveness of the Group’s internal control over financial reporting based on the Financial Instruments andExchange Act of Japan.
At operating divisions where issues have been identified through audits and assessments, the Center monitors progress and provides necessary guidance for improvement.

To ensure appropriate management and safe and effective use of information assets, the Group has establisheda framework for preventing information leakage under
the Tokyo Electron Group Information Security Policy
and the Regulation for Management of Technical andBusiness Information. These rules have been disseminatedglobally throughout the Group companies and are updated whenever necessary.
In order to strengthen information security, the Groupis enhancing training and education for all of its executives and employees worldwide. These programs ensurethat they can protect technical and business data andabide by the IT security rules.
Additionally, we have established a system for reporting both actual and potential cases (incidents) of information leakage. Such reports are critical in making quick
responses, and their analysis can offer valuable insights
into improving Group-wide measures to prevent leakage.

TOKYO ELECTRON Sustainability Report 2016

Compliance
Basic stance
Stakeholder trust is the cornerstone of business activities. In order to maintain trust, it is necessary to continuously
act in rigorous conformity to business ethics and compliance. In line with the Fundamental Policies concerning Internal
Controls within the Tokyo Electron Group, all Group executives and employees are required to maintain high standardsof ethics and to act with a clear awareness of compliance.
Theme

Goals for fiscal year 2016

Results for fiscal year 2016

Review the current management
system.
●Formulate an improvement plan basedon the review.
●

Ethics and compliancemanagement

Rework and reinforce themanagement system.

TEL’s Code of Ethics

Make the Code of Ethics conform more to socialchanges.

●●

Check conformity with the EICC Codeof Conduct.
Review TEL’s Code of Ethics.

Business ethics
In 1998, Tokyo Electron formulated the Code of Ethics of
the Tokyo Electron Group to establish uniform standards
to govern all of its global business activities. In the same
year, TEL appointed a Chief Business Ethics Director andestablished the Ethics Committee, which is responsible
for promoting business ethics awareness throughout theTokyo Electron Group. The Ethics Committee comprises
the Chief Business Ethics Director, the Ethics Committee
Chairman, and presidents of major Group companies inand outside Japan. The members meet semiannually, report on ethics related issues facing each company, anddiscuss measures to further improve ethical behavior andcompliance.
The Code of Ethics is reviewed in response to changes in the expectations of society. In January 2015, an anti-corruption statement was added to its introduction
based on Principle 10 of the UN Global Compact, which
concerns working against corruption including extortionand bribery. In fi scal 2016, the Group reviewed its Code of
Ethics in response to the Code of Conduct of the EICC, anelectronic industry CSR consortium that the Group joinedin June 2015.
The Tokyo Electron Group’s Code of Ethics and its Q&A
section are published in Japanese, English, Korean andChinese and disclosed on the intranet to enable all Group
executives and employees, including those overseas, toview them at any time. The Code of Ethics is also publicly
accessible from the corporate website.
URL http://www.tel.com/environment/corp_governance/compliance/ethical.htm

Compliance system
Tokyo Electron has appointed a Compliance & Internal
Control Executive Officer from among its executive officers to raise awareness of compliance across the Groupand further improve Group-wide compliance. TEL has
also drawn up the Compliance Regulations, setting out
basic compliance-related requirements in line with theCode of Ethics. The Compliance Regulations are intended●●

Conducted a review of the current management system,and enhanced cooperation between the Ethics Committee and the compliance department.
Checked conformity with the EICC Code of Conduct, andbegan a partial revision of TEL’s Code of Ethics to increase conformity with the EICC Code of Conduct.

to ensure that all individuals who take part in the business activities of the Tokyo Electron Group 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
Through the Group’s e-learning system, we provide standard web-based training programs covering the basics ofcompliance, export-related compliance, protection of personal information, the Act for Subcontracting and othertopics. All executives and employees are required to complete this training. In addition, other web-based programs
tailored to specific positions and job roles are also available,
including those on insider trading and the Social Security
and Tax Number System.
We also have a quiz-based business ethics complianceeducation course for all Group executives and employees.
Updated yearly, the quiz is intended to maintain compliance awareness throughout the Group and disseminate
the latest information.
In addition to these web-based courses, we organizedin-house seminars in fiscal year 2016 for Corporate Directors and domestic Group company presidents on the subjects of compliance and internal control.

Internal reporting system
The Tokyo Electron Group has an internal reporting system that employees can use to report any activity suspected of being in breach of laws, regulations or business ethics principles. An ethics hotline and a compliancehotline have been established to receive reports from all
Group companies, and each overseas location also has its
own reporting system. In all instances, the system ensures that whistleblowers remain anonymous and areprotected from any disadvantage or repercussions.
There were no reports or cases of non-compliancewith laws, regulations, or principles of ethics in fiscal
year 2016 that could have had a material impact on theGroup’s business or local communities.
TOKYO ELECTRON Sustainability Report 2016

47

Report Review

Takatoshi Yamamoto
Outside Audit & Supervisory Board Member,Tokyo Electron Limited

Comments on Tokyo Electron Sustainability Report 2016
Company stakeholders expect business to thrive and grow with society in a sustainable manner. Corporations are nowadays
requested to improve medium- to long-term corporate value by leveraging their business activities and company resources
to contribute to the resolution of current social issues. To attain these goals, we must generate new value through a cycleof CSR activities that builds on itself and becomes even more competitive in the global market. The nature of CSR programs
is shifting these days, from a passive set of activities to a proactive program based on societal needs. The thinking behind
this approach is that by seamlessly integrating business operations with CSR, social contribution and profitability can beachieved simultaneously.
To emphasize TEL's new focus on sustainable development and growth that is aligned with society, the title of this reporthas been changed from “Environmental and Social Report” to “Sustainability Report.” The report includes a descriptionof the medium-term management plan formulated under the leadership of our new management team. The plan
outlines TEL's business goals up to fiscal year 2020. The report also clarifies the relationship between the medium-term
management plan and various social issues surrounding our business. It lists a revised set of key issues and provides asimple overview of the goals and activities of each department.
TEL chose five key issues for this fiscal year: “Product competitiveness” , “Customer responsiveness” , “Earnings power” ,“Maximizing dreams and drive” , and “Establishing sustainable operations.” The first three of these come from the medium-

term management plan. A total of 15 themes and 16 goals have been established under these key issues, and we have been
pursuing these goals. The themes and goals that fall under “Establishing sustainable operations” are especially important,as they include corporate governance, compliance and ethics, safety, environmental management, and supply chain
management―items that are essential to the enhancement of corporate value. We hope to share our progress on theseobjectives with all employees and ultimately to achieve the goals through our united efforts.
Our business operations and CSR initiatives cannot be successful without strong stakeholder communication and engagement based on mutual trust. As we put our corporate philosophy into practice, we are aware how essential CSR is forenhancing our corporate value in both financial and non-financial terms. Just as we must engage in investor relations (IR)activities in the capital markets, we must keep our shareholders and other stakeholders well informed about both our basic
position with CSR and the specific activities we are pursuing. This includes our CSR policy, the internal promotion system,
our CSR goals, and company results. We believe such communication will give the stakeholders a deeper understanding of
our CSR management overall.

48

TOKYO ELECTRON Sustainability Report 2016

Awards and recognition

Main awards and recognition received in fiscal year 2016
Category

Business
partner

Product

Environment/
safetyCommunication/societyAward received * Awards received in fiscal year 2017

SponsorRecipient＊

Excellent Service In F10 Expansion

Taiwan Semiconductor Manufacturing Co., Ltd.

TELBEST PARTNER OF THE YEAR

SK hynix Inc.

TEL

TowerJazz’s 2015 “Most Reliable Tool Set”
Supplier of the Year Award

Tower Semiconductor Ltd.（TowerJazz）

TEL

2015 Partner Award

Fuji Electric Co., Ltd.

TELBest in class

SanDisk Corporation

TEL

Outstanding Support Award

WIN Semiconductors Corporation

TEL

2015 SCQI AwardIntel Corporation

TEL

Partnership Award

Yokkaichi Operations, Semiconductor & Storage
Products Company, Toshiba Corporation

TELBest Supplier Award 2015

Skyworks Panasonic Filter Solutions Japan Co., Ltd.

TELAppreciation Award*

United Microelectronics Corporation

TET

Supplier Excellence Award*

Texas Instruments Incorporated

TEL

AUO Global Partner Summit 2016 Award*

AU Optronics Corporation

TELBest Supplier Award

LG Display Co., Ltd.

TELSpecial Contribution Award*

Xiamen Tianma Micro-electronics Co., Ltd.

TEL

Semiconductor of the Year Excellence Award in
the semiconductor manufacturing equipment
category
EXIM™ sputtering system for next-generation
semiconductors

Sangyo Times, Inc.

TEL

Minnesota Safety Council Governor's Safety Award*

Minnesota Safety Council

TEF

CDP Disclosure Score: 94
CDP Performance Score: B

CDP

TEL

The 19th Nikkei Environmental Management
Survey: Ranked 23rd

Nikkei Inc.

TEL

Certificate of appreciation: For supporting the
Tohoku Forum for Creativity and establishing theTOKYO ELECTRON House of Creativity

Tohoku University

TEL

FTSE4 Good Global Index

FTSE

TEL

The Sustainability Yearbook 2016
Yearbook Member
and Industry Mover

RobecoSAM AGTELMSCI ACWI ESG Index and
MSCI World ESG Index

MSCI

TEL

2015 Internet IR Excellence Award

Daiwa Investor Relations Co., Ltd.

TEL＊ TEL: Tokyo Electron Limited / TET: Tokyo Electron Taiwan Limited / TEF: TEL FSI, Inc.

TOKYO ELECTRON Sustainability Report 201649

Performance summary (Environment)

Energy consumption/generation

CO2 emissions fromlogistics FY2014
and
Scope
the proportion of marine transport(kilotons)metric
Energy consumption(energy consumption/sales)
37.8(kiloliters/billion yen)

42.2
31.0

25.9

FY20161.20

1.02
52,0021.3036.1

2

Overseas
3

58

Total 51

54,97365
5
620,432
18,44868
59
79,35973,421

2014
Japan

2015
222,9762016 208,753

198,404

International logistics
Overseas
72,23965,615
Proportion of marine transport in international logistics (%)

55,797

66

Energy consumption3(crude oil equivalent)(kiloliters)
63
2012

60

Japan

FY2015

2013

7458,927

54(FY)

Logistics (MWh)in JapanPower consumption

Gas consumption(crude oil equivalent)(kiloliters)

Fuel consumption(crude oil equivalent)(kiloliters)

274,368

254,201

Japan

2,027

1,929

1,602

Overseas

1,850

1,572

1,146

Total

3,877

3,501

2,748

Japan

1,156

870

706

4

1

0

1,160

871

706

2,618

2,405

3,833

Green power purchase (MWh)Japan
PV power generation (MWh)

4,698

4,536

4,486

26

23

0

4,724

4,559

4,486

Overseas
Total

223.6

223.0

221.6

208.8

72.2

40.5

27.8

67,499295,215

Total(Million kWh)

15,497

Total

Overseas

Electricity consumption

2012

2013

Japan

Overseas

198.4

65.6

2014

55.8

2015

2016
(FY)

CO2 emissions from energy consumption(tons)

125,921

120,913

117,396

114,956

87,124

15,06336,31734,51332,591

2014

2015

2016

23,316

2012

2013

Japan

Overseas(FY)

Water consumption(thousand m3)

1,122

1,078

315

1,058

300

506

466

301

70 312
2012

1,043

297

612
471

416

290

300

104
2013

2014

896

327

226

503

368

180

302
2015

2016
(FY)

Environmental impact of logistics
Scope

FY2014FY2015FY2016

Japan

3,099

5,348

5,901

rate and generation of incinerated
CO2 emissions Recyclingfrom logistics
51,131
68,241and landfill wasteOverseas
in Japan(tons)

58,735(tons)

97.4

Total

97.3

Proportion of marine transport ininternational logistics (%)

331

98.0

54,230

98.9

42.2

31.0

Target: Maintain recycling rate of 97% or more

215

172
94

2012

73,5892013

2014

64,636

98.4

2015

36.1

Industrial water (Japan)
water (Japan)from logistics andCOTap
2 emissions
Groundwater(Japan)the
proportionof marine transport
Overseas use(kilotons)

42.2

37.8

36.1

31.0
Volume of25.9
PRTR Class I designatedchemical
substances handled in Japan(kg)663

60

14,361

74

2

54

3

68

63 11,73258 12,665
1,617
51

4,541
2012

2,031
2013
3,787

65

5

2,059 10,781
1,035
2014
4,144 2015
2,408

785
59
4,004

2016
(FY)

122

9,278
8,203 in Japan
Logistics
International
logistics
7,338
5,914
6,462
Proportion of marine transport in international logistics (%)

2016

2012

2013

2014

2015

2016
(FY)

(FY)

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

50

TOKYO ELECTRON Sustainability Report 2016

6

14,067

Hydrogen fluoride and its water-soluble salts
Methylnaphthalene
Other

66

60

3
63

2012

74
2

54

58
2013

3

68

51
2014

65

5

6
59

2015

72.2

40.5

27.8
2012

2013

Japan

Overseas

65.6

2014

55.8

2015

2016
(FY)

2016
(FY)

Logistics in Japan
International logistics
Proportion of marine transport in international logistics (%)

Greenhouse gas consumption/emissions

CO2 emissions from energy
consumption (tons)

Scope

FY2014FY2015FY2016

Japan

120,913

125,921114,956

Overseas

36,31734,51332,591

Total

157,230

160,434

147,547

Metric for CO2 emissions fromenergy consumption(CO2 emissions/sales)(tons/billion yen)

2.61

2.22

7,550

6,620

5,576

1
the proportion
marine transport
Scope 1 CO2 emissions(tons) of Overseas
3,601

3,066

2,242

125,921

120,913

117,396

114,956

87,12436,31734,51332,591

2014

2015

2016

23,316

2012

2013

Japan

Overseas

(FY)

Japan

CO2 emissions from logistics and(kilotons)

42.2

37.8

Total

25.9
66

2
60
Scope 2 CO2 emissions(tons)
3
2

58

Scope 3 CO2 emissions3 (tons)
2012
2013
Non-energy-derived greenhouse
Logistics in Japangas emissions (tons)

Japan
Overseas
54
3
Total
51
2014

11,15136.1

9,686

7,818

119,301

109,38031.0

113,36374

65
532,716
6 31,447

30,34968
146,079

139,72959150,748

3,650,734 3,566,479 3,491,1 1 1
2015
2016

Japan
20,794
International logistics

21,79532,848

Japan

2,610

1,501

2,452

PFCs (tons)

Japan

7,416

5,784

7,784

SF6 (tons)Japan

10,755

14,49917,095

Other (tons)

Japan

13

11

5,517

Recycling rate and generation of incinerated
and landfill waste in Japanpan, from which 50,000 tons was deducted through theuse of a domestic clean development mechanism (which

223.6
223.0
allows large221.6
corporations
to receive208.8
credits for CO2 emis198.4
sions reductions made by small and medium-sized businesses in exchange for financial and technological support

Water
consumption
for reducing
CO2 emissions).

72.2
65.6
1,122
55.8
1,07840.5 1,058
1,043
27.8
896
315
300
297

2012

2 Scope 2: Indirect GHG emissions from use of electricity, steam and heat purchased by TEL

98.9

98.4

98.0
97.4from corporate
97.3 value
3 Scope 3: Emissions
chains (excluding scope 1 and 2 emissions), such as product transportation, employee business travel, and major outsourced production processes
331
Target: Maintain recycling rate of 97% or more
172

2014

2015

70 312

104

300

290

2012

2013

2015 226 2016

503

(FY)

368

180

302

2014

2015

2016
(FY)

Industrial
water (Japan)
COfrom energy consumption
2 emissions
Tap water (Japan)(tons)

Groundwater (Japan)
120,913
117,396
Overseasuse

125,921114,956

87,12436,317 34,513 32,591
23,316
15,06314,361
14,067
12,665
1,617 11,732
785
2012
2013
2014
2015
2016
2,059 10,781

(kg)

4,541

2,031

Japan

Overseas
3,787

4,144

1,035
2,408

5,914

6,462

7,338

2012

2016

FY2014FY2015FY2016

Recycling rate (%): Recycled amount /
Japan
1,058
Amount of waste generated × 100

1,043

896

Groundwater

297

327

226

Tap water

471

416

368

Industrial water

290

300

302

612

503

180

Total

1,670

1,546

1,076

Japan

116

162

128

Overseas use

416

8,203

(FY)

IncinerationScopeand landfill

471
Overseas

Japan

301

327

2014
612

466

506

122

94

2013

Volume of PRTR Class I designated chemical
substances handled in Japan

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

2012
2013
Resource consumption(Million kWh)

(FY)

Proportion of marine transport in international logistics (%)

215

Electricity
CO2 emissions consumption
in fiscal year 2012 totaled 87,124 tons in Ja-(thousand m3)

HFCs (tons)

Water
consumption(thousand m3)(tons)

15,0632.57

63

CO2 emissions from energy consumption

2013

2014

2015

4,004
(FY)
9,278

2016
(FY)

Water
consumption
Hydrogenfluoride and its water-soluble salts(thousand m3)

Methylnaphthalene

1,122
Other
315

1,078

1,058

300

506

466

301

70 312
2012

1,043

297

612

327

471

416

290

300

104
2013

2014

896
226

503

368

302
2015

180
2016
(FY)

Use of copierpaper (tons)

Recycling rate and generation of incinerated
and landfill waste in Japan(tons)

97.4
331

97.3

98.0

98.9

Target: Maintain recycling rate of 97% or more

215

172
94

2012

98.4

2013

2014

2015

122

2016
(FY)

Industrial water (Japan)
Tap water (Japan)
Groundwater (Japan)
Overseas use

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

14,361

12,665
1,617 11,732
2,059 10,781
2,031
4,541
1,035
4,144
2,408
3,787
8,203

2012

5,914

6,462

7,338

14,067

785
4,004

9,278

TOKYO ELECTRON
Sustainability
2013
2014
2015
2016Report 2016
(FY)

51

117,396

125,921

120,913

114,956

87,124

Performance summary (Environment)

36,31734,51332,591

2014

2015

2016

23,316

15,063
2012

2013

Japan

Overseas(FY)

Amount of waste generated

Amount of waste generated(tons)

Scope

FY2014FY2015FY2016

Japan

8,780

8,858

7,721

Overseas

1,185

1,206

663

Total

9,965

10,064

8,384

Amount of specially controlledindustrial waste generated
in Japan (tons)

2,627
Japan

Recycled amount (tons)

8,608

Overseas

Amount incinerated or put into
landfill (tons)

2,842

2,125

8,764

7,599

813

1,064

583

Total

9,421

9,828

8,182

Japan

172

94

122

Overseas

372

142

80

Total

544

236

202

Chemical substances
Recycling rateconsumption/emissions
and generation of incinerated
and landfill waste inScopeJapan

FY2015FY201698.912,66598.4 10,781

14,067

Hydrogen fluoride and its
Japan
6,462
7,338
331
water-soluble
salts (kg) Target: Maintain recycling rate of 97% or more

9,278

Methylnaphthalene (kg)(tons)

Volume of PRTR Class I designatedchemical substances(kg)
97.4 handled
97.3

Japan

98.0

FY2014

Japan

2,408

4,004

2,059

1,035

785

21

12

21

8,254

9,941

1

114

101

Consumption Amount(kg)
Japan × 100 4,144
of waste generated

2,401

4,004

172

Other (kg)Japan

Atmospheric release (kg)Japan

Amount transported as waste
2012
2013
(kg)

Japan
2014

Amount discharged in sewage
Incineration and landfillJapan
(kg)

94

122

2015 8,4992016(tons)

97.4

98.9

98.0

97.3

98.4

Water consumption(thousand m3)

331
1,122

315

300

1,058

1,043

297 172

612

466

506
301

Target: Maintain recycling rate of 97% or more

1,078
215

471

896

327
416

226 122

94
503

368

180
2014
2015
2016
104
70 312 2013
302
300
290

2012

(FY)

2012
2013
2015
Incinerationand landfill2014
Recycling rate (%): Recycled amount /Industrial(Japan)Amount waterof waste
generated × 100
Tap water (Japan)
Groundwater (Japan)
Overseas use

2016
(FY)

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

14,3614,144

215

Recycling rate and generation of incinerated
and landfill waste in Japan

12,665
1,617 11,732
2,059 10,781
2,031
4,541
1,035
4,144
2,408
3,787
8,203

2012

5,914
2013

6,462
2014

14,067

785
4,004

9,278

7,338
2015

2016
(FY)

(FY)

Recycling rate (%): Recycled amount /NOx emissions (tons)

Japan

9.7

12

7.5

SOx emissions (tons)

Japan

2.8

2.7

2.2

Hydrogen fluoride and its water-soluble salts
Methylnaphthalene
Other

Environmental management/biodiversity
Scope

FY2014FY2015FY2016

Japan

7

4

4

Overseas

3

4

3

Total

10

8

7

Number of ecosystem tours

Japan

16

13

15

Number of ecosystem tour participants

Japan

42

69

281

Number of ISO 14001-certified companies

Compliance
Scope

FY2014FY2015FY2016

Number of breaches of environmental laws and regulations

Group

0

0

0

Amount of fines on legal breaches (yen)

Group

0

0

0

Other
Scope
Total product shipment (tons)

52

TOKYO ELECTRON Sustainability Report 2016

Japan

FY2014
16,331FY2015
13,596FY2016
17,342Performance summary (Social)

Employees and workplace

Target: Group companies in Japan (excluding Tokyo Electron Device Limited)

FY2014Composition of employees

Percentage of employeeswith special needs
Number and percentage ofwomen among managers

6,262

6,165

6,075

Women

1,009

1,001

985

Total

7,271

7,166

7,060

1,570

1,455

1,677

Men

135

65

21

Women

26

8

3

Total

161

73

24

Percentage of women

16

11

13

TEL (unconsolidated)

1.80

2.00

1.96

Group companies

1.90

1.94

1.98

Group companies

30/1.232/1.339/1.5

94.3

94.3

93.7

Men

15 yrs. 9 mos.

16 yrs. 6 mos.

17 yrs. 2 mos.

Women

14 yrs. 3 mos.

15 yrs. 3 mos.

16 yrs.

Overall

15 yrs. 7 mos.

16 yrs. 4 mos.

17 yrs.

Men

1.4

2.5

1.5

Women

3.3

3.4

3.9

Overall

1.6

2.7

1.8

59.6

61.8

62.6

70

52

42

95

95

93

53

46

46

93

88

85

211

192

172

Regular employees

Retention after three years of joining TEL(average in recent five years) (%)

Average service years
Employee retention

Turnover (%)

Use of annual paid leave (%)
Number of those who took child care leave
Percentage of those among the eligible who
actually took child care leave
Number of those who returned to work afterchild care leave
Percentage of those who returned to work afterchild care leave
Number of those who took paternity leave
Child care support system

Nursing care support

Number of those who used the shorter
working hour system

Men

8

11

13

Women

151

172

175

Number of those who took child care leave
to care for a sick/injured child

Men

240

246

245

Women

195

214

208

Number of those who took child care
support leave

Men

17

24

15

Women

75

72

88

Number of those who took extended
nursing care leave

Men

0

0

0

Women

2

2

0

Number of those who took short nursing
care leave

Men

13

11

10

Women

9

9

21

Men

1

1

0

Women

0

0

0

Number of those who used the shorter
working hour system for nursing care
Special paid leave system

FY2016Men

Non-regular employees

Number of new graduates hired

FY2015

Number of those who took refreshment leave

Men

663

1,091

926

Women

109

194

119

Retirees who used
reemployment system

Men

68

74

98

Women

0

0

3

Users of second career
support system

Men

68

59

43

Women

14

10

6

TOKYO ELECTRON Sustainability Report 201653

Performance summary (Social)

SafetyFY2014
Framework

EmployeesafetyNumber of breaches of regulations and self-imposed restrictions on healthand safety that occurred during product/service lifecycle

FY2015FY2016000Percentage of employees who
received training or refresher
training on basic safety

100

100

100

Percentage of employees who
received training or refresher
training on advanced safety

100

100

100

LTIR (lost time incident rate) for the past 3 years (%)

0.67

0.61

0.56

TCIR (%)

0.37

0.24

0.21

Percentage of employees who received
training on health and safety standards
in the past 2 years

Quality
FY2014
Framework
Customersatisfaction

FY2015FY2016

Amount of significant fines for breaches of laws and regulations on provision/use of products and services (yen)

0

0

0

Customer satisfaction rates for the past 4 years and latest target (%)

79

80

87

Number of substantiated complaints regarding customer privacy infringement
and loss of customer data

0

0

0

Procurement
FY2014

Supply chain
management

Improvement ofprocurement CSR (%)

Conflict minerals survey
Local operations

FY2015Rate of improvement after supply chain
CSR assessment

-

25

34

Rate of improvement after supply chain
BCP assessment

-

41

27

Rate of improvement after
green procurement survey

-

46

-*

Number of identified CFSP-certified smelters

-

117

204

99

99

99

Percentage of spending on local suppliers at critical business bases* Integrated with supply chain CSR assessment.

Social contribution

FY2014
Spending on social contribution (million yen)

Cash donations
breakdown (%)

FY2016FY2015FY2016

259

184

277

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

5

2

14

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

38

47

52

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

57

51

34

Compliance
FY2014
Enforcement ofcompliance

FY2015FY2016Percentage of employees who have received web-based training
on business ethics and compliance

100

99.7

98.4

Percentage of employees who have consented to the information
security agreement.

100

100

99.9

Innovation
FY2014

Number of active
issued patents

FY2015FY2016

Japan

5,227

5,288

5,172

U.S.

4,299

4,326

4,361

Europe

439

354

241

Korea

2,875

2,847

2,784

Taiwan

1,889

1,983

2,131

China

1,647

1,623

1,611

Total

16,376

16,421

16,300FY2013Global patent application rate (%)

FY201470.3

69.5

FY2015*68.0* Calendar year when patents were filed

FY2013Patent application
success rate (%)

FY2014FY2015*

Japan

78.0

74.0

78.0

U.S.

66.8

62.8

71.2

* Calendar year when patents were granted

54

TOKYO ELECTRON Sustainability Report 2016

Corporate profile(as of April 1, 2016)

Company name: Tokyo Electron Limited
Address:

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

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

Established:

Capital: 54,961 million yen
Number of employees: 1, 441

November 11, 1963

Number of Group employees: 10,657

Representative: Toshiki Kawai
Representative Director,
President & CEO

Number of locations:
In Japan:
8 companies at 29 locations
Outside Japan: 30 companies at 45 locations in 15 countries and regions
Worldwide total: 38 companies at 74 locations in 16 countries and regions

Main products
Semiconductor production equipment

Coater/Developers
CLEAN TRACKTM
LITHIUS ProTM Z

Plasma Etch System
TactrasTM

Atomic Layer
Deposition System
NT333TM

Thermal Processing
SystemTELINDY PLUSTM

Semiconductor production equipment

Wafer Prober
PrecioTM XL

Gas Chemical Etch System
Certas LEAGATM

Single Wafer
Deposition System
Trias e+TM

Single Wafer Cleaning
SystemCELLESTATM -i

FPD production equipment

Electrochemical
Deposition System
StratusTM

FPD Etch/Ash System
ImpressioTM

Inkjet Printing System for
manufacturing OLED panels
EliusTM

Financial data
Consolidated net sales(billion yen)

633.0

612.1

613.1

Consolidated operating income

R&D expenses(billion yen)(billion yen)

116.7

663.9

81.5

88.1

497.2

73.2

78,6

71.3

76.2

2015

2016

60.4
32.2
12.5
2012

2013

2014

2015

2016

2012

(FY)

2013

2014

2016

(FY)

2012

2013

2014

Others
6.2 billion yen (1.0%)

Other
2.6％

Europe
8.5％

Taiwan
25.6％

China
13.2％

FY2016FY2016
Japan
18.3％

U.S.
15.6％
Korea
16.2％

Semiconductor production equipment
613.0 billion yen (92.3%)

AssetsTotal
Cash and cash equivalents
Trade notes andaccounts receivables
Inventories
Other current assets
Tangible fixed assets
Intangible fixed assets
Investments and other assets(FY)

Composition of sales by region (consolidated)

Net sales by division (consolidated)
FPD production equipment
44.6 billion yen (6.7%)

2015

2015
876.1
317.6

2016
793.3
236.6

110.8

116.5

175.5
66.7
106.8
27.5
70.8

195.0
69.1
96.3
17.6
62.0

(billion yen)

Liabilities and net assets
Total
Net assets
Other liabilities

2015
876.1
641.1
234.9

2016
793.3
564.2
229.1

(billion yen)

(As of March 31, each year)

Note: Figures are rounded down to the nearest 100 million.

TOKYO ELECTRON Sustainability Report 201655

solaé art gallery project
The solaé art gallery project uses part of the “solaé” cafeteria at TEL
headquarters to provide a venue for rising new artists and display
their work. The highly creative exhibits, which integrate art, technology,
and science, are designed to inspire TEL employees who come into
contact with them. This crossing of paths of aspiring artists, supportive
stakeholders, and TEL employees has the potential to create value in
new ways for TEL.

About the cover art“reflectwo (green) ” by Haruka Kojin

Haruka Kojin is also an active member of the modern artist group“Me” (“Eye” in Japanese).

PR54-161