Message from the President

Transforming for
Sustainable Growth

Tetsuro Higashi
Representative DirectorPresident & CEOTokyo Electron Limited

New challenges and innovation“We strive to contribute to the development of a dream-inspiring society through our leading-edge
technologies and reliable service and support”—guided by this Corporate Philosophy, the Tokyo
Electron Group as a member of the electronics industry is committed to contributing to the further
development of the industry and a sustainable society.
Although Tokyo Electron Limited (TEL) had been preparing for a business combination with U.S.based Applied Materials, Inc. since September 2013, the business combination agreement wasterminated in April 2015. Despite both companies having made their utmost efforts and contributed
to discussions aimed at gaining the approval of the relevant authorities, the business combination
did not go ahead because there remained a gap between our view and the view of the United States
Department of Justice. The business environment surrounding not just TEL but the semiconductor
production equipment industry as a whole has reached a turning point; however, our fundamental
policy of undertaking drastic reforms in order to ensure our own growth and contribute to the industry
as a “Globally Excellent Company” remains unchanged.
Through the business combination process, we reaffirmed the strength of TEL’s world-classcorporate culture. With confidence and pride in that strength, and with the determination to make therequired changes, we developed our new Medium-term Management Plan with a vision as part of oureffort to enhance our corporate value.

Enhancing the TEL Group’s operating base and corporate governanceIn fiscal year 2015, we proactively undertook restructuring reforms for further profitabilityimprovement. We withdrew from the unprofitable business of photovoltaic panel production
equipment, consolidated business locations, and sold some stocks of Tokyo Electron Device Limited,which is engaged in the electronics components and computer networks segments, changing it froma consolidated subsidiary to an equity-method affiliate. With these measures, our gross profit margin,ROE, and free cash flow for fiscal year 2015 all improved dramatically year over year. We will step up
efforts to enhance our operating base for further business growth.
Under the new operating structure announced in May of this year, the next generation of leaders
were appointed to senior management and a new position of Chief Operating Officer (COO)
was established, reporting to the President and Chief Executive Officer (CEO). The rejuvenatedmanagement and the newly created position are intended to lead the acceleration of operations withthe goal of boldly differentiating our main business in this rapidly changing and intensely competitiveenvironment. Furthermore, the addition of experienced top executives from overseas subsidiaries toour executive officer team is expected to enhance our competitiveness at the global level.

4Message from the President Transforming for Sustainable GrowthJoining EICC®
The electronics industry, to which the TEL Group belongs, is becoming ever more challenging.
Business activities must be conducted from a socially conscious perspective and must contribute to
the sustainability of society.
To ensure our efforts to that end are broadly in line with international standards, TEL joined theUnited Nations Global Compact in July 2013. Moreover, having already conducted CSR activities prior
to fiscal year 2015, in June 2015, we joined the Electronic Industry Citizenship Coalition® (EICC®), aCSR alliance that sets forth a code of conduct in relation to labor, safety, the environment, and ethics
for the global electronics supply chain. Even before joining, TEL had incorporated the EICC® Codeof Conduct into its corporate activities, identified social issues related to its business, and steadily
implemented initiatives to address those issues. With EICC® membership, we now aim to proactively
launch and implement such initiatives on a Group-wide basis and work with suppliers to promote CSR
throughout the industry as a whole.

Product stewardship—product development for improved environmental
performance
Having undergone a tremendous evolution involving a series of performance improvements andcost reductions, semiconductors have played an important part in the development of our advanced
information-and-communications-driven society. For further advancement, there are growing
expectations for technological innovation of both semiconductors and semiconductor production
equipment. Meanwhile, reducing environmental impact is indispensable to the formation of asustainable society. Under the slogan of “Technology for Eco Life,” the TEL Group is developing
equipment to solve environmental issues.
To limit the environmental impact of its products during customer use, the TEL Group conducts
life cycle assessments to reduce their energy consumption. In fiscal year 2014, we achieved a 50%
reduction of energy consumption for our major models (per wafer compared to fiscal year 2008).
Subsequently, in fiscal year 2015, we set a goal of reducing both energy and pure water consumption
by 10% from the fiscal year 2014 level within the next five years.

Together with stakeholders
To develop together with society, the TEL Group is building relationships through our ardent efforts tofulfill our strong commitment to addressing social issues, such as developing the next generation andmaking community-based contributions according to local needs. The TEL Group is also committed
to enhancing its corporate value by fostering employee engagement and incorporating opinions from
customers, suppliers, shareholders and other stakeholders into its business activities.
Last year, TEL identified materiality (important sustainability issues) that will drive long-term value
creation in light of social issues. This year, we verified these again with stakeholders from theperspectives of business continuity and growth and identified 20 issues, including some new ones.
We will now prioritize them to make optimal use of our management resources.
We will continue to sincerely welcome feedback from stakeholders to accelerate our transformation
and achieve our own corporate growth and that of society. We greatly appreciate your continued
support and understanding.

EICC® is a registered trademark of Electronic Industry Citizenship Coalition Incorporated.

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