Identifying Material Issues

Tokyo Electron identifies important and priority material issues (key issues) to be addressed for the medium- to long-term enhancement of corporate value by examining both social and business environments, evaluating risks and opportunities and holding active dialogs with stakeholders.

Issues Awareness

Social Issues

While society is currently being affected in many ways by the COVID-19 pandemic, humans are also faced with various issues, such as abnormal climate conditions and natural disasters, human rights issues, conflicts between nations and cyber-attacks. Mitigating climate change and eliminating inequality in human rights in particular are pressing issues for the global community, and there are strong calls for further action, not just by international organizations, and national governments, but also by the private sector.

While participating in global initiatives such as the United Nations Global Compact and RBA and keeping an eye on societal trends, and considering recommendations from third party organizations, we also examine social issues that may impact our business activities.



Business Environment

With the spread of IoT, AI, 5G and other technologies, a data-centric age has arrived and the implementation of digital transformation and information communication technology (ICT*¹) is accelerating. This further increases the importance of the semiconductor industry as a social infrastructure. Along with innovations in semiconductor technologies to achieve larger capacity, higher speed, higher reliability and lower power consumption, the market for semiconductor wafer fab equipment (WFE*²), in which we conduct our business, is forecast to continue expanding.

New evolutions are also required in Flat Panel Display (FPDs), which act as the interface between people and ICT, and further technical innovations are occurring. In the future, as organic EL displays become widespread, panel size increases, and design improvements that take advantage of enhanced characteristics such as high resolution, low power consumption, thinner profile and flexibility, are expected to further expand the application fields.

Taking actions to preserve the global environment has become an urgent issue, and initiatives toward decarbonization are accelerating on a global scale under international frameworks such as the SDGs and Paris Agreement. As the transition to a digital and green society progresses, the roles played by semiconductors and FPDs will increase even further in the future.

At the same time, the importance of corporate governance, which fundamentally supports the medium- to long term growth of corporations, is also increasing. Further strengthening of measures is essential to ensure safety and quality, as well as compliance and risk management.

*1 ICT: Information and Communication Technology
*2 WFE: Wafer Fab Equipment. The semiconductor production process is divided into front-end production, in which circuits are formed on wafers and inspected, and back-end production, in which wafers are cut into chips, assembled and inspected again. WFE refers to the production equipment used in front-end production and in wafer-level packaging production.

Risks and Opportunities

We examined the risks and opportunities closely related to sustainable business development in consideration of social issues and social/business environments such as the SDGs.

Social

trends

Conceivable major risks

Opportunities

Environment

If we fail to comply with laws and regulations,

 industry codes of conduct, or in-house policy,

 product competitiveness and social credibility

 will decline, and the cost of correcting the

 problem will increase business costs.

Promote environmental management, improve

 the environmental performance of our

 companys manufacturing equipment, create

 business opportunities and provide technologies

 that will help reduce the power consumption of

 semiconductors

Human rights

If we fail to comply with laws and regulations,

 industry codes of conduct, or in-house policy,

 social credibility and employee engagement

 will decline.

Create a workplace environment that respects

 employee diversity and enables all employees

 to demonstrate their full capabilities, improve

 employee turnover rate and promote health

 management

Supply chain

management

If a natural disaster occurs, or it becomes

 impossible to continue business transactions

 with suppliers, events such as delivery delays

 and contractual non-performance will harm

 business continuity.If sustainability-related

 issues such as the environment and human

 rights become more serious, operations will

 stagnate.

Establish a sustainable production system,

 further increase business operations efficiency,

 improve business continuity through enhanced

 business continuity plans, strengthen

 competitiveness in the supply chain and build

 trusted relationships with customers and

 suppliers

Governance

If managements monitoring or supervising

 function declines, management risk will

 increase, and business activities will

 stagnate.

Enhance corporate value on a medium- to

 long-term basis, gain stakeholders trust and

 increase social credibility

Compliance

If an ethical or compliance violation occurs,

 we will lose social credibility and suffer

 economic loss.

Operate healthy corporate activities by

 complying with laws and regulations, industry

 codes of conduct, corporate ethics, and other

 rules

Evolution of

technology

If the development of leading-edge

 technologies is delayed, we will lose

 business opportunities.

Create ground-breaking innovations, strengthen

 competitive superiority and contribute to

 industry and societal issue resolution and

 growth

Information

security

・If confidential information is leaked, social

 credibility will decline, and compensation

 for damages be required
・If a cyber-attack or natural disaster occurs,
 our business will stagnate.

・ Build a rock-solid information infrastructure by
  strengthening information security, and improve
  information literacy

Stakeholder Engagement

We examined the opinions and requests obtained through dialog and engagement opportunities with stakeholders.


Stakeholders

Main engagement opportunities

Key opinions and requests

Shareholders/

investors

・Earnings release conference, medium-
 term management plan briefing,
 non-financial briefing (IR Day)
・IR conference, IR road show*¹,
 individual IR interview
・Shareholders' Meeting

・Medium- to long-term growth scenario and
 associated measures
・Further initiatives for governance
・Capital policy, including shareholder
 return

Customers

・Technology conference
・Customer satisfaction survey
・Joint development

・Understand diverse application needs and
 suggest solutions to satisfy them
・Maximize equipment performance and
 productivity
・Comprehensive and optimal solutions

Suppliers

・Production update briefing
・TEL Partners day
・STQA*² audit

・Share high-quality information related to
 production and technology trends in a timely
 manner
・Improve our company’s operation by
 complying with the expected quality
 standards

Employees

・Employee meeting
・Global engagement survey
・Career interest survey (Japan)

・Share the management policy further
・Provide medium- to long-term career
 development opportunities for employees
・Create work environment in which diverse
 human resources can thrive

Local

communities

・Community contribution activities
・Tours of plants and offices
・Environmental debriefings

・Coexistence of the company with communities
・Promotion of environment conservation
・Human resource development and
 innovation

Governments/

associations

・Industry group activities
・Collaboration with various initiatives

・Create new values through innovation
・Initiatives targeted at climate change, human
 rights, etc.
・Building of sounder supply chains


*1 IR roadshows: IR activities presented directly to shareholders and investors

*2 STQA: Supplier Total Quality Assessment



Identifying Material Issues

We have ascertained the social issues and business environment, considered the risks and opportunities and examined the opinions and requests of all stakeholders. We have reassessed material issues from the perspectives of developing a sustainable society and enhancing medium- to long-term corporate value.

As a result, we decided to leave Product Competitiveness, Customer Responsiveness, and Higher Productivity
unchanged, which are items already identified for enhancement in the Medium-term Management Plan as material issues. We also reexamined the significance and activities related to People and Workplaces, which had previously been defined as a material issue through fiscal year 2021, and decided to integrate it into Management Foundation.

The material issues were decided at the CSR Management Council, attended by Chairman of the Board, Representative Director, and President & CEO, and corporate directors involved in CSR.

Annual Goals for Each Material Issue

Reflecting on the priority themes in each material issue, we verified the results against the goals for fiscal year 2021 and set annual goals for fiscal year 2022.In setting each goal, we have clearly identified the corporate director responsible for achieving it, and we are working on various activities aimed at further enhancing our corporate value and contributing to the achievement of SDGs.

CSR Goals and Results

Fiscal Year 2021

Material issuesPriority themesAnnual goalsResults





Product
competitiveness



Tackling
technological
innovation
・Ensure that 20% or more
 (three-year moving average) of all
 equipment models are new
 products for next-generation
 technologies
・23.6%
・Maintain the previous year’s global
 patent application rate (±10%)
・Maintained the previous year's rate
 (Achieved 79.8% in fiscal year 2020
 and 74.3% in fiscal year 2021)
Environmental
contribution of
products
・Reduce per-wafer emissions of CO₂
 by 20% by fiscal year 2025
 (compared with fiscal year 2014)
・Reduced by 16% in fiscal year 2021
 as compared with fiscal year 2014






Customer
responsiveness



Solutions that
create value for
customers
・Increase Tokyo Electron's value to
 customers
・Orders and sales both increased
 significantly from the previous fiscal
 year, driven by demand for
 smartphones and servers
・Increase sales-in-field solutions
 business by 5% or more from the
 fiscal year 2020 level
・Increased by 19.6% from previous
 fiscal year
Improvement of
customer
satisfaction
・Achieve evaluations of “Very
 Satisfied” or “Satisfied” for 100% of
 customer satisfaction survey
 responses
・96.7% (achieved in 29 out of 30
 questions)
















Higher productivity




Continuous
improvement of
business operations
・Target a 10% improvement in
 operational efficiency as a medium-
 to long-term goal, achieve
 centralized data management
 through adoption of a new ERP*¹
 system, and build a business
 foundation where employees can
 focus even more on high-value work
 (1)Expand implementation of CRM*²
 and PLM*³, and
 (2)adopt new ERP during fiscal year
  2021
・Expanded CRM to multiple overseas
 subsidiaries
・Expanded PLM to multiple domestic
 manufacturing sites in Japan
・Almost completed preparations for
 adopting ERP


Quality
management
・Check the impact of important non-
 conformance items on other
 equipment and thoroughly
 implement recurrence prevention
 measures

・Finished revising new QA-BOX
 operation rules
・Started regular meetings with the
 heads of all BU quality assurance
 divisions
・Implemented progress

 management for QA-BOX

 submission





Improvement of
customer
productivity/yield

・Promote Shift Left*⁴ (front-loading)
 activities for quality
 (1)Increase engineer time for
 high-value work in upstream
 processes, and
 (2)implement medium- to long-term
 action plans to continue to enhance
 quality assurance activities

(1)Completed each company's
 individual/common activity plans
 Each company is currently carrying
 out individual activities as planned
 Common activities: Formulated
 activity policy based on best
 practices Agreed on activity policy
 with the heads of each quality
 assurance division
(2)Formulated medium- to long-term
 plans Formulated plans, started
 activities















People and
workplaces

Diversity and
inclusion
・Double the percentage of female
 managers and experts (with same
 roles and responsibilities as
 managers) by fiscal year 2022
 from 2.0%*⁵ in fiscal year 2019
・2.5%
 (Reference) Percentage of female
 managers: 2.2% (Japan),
 5.2% (global)



Career
development
・Foster a culture of learning and
 development in the workplace
 through
 (1)Leader development programs,
 (2)provision of personalized global
 learning opportunities, and
 (3)support for career development
 throughout working life
(1)Increased number of leader training
 participants year-on-year change
 104% (Japan)
(2)Increased number of external web
 based training courses taken year-
 on-year change 158% (Japan)
(3)Increased number of participants of
 career training for senior employees
 year-on-year 149% (Japan)
Work-life balance・Reach at least 70% take-up rate
 of annual paid leave
・62.5% (Japan)




Health and safety
・Reduce gap between health age*⁶
 and actual age by 1.5 points by
 fiscal year 2021 (as compared
 with fiscal year 2018)
・Reduced gap by 0.21 points (Japan)
・Reduce the number of workplace
 injuries per 200,000 work hours.
 Target: TCIR (the total case
 incident rate) is less than 0.5
・Achieved 0.27




























Management
foundation








Governance
・Continue to improve on issues
 identified in evaluations of the
 effectiveness of the Board of
 Directors
・Revised Board of Directors
 Regulations and established the
 Business Execution Meeting to
 improve the effectiveness of
 the Board of Directors
・Revised the Affiliated Companies
 Management Regulations from
 the perspective of strengthening
 group governance. Confirmed status
 of operations based on the
 regulations with each division
・Implemented SR*⁷ activities with
 institutional investors with an eye to
 shareholders'meeting proposals
 and ESG-related issues
・Held discussions at off-site meetings
 on medium- to long-term strategies



Risk management

・Promote an integrated risk
 management system throughout
 our Group,
 (1)Adopt Control Self Assessment
 (CSA), and
 (2) establish and operate a risk
 management committee

(1)Conducted assessments using
 checklists at overseas and
 domestic group companies,
 identified risks and examined
 countermeasures
(2)Established the Risk Management
 Committee and held meetings
 (Mar. 2021)




Compliance
・Achieve 100% recognition among
 employees concerning internal
 hotline
・Revise Code of Ethics, conduct
 basic annual training, and achieve
 pledge rate of 100%
・Conduct a compliance awareness
 survey

・Recognition of internal hotline: 68%

・Code of Ethics education and pledge
 rate: 98.8%
・Awareness survey
 (Trial survey planned for fiscal
 year 2022)





Environmental
management
・Reduce energy consumption by
 1% from the fiscal year 2020 level
 (per-unit basis*⁸) at each plant
 or office
・Achieved goal at 1 of 11 plants
 or offices
・Maintain water consumption
 (per-unit basis*⁹) at plants and
 offices at the fiscal year 2012
 level in Japan and at individual
 base year levels overseas
・Achieved 10 of 13 goals







Supply chain
management
・Implement supply chain CSR
 assessments for the following
 percentages of suppliers
 Material suppliers: Covering at least
 80% of our procurement spend
 Logistics suppliers: 100% of customs
 -related operators
 Staffing suppliers: 100% of
 employment agencies and
 contracting companies
 (internal contractors)
・Implement supply chain BCP*10
 
assessments for the following
 percentages of suppliers Material
 suppliers: Covering at least 80%
 of our procurement spend
・Percentage of suppliers at which
 supply chain CSR assessments
 were implemented
 Material suppliers: Achieved 80%
 or more of our procurement spend
 Logistics suppliers: Achieved 100%
 of customs-related operators
 Staffing suppliers: Achieved 100%
 of employment agencies and
 contracting companies
 (internal contractors)
・Percentage of suppliers at which
 supply chain BCP assessments were
 implemented
 Material suppliers: Achieved 80%
 or more of our procurement spend

*1 ERP: Enterprise Resource Planning
*2 CRM: Customer Relationship Management
*3 PLM: Product Lifecycle Management
*4 Shift Left: Refer to p.17 and p.31
*5 Senior specialists were included in the 2.0% figure in fiscal year 2019
*6 An indication of the risk of lifestyle diseases in years, based on the results of health checkups
*7 SR: Shareholder Relations
*8 Per-unit basis: Calculated using complex weighting of the number of developed evaluation machines, units produced, floor area, and labor-hours for each district
*9 Per-unit basis: Calculated based on floor area and labor-hours, etc. for each district
*10 BCP: Business Continuity Plan

Fiscal Year 2022

Material issuesPriority themesAnnual goalsMedium-term goalRelevant
SDGs 
Product competitivenessTackling technological innovation

・Ensure that 20% or more (three-year
 moving average) of all equipment
 models are new products for
 next-generation technologies
・Maintain the previous year’s global
 patent application rate (±10%)

Create strong next generation products





17.jpg

Customer
responsiveness
Solutions that create value for customers・Increase Tokyo Electron’s value to
 customers
・Increase sales-in-field solutions
 business by 5% or more from
 the fiscal year 2021 level
Be the sole strategic
partner





17.jpg

Improvement of customer satisfaction

・Achieve evaluation of “Very Satisfied”

 or “Satisfied” for 100% of customer

 satisfaction survey responses*¹

Higher productivityContinuous improvement of business operations

・Target a 10% improvement in
 operational efficiency as a medium-

 to long-term goal, achieve centralized
 data management through adoption
 of a new ERP system, and build a
 business foundation where employees
 can focus even more on higher value
 work
 (1)Adopt ERP at headquarters
 (2)Prepare to adopt ERP at
 manufacturing sites in Japan and
 overseas subsidiaries

Constantly pursue higher management efficiency





17.jpg

Quality management

・Check the impact of important
 common issues and thoroughly
 implement measures to prevent
 recurrence of similar faults
・Verify the effects of strengthening the
 quality information environment

Improvement of customer productivity/yield

・Promote Shift Left (front-loading)
 activities for quality
・Identify risks and thoroughly
 implement countermeasures from the
 initial development stage
 (thorough prevention)

Management foundation

Diversity and inclusion

・Implement initiatives to make the
 ratio of females in management
 positions equal to the ratio of
 females in the company over the
 medium term
・Implement initiatives to make the
 ratio of female recruits equal to or
 greater than the general ratio of
 females*² in each region
・Create an organizational system
 where even those from outside of
 Japan can take on corporate roles
 through the use of technology and
 shared global human resources
 systems





Build a strong
management
foundation for
underpinning our business activities






E-WEB-Goal-03.png






17.jpg







Career development

・Foster a culture of learning and
 development in the workplace
 through
 (1)Leader development programs
 (2)Provision of personalized global
 learning opportunities
 (3)Support for career development
 throughout working life

Work-life balance

・Reach at least 70% take-up rate of

 annual paid leave

Health and safety

・Increase the percentage of employees
 receiving specific health guidance to
 60% (figures based on the results of
 medical checkups up to the end of
 fiscal year 2024)
・Reduce the number of workplace
 injuries per 200,000 work hours
 Target: TCIR (the total case incident
 rate) is less than 0.5

Governance

・Continue to improve on issues

 identified in evaluations of the

 effectiveness of the Board of Directors

Risk management

・Promote an integrated risk
 management system throughout our
 Group
 (1)Ongoing rollout of CSA
 (2)Unified classification and response
 to risks to the entire Group
 (3)Launch of internal education
 program Roll out in Japan in fiscal
 year 2022 and overseas in fiscal year
 2023

Compliance

・Continuous cultivation of a
 compliance culture
 (1)Provide Code of Ethics training and
 achieve a pledge rate of 100%
 (2)Implement and improve a
 compliance survey
 (3)Achieve 100% recognition of the
 internal hotline among employees

Environmental
contribution of
products

・Reduce per-wafer emissions of CO₂ by
 20% (by fiscal year 2031, compared
 with fiscal year 2019)
・Reduce the amount of the use of
 wooden packaging materials by
 50% (packaging for semiconductor
 production equipment, fiscal year
 2024)

Environmental management

・Reduce total CO₂ emissions at plants
 and offices by 70% (by fiscal year
 2031, compared with fiscal year 2019)
・Adopt 100% renewable energies at
 plants and offices (by fiscal year 2031)
・Reduce energy consumption by 1%
 from the fiscal year 2021 level (per-
 unit basis) at each plant or office
・Maintain water consumption (per-
 unit basis) at each plant and office at
 the fiscal year 2012 level in Japan and
 at individual base year levels overseas

Supply chain management

・Implement supply chain CSR
 assessments for the following
 percentages of suppliers
 Material suppliers: Covering at least
 80% of our procurement spend
 Logistics suppliers: 100% of customs-
 related operators
 Staffing suppliers: 100% of
 employment agencies and

 contracting companies

 (internal contractors)
・Implement supply chain BCP
 assessments for the following
 percentages of suppliers
 Material suppliers: Covering at least
 80% of our procurement spend

*1 For each question, average score is calculated for all customers who responded
*2 The ratio of females majoring in science or engineering in the case of engineers