CEO's Message

Tokyo Electron’s 60th Anniversary

On November 11, 2023, Tokyo Electron will celebrate 60 years since its founding in 1963. From that time, we have been able to contribute to the development of the semiconductor industry and achieve the level of growth that we have entirely thanks to the support we have received from all our stakeholders. I wish to express my deepest appreciation.
Until now, we have strived to create strong next-generation products and to provide the Best Technical Service, specializing in the semiconductor business. While prioritizing the building of trust and reliability with all our stakeholders, we aim to practice our Corporate Philosophy of “We strive to contribute to the development of a dream-inspiring society through our leading-edge technologies and reliable service and support,” endeavoring to expand medium- to long-term profit and to continuously enhance our corporate value.

These 60 years have seen spectacular technological innovation in semiconductors, and at the same time, we have initiated innovation and grown by staying true to our venture spirit. The uses for semiconductors expanded to computers, televisions and then to mobile phones, and the emergence of the Internet led to the connection of billions of devices, as we witness the shift from selling products to selling value. With the arrival of the DX era, where big data drives society, semiconductors have become indispensable, with persistent technological demands for semiconductors with larger capacity, higher speed, superior reliability and lower power consumption.
The current semiconductor market is reaching a period of adjustment, due to concerns of continued inflation, geopolitical risks and accompanying macro-economic deceleration and other factors such as inventory control of semiconductors, with a focus on memory. But demand will gradually recover, and is expected to grow considerably from 2024 onwards. The global data traffic is increasing at a compounded annual growth rate of 26%* due to the spread of various applications, improved data processing capabilities and other factors, and is forecast to reach 10 times its current level in 10 years time. With investment in data centers, the recovery of demand for computers and smartphones, the spread of EVs and autonomous driving and the use of generative AI, the semiconductor market is forecast to grow to twice its current size and be worth over US$1 trillion in 2030. Along with the advancement of technology through further scaling and higher multi-layering of semiconductors used in logic, DRAM, NAND and so on, the semiconductor production equipment market, in which we operate, is also expected to expand.

A compounded annual growth rate of 26%: Omdia' s projection for 2020-2030

TSV Aimed at Sustainable Corporate Value Enhancement

With the 60th anniversary of Tokyo Electron approaching, last year we formulated a new Vision to become “A company filled with dreams and vitality that contributes to technological innovation in semiconductors.” This new Vision is based on the idea of CSV (Creating Shared Value). The concept behind CSV is that, by using their unique resources and expertise to resolve social issues, companies can realize sustainable growth through the creation of social and economic value. The world is aiming for the coexistence of digitalization and decarbonization for preservation of the global environment in order to build a strong and resilient society in which economic activities do not stop under any circumstances, and technological innovation in semiconductors is essential for this. We are expanding our business activities based on our TSV (TEL’s Shared Value), our CSV, aiming for sustainable corporate value enhancement by leveraging the expertise we have cultivated as an industry leader, to drive semiconductor technological innovation.
As we implement TSV, in our Medium-term Management Plan we set fiscal 2027 financial targets aimed at further growth—an operating margin of 35% or more and ROE of 30% or more with net sales of 3 trillion yen or more. We are aware that such financial targets are unique even for the Tokyo Stock
Exchange Prime Market, and will strive to ensure we can achieve them. We consider profit to be an important measure of value in our products and services, and are therefore aiming for a world-class operating income of over 1 trillion yen, through creating high-value-added technologies that world has never seen and only we can accomplish.
In addition, we endeavor to implement appropriate balance sheet management and to focus on producing returns for shareholders by setting a high-level payout ratio of 50%.

Leveraging Our Strengths

We consider the following to be our strengths: (1) being the world’s only manufacturer with products in deposition, coater/developer, etch and cleaning, the four sequential key processes necessary for semiconductor scaling, (2) a 100% share in EUV lithography coater/developer, which are necessary for semiconductor evolution, (3) our product lines being strongly positioned in their respective segments, all of which having achieved first or second place in market share, (4) technical service and marketing developed based on relationships of absolute trust with customers, built through the highest number of installations in the world (approximately 88,000 units) and (5) approximately 22,000 patents owned, the largest number in the industry globally. In order to leverage and further develop these strengths, we are planning 1 trillion yen or more in R&D investment and 400 billion yen or more in capital investment over five years.
Products are our lifeline. Moving forward, we will continuously produce “only one” and “number one” products needed in the future by customers in a timely manner.

Net Zero Initiatives through E-COMPASS

Through our business activities, we are expanding E-COMPASS, focused on the environment, and will work with our customers and partner companies to promote the technological innovation in semiconductors and to reduce environmental impact across the entire supply chain, mainly from the following three perspectives.

Pursuing higher performance and lower consumption in semiconductors
Achieving both the process performance and environmental performance of equipment
Reducing CO₂ emissions in all business activities

We have set net zero, the reduction of greenhouse gas actual emissions, as a long-term environmental goal, and are implementing and accelerating our E-COMPASS initiatives to be able to realize net zero for Scope 1 and 2 emissions*¹ by 2040, and for Scope 3 emissions*² by 2050.

Scope 1 and 2: Emissions from the use of energy such as electricity in our own business activities

Scope 3: Emissions from the use and disposal of equipment sold, purchase of materials, distribution, etc.

Our Corporate Growth Is Enabled by People, and Our Employees Both Create and Fulfill Company Values

Without a doubt, it is people who will achieve this. Based on our belief that “our corporate growth is enabled by people, and our employees both create and fulfill company values,” we conduct management and appropriate initiatives focused on employee motivation so they can fully exercise their capabilities, centered on the following five points.
As one pillar of our management, we are also focusing on initiatives for diversity, equity and inclusion, in an effort to enhance 3G diversity (encompassing Global, Gender and Generation aspects).
Going forward, with the expectation of expanding applications for semiconductors in society and development of further innovation, it is important to nurture the students, researchers and other human resources who will lead future technological innovation. We are continuing efforts to boost human resource development in the semiconductor industry through the promotion of a program of industry-ademiagovernment
collaboration that includes collaboration with universities in Japan and abroad.

The Five Points and Main Activities for Motivation-oriented Management

Aiming to Be a Company Filled with Dreams and Vitality

We look towards a prosperous future made possible by semiconductors, their ongoing evolution and the significant expansion of the semiconductor production equipment market that supports this. Tokyo Electron will make even greater contributions to the technological innovation in semiconductors, as the industry leader. As we mark the 60th anniversary of our company’s founding, we will continue tackling challenges for further growth and evolving, while valuing trust and reliability. We will aim to be “a company filled with dreams and vitality” so as to be cherished and deeply trusted by all stakeholders and so that our employees can fully exercise their motivation and capabilities.
We look forward to your continued support and patronage.

Toshiki Kawai
Representative Director, President & CEO
Tokyo Electron Limited