Quality management

Higherproductivity

Quality policy
Tokyo Electron (TEL) has a quality policy shared by all group companies which it has developed and is rolling out.
1. Quality Focus
Focusing on quality to satisfy customers, meet production schedules, and reduce required maintenance even with temporary cost increases.
2. Quality Design and Assurance
Building quality into products and assure in-process quality control, from the design and development phase throughout every process.
3. Quality and Trust
When a quality-related problem occurs, working as a team to perform thorough root cause analysis and resolve problems as quickly as
possible.
4. Continual Improvement
Ensuring customer satisfaction and trust by establishing quality goals and performance indicators and by implementing continual improvement using
the PDCA cycle.
5. Stakeholder Communication
Listening to stakeholder expectations, providing timely product quality information, and making adjustments as needed.

In initiatives to enhance corporate value, it is important to strive to improve productivity in all business activities, and tocontinuously increase management efficiency. Tokyo Electron (TEL) is reviewing and optimizing its business processes across thecompany as a whole, in development and manufacturing divisions as well as in sales and administration divisions, and the company
is promoting quality management throughout the value chain. In addition, the company is developing various educational programsin an effort to enhance the awareness and capabilities of each employee regarding productivity, as well as implementing continuous
quality improvement activities throughout the supply chain in collaboration with suppliers. By implementing quality-focus
operations, TEL is further improving productivity, in its efforts to build strong relationships of trust with all stakeholders.

Management system
TEL is building quality assurance systems under the leadership of the Representative Director, President & CEO. To
provide consistent, high-quality products, TEL has been acquiring ISO 9001 quality management system certification at
various sites since 1994, and now, all of the group’s manufacturing companies have successfully obtained certification.
ISO 9001 certified factories and offices
Company nameFactory/Office nameTokyo Electron Technology Solutions
Tokyo Electron Kyushu

Medium-term goals (3)Constantly pursue higher management efficiency

Priority themes, Main activities

Improvement of quality inthe value chain■Promote quality management throughout the value chain,
ensuring sustainable forms of production and consumption■Quality management
Quality policy, management system, enhancement of qualityrelated awareness and capabilities■Improvement of quality in the value chain
Initiatives at the development and design stages,
improved productivity in software development, support
optimization, response when issues arise

December 1994

Koshi Office

March 1997

TEL Magnetic Solutions—

November 2009

Tokyo Electron Korea

Balan Factory

September 2011

Tokyo Electron Miyagi

Taiwa Office

September 2012

TEL FSI—

March 2013

TEL Epion—

May 2014

Tokyo Electron (Kunshan)—

May 2018

Decent work andeconomic growth

Improvement of quality in the value chain
Quality management throughout the value chain
Tokyo Electron (TEL) believes that implementing continuous improvement, not only of products and services but alsoof all work processes, contributes to improved quality and productivity. The company strives to improve operations
throughout the value chain, while strengthening collaboration within the company and externally, reflecting the needs ofcustomers.

Improved
qualityand productivity

Responsible
consumption andproduction
Marketingand sales

27

September 1994

Tohoku Office

SDGs initiatives■Promote improvement of productivity, continuously increasing
management efficiency, contributing to the developmentof the industry and society, and contributing to continuous
economic growth

Quality management

Certification date

Yamanashi Office (Fujii/Hosaka)

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Development

DesignProcurement

Manufacturing

Sales

Installation

Maintenanceand service

TOKYO ELECTRON SUSTAINABILITY REPORT 201928

Higher productivity

Raising awareness and skills
TEL believes in the importance of every employee having a high awareness and understanding of quality, and conducts
various educational programs to this end. In addition to the fundamental quality education that all new employees
receive, we focus on PDCA education for all employees, including those overseas. Through e-learning courses, employees
learn the need for continuous improvement using the iterative four steps of the PDCA cycle. As of May 2019, 93.7% of ouremployees had completed the courses.
In addition, the company implements its own education program called TEL 6-Step for employees closely involvedin quality control, such as developers, designers, quality managers, and service personnel, through which they acquire a
problem-solving model to handle important issues. It is a partially altered version of the eight discipline (8D) problemsolving method,1 widely used in quality control, customized to replace TEL’s problem-solving process. The program
enables thorough investigation of the true nature of problems to determine the technical factors and root causes,
cultivating skills that lead to quick resolution and prevention of similar problems arising. TEL currently uses e-learning
training for delivery, and as of May 2019, approximately 5,500 employees had completed the program. In addition, thecompany conducts group training, focused on quality control leaders at its bases, for practical, exercise-based learning
about resolution of quality issues, in an effort to enhance work improvement skills at production and development sites.
Moreover, TEL encourages employees to obtain external QC certification2 through the Quality Management (QM)
and Quality Control (QC) examinations and recommends their acquisition of fundamental skills, so that they canautonomously tackle quality improvement. Since fiscal year 2012, the number of certified employees has increased eachyear to approximately 2,200 as of March 2019.

1
8D problem-solving
method: A method forsolving problems inquality improvement
through eight disciplines
or processes
2
QC certification:
Quality management
certification operated
by the JapaneseStandards Associationand the Union ofJapanese Scientists
and Engineers. The
total number of people
qualified nationwide
exceeds 520,000 (as of
September 2018).

■Example initiative
Through the Quality Management Committee, Tokyo Electron Technology Solutions Yamanashi Plant implements
consistent quality control, from the development and design stage through to mass production, managing the progressof development, sharing quality issues, and so on.
With new development projects, the Yamanashi Plant checks thoroughly to ensure quality and reliability requirements
are sufficiently fulfilled, by establishing “gates” at each stage of conceptual design, transition to release of plans, shipmentof evaluation units to customers, and transition to mass production.
To ensure this initiative, session-based DRs1 are held by persons in charge of design development, quality control,
production, purchasing, sales and other related divisions, together with experts who possess technical knowledge.
When transitioning to mass production of equipment, a “mass production package,” comprised of a BOM,2 a QC
process chart,3 a manufacturing quality instruction manual,4 a startup manual5 and so on, is prepared to ensure mass
production operations are also carried out in full, and self-process assurance systems are established. Providing education
to workers and managing their skills is also conducive to activities aimed at the release of high-quality equipment.
Going forward, to further develop quality improvements, ongoing improvement activities will be promoted so that,based on an original evaluation model, essential evaluation points are applied without fail in order to maximize quality ateach stage of the manufacturing process, from planning (concept level) through to the parts and materials level.

Development projectsystem

Improve DR quality

Improve businessprocesses(as of March 2019)

Comply with change
management

Initiatives at the development and design stages
Promotion of front-loading and self-process assurance systems
In order to improve the quality of products, it is important to avoid contamination by defects in upstream processes,
and to ensure quality in each process so that defective products are not allowed to flow into later processes. From thisperspective, TEL is promoting front-loading and self-process assurance systems. In order to raise the degree of productquality at an early stage, TEL implements thorough risk detection and mitigation measures (FMEA)3 from the initial stagesof product design in an effort to suppress the occurrence or outflow of defects. The company also conducts thoroughinspections in each process and verification using simulation in the self-process assurance system. Together with thispromotion of front-loading and self-process assurance systems, TEL is also focusing on the deployment of Product Lifecycle Management (PLM). By deploying and promoting this concept of PLM, TEL comprehensively manages and analyzes
all processes from product planning, development, design, and production through to service, in an effort to achieve early
release of products on the market, work efficiency enhancement, quality improvement, and cost reduction.

Profit3
QC process chart:
A chart recording
the process flow for
one product fromprocurement of raw
materials and parts
to shipment of thefinished product,
including management
characteristics andmethods
4
Manufacturing quality
instruction manual:Technical informationtransmitted from thedesign team to the
manufacturing teamManage shipping ofevaluation units

PDCA of Quality
Review Committee

New employee training conducted in April 2019Market research/planning

2
BOM (bill of materials):
A chart of parts showing
how many of each areused for each finishedproduct

5
Startup manual:
Summary of procedures
and warnings whenstarting up equipment

QC certification holders

2,200 employees

1
DR: Design Review

Development/design

Production/sales

Service/maintenanceImprove supplier quality

Improve manufacturing
quality

Response to safety laws and regulations
TEL regularly checks the safety regulations and guidelines concerning equipment, and has established systems forresponding to them. Equipment is checked by a third party inspection company before shipment to ensure that theequipment complies with international safety standard and the guidelines like SEMI S2.6 Also, regarding the Machinery
Directive and EMC Directive,7 we obtain certificates of conformity from the Notified Bodies in Europe.

6
SEMI S2: This is a set ofenvironmental, health,and safety guidelines
for semiconductor
manufacturing
equipment
7
EMC Directive: Thisis one of the New
Approach Directives
that apply to the EU
member states

Improve profit
marginAccelerate time-tomarket for products

3
FMEA (failure modeand effects analysis):
Method to grasp risks
in advance, prevent andmitigate

Evaluate reliability

Extend lifetime
value of products

Cost

Time

29

TOKYO ELECTRON SUSTAINABILITY REPORT 2019

Reduce development
costsTOKYO ELECTRON SUSTAINABILITY REPORT 201930

Higher productivity

Response to quality problems

Software development initiatives
Streamlining product development
Since 1995, Tokyo Electron (TEL) has used platform software developed in-house in its semiconductor production
equipment, leading to streamlined operations and improved product quality. By introducing common platform software
the company is able to reduce the hours spent on developing duplicate functions for each type of equipment, toguarantee real-time1 control, and endeavors to connect this to enhancement of its response capability to new demands
and technologies.
In addition, TEL is also adopting concepts such as object-oriented2 for the more efficient software development,
while also promoting development and introduction of new platform software for development of next-generationequipment.
Realization of smart equipment
With the rapid progress of innovation in manufacturing utilizing IoT and AI, TEL is working on designing the form of future
semiconductor production equipment required in the smart fabs3 which customers aim to realize, and to develop thevarious software and systems that will be required there. The specialized development units responsible for advanced
data utilization and system development cooperate with each business unit and production site in the pursuit of smart
equipment that offers simple operation, presentation of the causes and resolutions of troubles, and autonomous
operation through prediction of results.

3. Control
Actual reproduction of
results of data analysis

1
Real-time: The propertyof time limitation until
the completion of work
2
Object-oriented:
A software engineering
theory3
Smart fab: A fab which
realizes production
innovation throughanalysis and utilizationof data from all of theequipment, facilities,
and human work within
the fab2
TIRS: TEL Incident
Report System
3
QA-BOX: TEL Group
internal information
sharing and horizontal
deployment tool

Response to serious accidents
4
FCN (Field Change
Notice): Refers togeneral recall notice

TEL Group

Seriousaccident

Visualization ordigitization of situation

Autonomy refers to
self-learning and self-judgment
Forms after (1), (2),and (3)Customer

2. AnalyzeFiredepartment
Policedepartment

Accident
reportingsystem(TIRS)(Q-VICS)

Report and workplace recovery

Customer
contact
point

Prediction and forecasting based on digital analysis

Initiatives with suppliers
Developing strong partnerships with suppliers is essential to improve product quality. In efforts to maintain and improve
quality, since 2000, TEL has conducted its unique Supplier Total Quality Assessments (STQA) to enable its suppliers toproperly understand the level of quality that the company expects from suppliers. Before starting business with new
suppliers, an STQA is conducted via self-assessment to evaluate their product quality, costs, and information security.
The assessment also includes CSR issues, including human rights, ethics, safety, and the environment. If any risks toquality are found, TEL representatives visit the supplier on-site to explain the problems, TEL’s expectations for the level ofquality required. After the supplier understands the issues, TEL asks that they plan and make improvement measures, andprovides continuous support until all of the improvements have been completed. The company conducts on-site audits
once every three years at suppliers who manufacture important components and at suppliers where quality issues havebeen found.
In recent years, TEL has been particularly focused on process improvement activities using statistical process control(SPC).4 Equipment that TEL provides to its customers must always be controlled to avoid variations, to ensure accurate
process repeatability, and to realize high productivity. To achieve this, TEL works to ensure understanding of theimportance of, and agreement to, these activities by suppliers which handle specific important parts, and works on
SPC together with suppliers, in order to reduce variations in the quality of parts, in an effort to maintain and improve
processes to produce good products.

1
EN (European Norm):
Uniform standard for
the European Union
complimenting partsof technical standards
not stated in European
Commission directives(“New Approach”
directives)

Management

1. Monitoring
4. Autonomy

In addition to compliance with ISO and EN1 safety standards, TEL establishes design rules applicable to its own equipment
to achieve the highest level of safety possible. In addition to developing systems to manufacture safe products,
the company fulfill its mission as an equipment manufacturer by establishing systems for responding to design- or
manufacturing-related issues or accidents arising from operation-related problems.
If an accident occurs, TEL uses its TIRS2 accident reporting system to report and share information with all levels ofmanagement, from safety and quality personnel in each division to senior management. We immediately conduct anaccident investigation to identify the cause and plan preventive measures.
In addition, TEL uses a proprietary system called QA-BOX3 to share accident information within TEL Group. The resultsof accident investigations are quickly implemented on the problem equipment, as well as on equipment operated
by other customers, and, for example, reflected in design standards in operation. As well as sharing problems andcountermeasures through QA-BOX, it is also used to prevent recurrence of accidents. Accident-related data accumulated
in QA-BOX is used for the cumulative analysis of trends to visualize the types of equipment which frequently experienceproblems and the types of problems that they experience, whereby we can implement countermeasures that have an
immediate impact, leading to a reduction in the number of accidents attributable to equipment.

4
SPC (statistical processcontrol): Refers to using
statistical methods toanalyze manufacturing
processes, takemeasures forestablishing andmaintaining stableprocesses, and improve
process capability. In
many cases, statisticalmethods indicate
techniques with a focus
on control charts.

Permanent measures

Investigate andidentify causes
Issue FCN4

Operations
divisions
Safetydivision
Qualityassurance
division

Servicedivision

Accident information:

Relevant divisions
Investigation of causes and development ofrecurrence prevention measures

Share with Group(QA-BOX)

Confirm spread

Reflect in design
standards
Determine measures

Revise standards
Notify revision

Establish
implementation plan

Information sharing:Operations and information flow:■Example initiative
At all of its production sites, TEL collaborates with suppliers to implement initiatives to reduce the occurrence of defective
goods. Company employees visit the production sites of suppliers to learn about their production environment in order
to discuss and implement effective improvement proposals. In addition, Tokyo Electron Technology Solutions Yamanashi
Plant works closely with business partners to share data on parts and unit manufacturing, and to promote quality
management through SPC, and is thereby delivering results in defect rate reduction.

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