CEO's Message

Toward Further Growth Based on Trust and Reliability

I would like to start by thanking all our stakeholders for their constant support. On November 11, 2023, Tokyo Electron celebrated 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 this support from our stakeholders. Prioritizing the building of trust and reliability, we aim to practice our Corporate Philosophy of “We strive to contribute to the development of a dream-inspiring society through our leadingedge technologies and reliable service and support,” endeavoring to expand medium- to long-term profit and to continuously enhance our corporate value.
The birth of the transistor in 1947 led to the development of personal computers, mobile phones and other electronic devices, and to the internet and IT platform services. Over recent years, it has also led to a transition toward a full-fledged data-driven society. Going forward, it is expected that applications requiring large-scale computing, such as AI, autonomous driving and virtual reality, will become technology drivers and that further market growth will continue. And it is technological innovation in semiconductors that will support these trends.
Under such circumstances, the semiconductor market is forecast to reach US$1 trillion by 2030. This means that a market that has grown to US$530 billion over 76 years will roughly double in size in just 6–7 years. On the other hand, using many different applications will require higher data processing capabilities, and therefore will increase power consumption, so there is concern about the impact on preservation of the global environment. For this reason, innovative technologies are needed to not only achieve higher speeds, larger capacity and superior reliability in semiconductors, but lower power consumption as well.
With semiconductor market growth, about 100 new semiconductor fabs are predicted to start operating globally in the years from 2022 to 2026, so the semiconductor production equipment market in which we operate will also expand further.

Continuous Enhancement of Corporate Value through A Double-offensive Management Style

Vision Realization and the Medium-term Management Plan

Digitalization and decarbonization for preservation of the global environment, to build a strong and resilient society in which economic activities do not stop under any circumstances, are becoming global trends. To help realize balancing the digitalization and preservation of the global environment, we are leveraging our expertise as a semiconductor production equipment manufacturer, and promoting technological innovation in semiconductors. And for this purpose, we formulated our Vision of becoming “A company filled with dreams and vitality that contributes to technological innovation in semiconductors.” This Vision is based on the Creating Shared Value (CSV) concept of utilizing our unique resources and expertise to solve social issues. We have defined our own CSV as TEL’s Shared Value (TSV), through which we strive to create social and economic value in our business activities.
As we implement TSV, we have set fiscal year 2027 financial targets in our Medium-term Management Plan of an operating margin of 35% or more and ROE of 30% or more, with net sales of 3 trillion yen or more. We consider profit to be an important measure of value in our products and services, and we aim to achieve a world-class operating margin and ROE by providing the Best Products with innovative technology, and the Best Technical Service with high added value.
Our pursuit of this aim is a more aggressive style of management. At the same time, though, we are focusing on Safety, Quality, Compliance and other essentials for continuous growth of the Company. Our efforts on these areas may appear at first glance to be defensive in nature; however, we believe that more proactive action will help our company become stronger, or more aggressive. By promoting such a double-offensive management style, and ensuring short-, medium- to long-term profit expansion and continuous corporate value enhancement, which are also part of my mission as CEO, we aim to become a truly excellent global company.

Business Activities Anchored around Material Issues

As part of efforts to achieve our Medium-term Management Plan, we identify key items to be worked on with priority in our businesses as material issues. In fiscal year 2024, we looked at our previous material issues of Product Competitiveness, Customer Responsiveness, Higher Productivity, and Management Foundation, and developed a more granular level of material issues with respect to their significance to the Company and to society.

Initiatives for Further Growth

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 coater/developer for EUV lithography, 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 92,000 units) and (5) more than 23,000 patents owned, the largest number in the industry globally.
Leveraging these strengths, we plan to spend 1.5 trillion yen or more on R&D investment and 700 billion yen or more on capital investment over five years from fiscal year 2025 to accomplish our Medium-term Management Plan and achieve further growth thereafter.
What is vital for us is timely and continuous creation of nextgeneration products that are both “only one” and “number one.”We will work to provide high-value-added equipment with worldleading performance through not only our own R&D activities, but through collaborations with customers and consortiums as well, and we will ensure the outcomes of this R&D leads efficiently to increased profits.
As we expand the scale of our business, it is also important that we improve production efficiency. By implementing digital transformation, we will actively promote standardization and leveling of tasks in a range of operations, and adopt Smart Manufacturing at our manufacturing sites.

Reducing Environmental Impact and Achieving Net Zero Emissions through E-COMPASS

With preservation of the global environment growing in importance in society, we are conducting a range of activities through our environment-focused E-COMPASS initiative. Specifically, we are working with our customers and partner companies to achieve technological innovation in semiconductors, and reduce their environmental impact throughout the entire supply chain, from the following three perspectives.

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

While our original long-term environmental goal was to achieve net zero by 2050, during implementation of these initiatives, in December 2023, we brought that date forward to 2040 as we continue working to reduce our greenhouse gas emissions.

Practicing Motivation-oriented Management

Focusing on Sustainable Industry Development

As a leading company in semiconductor production equipment, we are actively engaged in supply chain management, not just within the Company, and in the education of students, researchers and others who will be responsible for the future of the industry, which we consider to be our mission. We will therefore contribute to the sustainable development of industry in a number of ways. For the supply chain, we will further enhance the E-COMPASS initiative that I described earlier, and to strengthen human resource development, we will promote a program of industry-academia-government collaboration, which includes collaboration with universities in Japan and abroad.

Aiming to Become a Company That Is Cherished and Trusted by All Stakeholders

We have now entered a new growth phase in terms of a prosperous future made possible by semiconductors, their ongoing evolution, and the semiconductor production equipment market that supports them. To achieve our goal of becoming number one globally, we will continue to take on challenges and evolve, create high-value-added technologies that the world has never seen and only we can, and provide them to society. We will also strive to become a company that is cherished and deeply trusted by all stakeholders, and that continues to be a company filled with dreams and vitality.
We look forward to your continued support and patronage.

Toshiki Kawai
Representative Director, President & CEO
Tokyo Electron Limited

This message is the CEO's message in the Integrated Report 2024.