Tokyo Electron Corporate Update

Transcription

1 Tokyo Electron Corporate Update May 11, 218 1

2 Contents 1. TEL Overview 2. Medium-term Management Plan TEL Initiatives and Progress 3. FY219 Business Environment and Financial Estimates Appendix 1: Etching System Appendix 2: Effects of EUV Lithography Adoption Appendix 3: FPD Production Equipment Appendix 4: Financial Data

3 TEL Overview 3

4 TEL is Innovative and Flexible to Market Change (Billion Yen) 1,5 1,2 Distributor of other suppliers products TEL consolidated net sales Established development/ manufacturing functions Globalization Production reform Striving for new growth (FY) (E) Established first manufacturing JV (TEL-Thermco) Discontinued export business of consumer products Listed on TSE #2 in198 and #1 in 1984 Began overseas direct operations Strengthened corporate governance Semiconductor applications Mainframe computer PC Mobile phone Consumer electronics, etc. 4

5 Financial Performance: Sales and Operating Margin (Billion Yen) 1,5 TEL Net sales 1,4. 5% 1,2 Operating income Operating margin 1,13.7 4% % % % 26.1% % % % 17.6% 3% 2% 3 5.3% 2.5% 1% -3 % -4.4% -.5% -1% (FY) (E) 4M DRAM oversupply Financial crisis in Asia 64M DRAM oversupply IT bubble crash Excessive logic foundry investment World financial crisis Memory oversupply Effects of European debt crisis, slowdown in emerging markets Weak demand for PC, mobile 5

6 The Market TEL Participates in Electronic System CY216 World Market US$ 1,742B FPD Production Equipment (FPD) FY218 TEL Sales (April 217-March 218) 75.B, 7% Others.4B, % Semiconductor US$ 343B 1,13.7B WFE * CAPEX US$ 37B 1,55.2B, 93% Semiconductor Production Equipment (SPE) *The semiconductor production process can be divided into two sequential subprocesses: front-end (wafer fabrication) and back-end (assembly and test) production. WFE is used in the front-end production process. Front-end production equipment includes equipment for wafer level packaging. Source: Gartner, Forecast: Semiconductor Wafer Fab Manufacturing Equipment, Worldwide, 1Q17 Update 13 April 217 Charts/graphics created by Tokyo Electron based on Gartner research. 6

7 TEL Main Products World Market Share (CY217) Semiconductor Production Equipment 26% 36% 25% 87% Coater/Developer Dry Etch System Deposition System Cleaning System FPD Production Equipment (FY218) 31% 38% 42% 19% 71% ALD CVD Oxidation/Diffusion FPD Coater/Developer Source (FPD): TEL survey FPD Etcher/Asher Source (SPE): Gartner, Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 217, 18 April 218, Charts/graphics created by Tokyo Electron based on Gartner research. Coater/Developer: Photoresist processing (Track), Dry Etch System: Dry etch, Deposition System: Tube CVD + Atomic layer deposition tools + Oxidation/diffusion furnaces + Nontube LPCVD, ALD: Atomic layer deposition tools, CVD: Tube CVD + Nontube LPCVD, Oxidation/Diffusion: Oxidation/diffusion, Cleaning System: Wet stations + Spray processors + Other clean process 7

8 World Top 1 SPE Makers CY216 Revenue Ranking Applied Materials (Billions of US$) 9.87 ASML 7.33 Lam Research Tokyo Electron KLA-Tencor 3.19 SCREEN Advantest Teradyne Hitachi High-Technologies ASM Pacific Technology Source; The Chip Insider Equipment & Emerging Markets (VLSI Research, May 217) Exchange Rates: 1US$=

9 Medium-term Management Plan TEL Initiatives and Progress 9

10 Wafer Fab Equipment (WFE) Market Outlook Future growth drivers PC, internet, mobile + VR/AR/MR *, IoT, AI, RPA **, machine learning, big data, autonomous driving, blockchain * VR/AR/MR: Virtual reality/augmented reality/mixed reality ** RPA: Robotic process automation ($ Billion) WFE market growth accelerating. Investment expanding to $5B+ CY'13 CY'14 CY'15 CY'16 CY'17 CY'18 Equipment market is moving to the next phase amid expanding applications for semiconductors Source: VLSI Wafer Fab Equipment (WFE) Market History and Forecast April 218. Graph created by TEL using above data 1 Equipment for wafer-level packaging is not included in the market size here.

11 SPE Business Strategy: Etching System Achieving success in DRAM as planned. Continue to Focus on 3D NAND and Logic DRAM Capacitor processes (HARC) Interconnects Interconnects Capacitor 3D NAND HARC * processes Improve our position in 9X/12X through our clear lead in productivity and etch profile CY 17 CY 18 CY 19 6X 6X/9X 9X Logic Maintain high interconnecting dielectric process market share Enhance our position in 7nm and finer advanced patterning Lower customer patterning costs through combining multiple steps into one Simplify processes Word line isolation (Slit) Channel (Memory hole) Multi-level contact Interconnects FinFET Market share CY 15 (Actual) CY 16 (Actual) CY 17 (Actual) CY 19 (Target) Etching System 21% 23% 26% >3% * HARC (High aspect ratio contact) process: a process for forming holes that requires advanced processing technology 11

12 SPE Business Strategy: Deposition System Aim to expand earnings based on new technologies for further miniaturization and next-generation semiconductors ALD system Achieve both high quality film formation and high productivity needed for miniaturization and for 3D structure with semi-batch system ALD system market CAGR >1% 15.B CVD system Differentiate in memory through our clear lead in batch system productivity Achieve high quality metallization to enable further miniaturization 9.B Semi-batch ALD system NT Source: TEL estimate Batch system TELINDY PLUS Metallization system Triase+ Market share CY 15 (Actual) CY 16 (Actual) CY 17 (Actual) CY 19 (Target) Deposition system 38% 37% 36% >47% Source: Gartner, Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 216, 3 March 217, Charts/graphics created by Tokyo Electron based on Gartner research. Deposition System: Tube CVD + Atomic layer deposition tools + Oxidation/diffusion furnaces + Nontube LPCVD 12

13 SPE Business Strategy: Cleaning Systems Expand sales of CELLESTA single wafer cleaning system Expand applications based on backside and bevel cleaning * and drying technology that prevents pattern collapse during the post-etch cleaning processes Secure key 3D NAND processes through batch cleaning Provide high quality and productivity in the metal etching, polysilicon etching, and nitride film removal processes required for precise controllability Apply best known coater/developers methods to cleaning system business Share leading-edge technology and expertise by unifying R&D Single wafer cleaning system CELLESTA Batch cleaning system EXPEDIUS TM Market share CY 15 (Actual) CY 16 (Actual) CY 17 (Actual) CY 19 (Target) Cleaning system 18% 2% 25% >24% * Bevel cleaning: process for removing film from the outer part of the wafer 13

14 Field Solutions (FS) Business: Medium-term Plan Field Solutions sales FS business strategy FY'15 FY'16 FY'17 FY'18 WFE$45B 32.B FY 2 (Medium-term plan) Used equipment and modification Parts and services Respond to new customer needs driven by IoT Provide upgrades and remanufactured equipment that handle new applications Contribute to improving customer productivity Provide added-value services using remote connections (Installed base of 62, units) Increase earnings in both the used equipment/modification and parts/service segments through a business model that utilizes makers strengths 14

15 Financial Model (toward FY22) FY218 (Actual) FY219 (Estimate) FY22 (Medium-term plan) WFE $51B WFE $58B WFE $42B WFE $45B Net sales 1,13.7 1,4. 1,5. 1,2. SPE 1,55.2 1, ,12. FPD Gross profit Gross profit margin SG&A expenses SG&A expense ratio Operating income Operating margin Net income attributable to owners of parent % % % % % % % % % (Billion Yen) % % %

16 FY219 Business Environment and Financial Estimates (FY219: April 1, 218-March 31, 219) 16

17 Business Environment (Outlook as of April 218) WFE * capex CY218 investment driven by buoyant demand for memory, expect YoY growth of approx. 15% FPD production equipment capex for TFT array process ** We expect CY218 investment in production equipment to increase approx. 1% YoY despite adjustments to investment in small/medium panels for mobile devices, with demand driven by significantly expanded investment in G1.5 on demand for large panels Accelerating growth in the equipment market on active investment in IoT and next generation technologies * 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. Wafer fab equipment refers to the production equipment used in front-end production and in wafer-level packaging production. ** TFT array process: The processes of manufacturing the substrates with the electric circuit functions that drive displays 17

18 CY 18 WFE Market Growth and Business Opportunities by Application DRAM: Market growth of 6% YoY forecast Capex: 7% of investment amount to be for new factories, and 1X/1Ynm generation to comprise 8% Driving force: Average server capacity up 35% Opportunities: Differentiation through combined patterning and our strength in interconnects Non-volatile memory: Same level forecast Capex: 9X generations to comprise 5% Driving force: Growth in SSD demand for data centers and PCs Opportunities: Differentiation through high value-added etch and clean WFE market by application* $58B $51B WLP DRAM Logic/Foundry: Same level forecast Capex: 1nm and beyond generation to comprise 5% Driving force: Demand for higher performance, lower power consumption Opportunities: Business expansion in more complex patterning processes CY'17 Non-volatile memory Logic foundry Logic & others CY'18 * TEL estimate 18

19 Drivers of Investment in NAND Flash Breakdown of NAND bit demand by application *Ratios on graph are in comparison with total bit demand, which is 1 SSD bit growth CAGR 5.9% 4% 4% 43% 29% 38% 35% 49% 3% 51% 3% CY'17(E) CY'18(E) CY'19(E) CY'2(E) CY'21(E) Others SSD Mobile Source: Gartner, Forecast: NAND Flash Supply and Demand, Worldwide, 1Q16-4Q18, 4Q17 Update, 2 January 218. Charts created by Tokyo Electron based on Gartner research. Mobile: Ultramobile + Phone, Basic, Smart OS + Phone, Premium, Smart OS + Phone, Utility, Smart OS, CAGR: CY 17-CY 21 NAND bit growth driven by SSD SSD CAGR 5.9%(CY 17-21) Mobile CAGR 32.%(CY 17-21) Rapid increase in demand for server capacity *Capacity is aggregate of SSD and HDD CY 17 3EB CY 21 1ZB Big potential for growth in SSD usage Only used in 9% of servers in CY 17 EB: 1 18 byte, ZB: 1 21 byte Usage in PCs also low at 39% in CY 17 Source: Gartner, Forecast: Hard-Disk Drives, Worldwide, , 3Q17 Update, 13 November 217. Server: Total Enterprise HDD/SSD PB, PC: Total Notebook/Ultramobile Premium and Desk-Based/Workstation PCs Investment driven by rapid increase in storage capacity demand through IoT and increase in SSD usage 19

20 FY218 (April 217-March 218) Highlights 1, % Net Sales and Gross Profit Margin Net sales ( B) Gross profit margin 42.% 39.6% 4.2% 4.3% ,13.7 FY'14 FY'15 FY'16 FY'17 FY' Operating Income and Operating Margin 5.3% 32.2 Operating income ( B) Operating margin 14.4% % 19.5% Net sales +41% YoY driven by increase in SPE* demand and expansion of market share in focus areas Operating income and net income attributable to owners of parent reached new record highs * SPE: Semiconductor production equipment % FY'14 FY'15 FY'16 FY'17 FY'18 3.% 25.% 2.% 15.% 1.% 5.%.% Net Income Attributable to Owners of Parent and ROE 29.% -3.3% Net income attributable to owners of parent ( B) ROE % 13.% % FY'14 FY'15 FY'16 FY'17 FY'18

21 FY219 Financial Estimates FY218 (Actual) FY219 (Estimates) H1 H2 Full year (Billion yen) Full year YoY change Net sales 1, , % SPE 1, , % FPD % Gross profit Gross profit margin % % % % pts SG&A expenses Operating income Operating margin % % % % pts Income before income taxes Net income attributable to owners of parent Net income per share (Yen) 1, , Expect sales growth to exceed market growth, generating record high profits for third consecutive year SPE: Semiconductor production equipment, FPD: Flat panel display production equipment 21

22 FY219 SPE Division New Equipment Sales Forecast (Billion yen) DRAM Non-volatile memory % 37% 11% 3% FY'18 H1 (Actual) Sales by application Logic foundry Logic & others % 43% 1% 22% FY'18 H2 (Actual) % 39% 1% 16% FY'19 H1 (Estimates) 32% 32% 12% 24% FY'19 H2 (Estimates) DRAM investment growth driven by tight supply 3D NAND Continued strong investment on sustained SSD demand for data centers and PCs Logic/Foundry Continued investment in 1/7nm generations Also firm investment in 28nm and prior generations Percentages on the graph show the composition ratio of new equipment sales. Field solutions sales are not included. 22

23 FY219 R&D Expenses, Capex Plan R&D Expenses 12.B Continue investing based on focus areas and sustainable growth Capex 51.B Actively invest in advanced technologies R&D and to meet increasing production Depreciation 26.B New production buildings (deposition systems, gas chemical etch systems, test systems) (Billion Yen) (Billion Yen) R&D expenses FY'15 FY'16 FY'17 FY'18 FY'19 (E) Capex Depreciation Nirasaki City, Yamanashi Prefecture: approx. 13.B construction cost (Begin construction in January 219, completion scheduled for April 22) Oshu City, Iwate Prefecture: approx. 13.B construction cost (Begin construction in October 218, completion scheduled for September 219) Maximize business opportunities while equipment market is in a growth phase 23 FY'15 FY'16 FY'17 FY'18 FY'19 (E)

24 FY219 Dividend Forecast (Yen) 9 Dividend per share 823 yen yen 352 yen 624 yen Year-end 433 yen 237 yen Interim 39 yen TEL shareholder return policy Dividend payout ratio: 5% Annual DPS of not less than 15 yen We will review our dividend policy if the company does not generate net income for two consecutive fiscal years We will flexibly consider share buybacks FY'15 FY'16 FY'17 FY'18 FY'19 (E) Expect to raise DPS 32% YoY 24

25 Appendix 1: Etching System 25

26 3D NAND Business Opportunities Ratio of etching systems in NAND CY Other systems 85% Etching systems 15% Other systems 5% 3D NAND HARC * processes CY 19 Etching systems 5% TEL estimates CY 17 CY 18 CY 19 6X 6X/9X 9X Increase in 3D NAND HARC * processes Investment per 1k/wspm ** ($M) 6X 9X 12X HARC processes (multi-level contact/word line isolation/channel) Other etching processes Etching process total D NAND 6X 9X (Greenfield, TEL estimates) Multi-level contact Word line isolation (Slit) Channel (Memory hole) Expand HARC processes by increasing number of stacked layers * HARC (High aspect ratio contact) process: a process for forming holes that requires advanced processing technology ** wspm: wafer starts per month 26

27 3D NAND: Approach and Results Maintained a 1% share of the multi-level contact processes. Plan to further increase revenues by integrating mask process to improve productivity Captured new customer PORs with 9X generation word line isolation. Aim to increase our position by integrating mask process Realize the capture of channel processes through new technology Improve productivity by integrating processes A single system that combines mask and main processes normally processed by different systems Improved productivity Mask process Main process Expand our position by dramatically improving profile and productivity 27

28 Logic: Approach and Results Maintained high interconnecting dielectric etching process market share Aim to expanded advanced patterning applications Interconnects Advanced patterning RLSA plasma source ALE concept process Plasma etch systems Tactras RLSA Realize high selectivity through low electron temperature plasma Achieve high-level of control over dimension variation Aim to increase sales by differentiating our technology in 7nm and finer advanced patterning 28

29 DRAM: Approach and Results Captured BEOL processes by leveraging expertise in logic through our strength in damascene processes Captured development PORs with all customers using 1Y generation capacitor process (HARC) Realized reduced patterning costs for customers by combining etching steps. Currently using successes with strategic customers to expand market share in other customers Interconnects Capacitor (HARC) Simplify process and raise productivity by combining multiple etching steps Currently achieving success in all DRAM focus processes in line with plan 29

30 Appendix 2: Effects of EUV Lithography Adoption 3

31 Effects of EUV Lithography Adoption EUV adoption will solve sophisticated technological hurdles our customers face (i.e. placement errors), bringing about quite positive effects on semiconductor and SPE industries Advance miniaturization Accelerate customers investment in next generation technologies by enhancing the yield Further miniaturization led by EUV will create more differentiation of our products and business opportunities Increase our coater/developer market share even further Expand demand for etch, deposition and cleaning equipment Differentiate our product through advancing self-aligned patterning technology Expand business with process integration, leveraging our robust product lineup 31

32 Edge Placement Error Improvement by EUV Step1: Line/Space Line (Litho-Etch) 3 with 193i 2 1 Fluctuation can be cumulated after each litho-etch step Edge placement error Too close Space Step2: Cut Self-aligned multiple patterning (SAMP) requires a lot of etch and dep equipment Cut EUV introduction 1 3 Too far Closer 3 masks 3 masks : (Litho + Etch) x 3 Yield degradation Single exposure by EUV Minimum fluctions 1 1 Schematic of logic device LELELE = (Litho-Etch) 3 requires 1 mask many lithography tools but does not require many etch and dep equipment Yield improvement 1 mask : (Litho + Etch) x

33 (Litho-etch) n Patterning for Logic MOL Contact/Cut Module PMD dep Hard mask1 dep Hard mask2 dep Lithography1 Contact HM2 etch1 short etch time Lithography2 Contact HM2 etch2 short etch time Lithography3 Contact HM2 etch3 short etch time Contact HM1 etch short etch time Contact PMD etch long etch time Post etch clean Barrier metal Ti/TiN dep Contact plug W dep Contact plug W CMP (Litho-etch) n patterning Thicker layer Higher etch selectivity Lithography1 Lithography2 Lithgraphy3 Contact HM2 etch1 Contact HM1 etch (Litho-etch) 3 patterning Contact HM2 etch2 Contact PMD etch Contact HM2 etch3 or Contact plug W CMP EUV lithography Contact HM2 etch 33

34 Self-aligned Multiple Patterning for Line/Space Had mask1 dep Hard mask2 dep Mandrel1 dep Hard mask3 dep Hard mask4 dep Mandrel2 dep Hard mask5 dep Lithography Hard mask5 etch Mandrel2 etch Sidewall1 dep Sidewall1 etch back Mandrel2 pull Hard mask4 etch Hard mask3 etch Mandrel1 etch Sidewall2 dep Sidewall2 etch back Hard mask5 Mandrel2 Hard mask4 Hard mask3 Mandrel1 Hard mask2 Hard mask1 p 1 SADP 2 p Mandrel2 etch Sidewall1 dep Sidewall etch back1 1 4 p SAQP Lithography Deposition Etch Hard mask3 etch Mandrel1 etch Sidewall2 dep Sidewall etch back2 SADP: Self-aligned double patterning SAQP: Self-aligned quadruple patterning 34

35 Appendix 3: FPD Production Equipment 35

36 Display Trends Technology inflection creates greater business opportunities Increasing screen size OLED Color filter LCD TFT Backlight Emissive layer TFT LCD OLED Increasing resolution TV FHD 4K 8K Smartphones 3 ppi 7 ppi Design flexibility Flexible, edge bent, free format 36

37 FPD Business Medium-term Plan Increase share and profitability in market that has begun to grow again FY22 target: sales 8.B, operating margin over 2% (Billion Yen) 1 4% 8 3% 6 4 2% 1% Sales Operating margin 2 % FY215 FY216 FY217 FY218 FY22 (Medium-term plan) -1% 37

38 Medium-term Plan Progress: Highlights TEL s product strategy for a new PICP * etching system is progressing according to plan Expanding the G1.5 equipment business G1.5 G8.5 Coater/developers and etching system PICP etching system for large-sized panels PICP etching system for small- and medium-sized panels G6 New Betelex platform OLED process (G6H) Higher profitability for all panel generations * PICP: Plasma source for producing extremely uniform high density plasma on substrate 38

39 3,37 mm Opportunity G1.5 Equipment Market Greater than expected investment and market expansion Maintain high market share through technological differentiation (large area plasma suppression, air floating coater) G1.5 TFT array equipment market ($M) 3,5 3, 2,5 Eight 65 inch TV panel substrate possible 65 2, 1,5 1, Results based on IHS Markit, Technology Group Display Supply Demand & Equipment Tracker, Q Results are not an endorsement of Tokyo Electron. Any reliance on these results is at the third party's own risk. Visit technology.ihs.com for more details. 2,94 mm 39

40 Opportunity Metal Oxide/LTPS Higher sophistication of etching technology and increased number of processes TFT a-si Metal oxide LTPS Representation of structure Application Number of masks Dry etch processes LCD TV Monitor OLED TV Tablet Smartphone (LCD/OLED) a-si, SiNx SiO, SiNx SiO, Metal Further new needs Flexible displays +2 processes OLED process (G6 half size) +3-4 processes 4

41 Mm 2 / YR Opportunity Growth of OLED TV Market Introduced inkjet printing system to meet production demand from 218 Material utilization significantly more efficient than current evaporation method Increase in OLED TV manufacturers New manufacturers in Japan 8 7 OLED TV area demand Toshiba REGZA X91 series Launched March 217 Sony BRAVIA A1 To be launched June 217 Panasonic VIERA TH-65EZ1/EZ95 series To be launched June Results based on IHS Markit, Technology Group Display Supply Demand & Equipment Tracker, Q Results are not an endorsement of Tokyo Electron. Any reliance on these 41 results is at the third party's own risk. Visit technology.ihs.com for more details.

42 Appendix 4: Financial Data 42

43 Financial Summary FY217 FY218 YoY Change (Billion yen) (Reference) FY218 estimates announced on Oct. 31, 217 Net sales , % 1,13. SPE , % 1,54.7 FPD % % % % Gross profit +47.4% Gross profit margin +1.7pts SG&A expenses % 196. Operating income Operating margin % % +8.6% +5.4pts % Income before income taxes % 267. Net income attributable to owners of parent % 198. EPS (Yen) , % 1,26.66 R&D expenses % 1. Capital expenditures % 5. Depreciation and amortization % In principle, export sales of Tokyo Electron s mainstay semiconductor and FPD production equipment are denominated in yen. While some settlements are denominated in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking. 2. Profit ratios are calculated using full amounts, before rounding. 43

44 Segment Information SPE (Semiconductor Production Equipment) (Billion Yen) 1,2 9 Sales Segment income Segment profit margin 1,55.2 6% 5% FPD (Flat Panel Display Production Equipment) (Billion Yen) 1 Sales Segment income Segment profit margin % 5% 1% Composition of Net Sales 6 7 FPD % 4% % 3% % 5% SPE % % 1% % 17.7% % 1% FY'17 FY'18 % FY' Significantly raised profitability in both SPE and FPD 1. Segment income is based on income before income taxes. 2. R&D expenses such as fundamental research and element research are not included in above reportable segments. 3. Composition of net sales figures is based on the sales to customers. 44 FY'18 % % FY'17 FY'18

45 SPE Division: New Equipment Sales by Application (Billion Yen) 9 DRAM Non-volatile memory Logic foundry Logic & others (MPU, AP, Others) % FY218 results % 4% 3% 28% 2% 11% 31% 25% 25% 25% 24% FY'16 FY'17 FY'18 Sales of DRAM and non-volatile memory more than doubled YoY driven by increase in demand for servers and proactive investment in next-generation technology In foundry/logic, investment in cutting-edge generations and 28nm and above continued 45

46 SPE Division: New Equipment Sales by Product (Billion Yen) 9 Coater/Developer Etch system Deposition system Cleaning system Wafer prober Others % FY218 results % 4% Sales expanded in focus areas (etch, deposition, cleaning) driven by investment 3 28% 29% 34% 23% in non-volatile memory and miniaturization enabled by multiple patterning 22% 26% 1% 11% 1% 4% 6% 6% 3% 2% 1% FY'16 FY'17 FY'18 46

47 Field Solutions Sales (Billion Yen) 3 2 Used equipment and modification Parts and services FY218 results Sales growth of +21% YoY, full-year sales reached 251.B Parts sales increased strongly, especially in South Korea, due to rise in customers equipment utilization FY'16 FY'17 FY'18 * FY216 and FY217 sales figures have been rounded. 47

48 SPE Sales by Region (Billion Yen) Japan North America Europe Korea (Billion Yen) (Billion Yen) (Billion Yen) FY'17 FY'18 FY'17 FY'18 FY'17 FY'18 FY'17 FY'18 Taiwan China S.E. Asia, Others Region Composition (Billion Yen) (Billion Yen) (Billion Yen) FY' FY' FY' FY' FY'17 FY'18 1% 5% % FY'17 FY'18 S.E. Asia, Others China Taiwan Korea Europe North America Japan 48

49 Inventory Turnover and Accounts Receivable Turnover (Quarterly) (Billion Yen) (Days) Net sales Inventory turnover Accounts receivable turnover Q4 FY'16 Q1 FY'17 Q2 Q3 Q4 Q1 FY'18 Q2 Q3 Q4 Turnover days = inventory or accounts receivable at the end of each quarter / last 12 months sales x

50 Financial Summary (Quarterly) FY217 FY218 Q4 Q1 Q2 Q3 Q4 vs. Q3 FY218 Net sales % SPE % FPD % Gross profit Gross profit margin % % % % % +44.8% +2.pts SG&A expenses % Operating income Operating margin % % SPE: Semiconductor production equipment, FPD: Flat panel display production equipment % % % (Billion yen) +71.7% +5.5pts Income before income taxes % Net income attributable to owners of parent % R&D expenses % Capital expenditures % Depreciation and amortization % 1. In principle, export sales of Tokyo Electron s mainstay semiconductor and FPD production equipment are denominated in yen. While some settlements are denominated in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking. 2. Profit ratios are calculated using full amounts, before rounding.

51 Financial Performance (Quarterly) (Billion Yen) 5 5% % 4% 3 28.% 3% 2 2% % Q4 FY 17 Q1 FY 18 Q2 Q3 Q4 Net sales Operating income Net income attributable to owners of parent Gross profit margin 42.5% 41.1% 42.1% 41.1% 43.1% Operating margin 23.6% 23.2% 24.4% 22.5% 28.% % 51

52 Segment Information (Quarterly) SPE (Semiconductor production equipment) (Billion Yen) Sales Segment income Segment profit margin % 5% 4% FPD (Flat panel display production equipment) (Billion Yen) 35. Sales Segment income Segment profit margin % 5% 4% 1% Composition of Net Sales FPD % 29.8% 29.6% 28.6% 3.9% Q4 FY'17 Q1 FY'18 Q2 Q3 Q % 2% 1% % % 2.3 Q4 FY' %.4 Q1 FY' % % % Q2 Q3 Q % 2% 1% % 5% % Q4 FY'17 Q1 FY'18 Q2 Q3 Q4 SPE 1. Segment income is based on income before income taxes. 2. R&D expenses such as fundamental research and element research are not included in above reportable segments. 3. Composition of net sales figures is based on the sales to customers. 52

53 SPE Division: New Equipment Sales by Application (Quarterly) (Billion Yen) DRAM Non-volatile memory Logic foundry Logic & others (MPU, AP, Others) % % 25% 25% 38% 23% % 23% 18% 3% 17% 17% 31% 27% 27% 22% 22% 32% 25% 21% 23% 25% 23% 19% Q4 FY'16 Q1 FY' % 38% 31% 18% 17% 31% 22% 32% 23% 19% 12% % 18% 16% 24% 31% 32% 32% 34% 32% 25% 19% % 22% 31% 16% 27% 24% 32% 27% 34% 26% 25% 22% % 17% 27% 24% 4% 27% 34% 16% 24% 26% 25% 26% 24% 27% Q2 Q3 Q4 Q1 FY'18 22% 17% % % 25% 27% 21% 4% 35% 4% 35% 27% 8% 16% 32% 27% 24% 41% 16% 8% 12% 1% 32% 27% 28% 43% 26% 19% Q2 Q3 Q4 Percentages on the graph show the composition ratio of new equipment sales. Field solutions sales are not included. 53

54 Field Solutions Sales (Quarterly) (Billion Yen) Q4 FY 16 Q1 FY 17 Q2 Q3 Q4 Q1 FY 18 Q2 Q3 Q4 SPE Sales FPD Sales

55 SPE Division: Sales by Region (Quarterly) (Billion Yen) Q4 FY 16 Q1 FY 17 Q2 Q3 Q4 Q1 FY 18 Q2 Q3 Q4 Japan North America Europe South Korea Taiwan China S. E. Asia, Others

56 Balance Sheet (Quarterly) Assets (Billion Yen) Liabilities & Net Assets (Billion Yen) , , , Q4 FY'17 Q1 FY'18 Q2 Q3 Q4 Cash & cash equivalents* Trade notes, accounts receivables Inventories Other current assets Tangible assets Intangible assets Investment & other assets Q4 FY'17 Q1 FY'18 1,28.7 1,91.5 1, Q2 Q3 Q4 Liabilities Net assets * Cash and cash equivalents: Cash and deposits + Short-term investments, etc. (Securities in B/S). 56

57 Cash Flow (Quarterly) (Billion Yen) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY 16 FY 17 FY 18 Cash flow from operating activities Cash flow from investing activities* Cash flow from financing activities Free cash flow** Cash on hand*** * Cash flow from investing activities excludes changes in deposits with periods to maturity of over 3 months. ** Free cash flow = cash flow from operating activities + cash flow from investing activities excluding changes in deposits with periods to maturity of over 3 months. *** Cash on hand includes the total of cash + deposits with periods to maturity of over 3 months. 57

58 Consolidated 1-year Financial Summary (Million Yen) FY29 FY21 FY211 FY212 FY213 FY214 FY215 FY216 FY217 FY218 Net Sales 58,82 418, , ,91 497, ,17 613, , ,719 1,13,728 Semiconductor production equipment 325, , , , ,26 478, , ,32 749,893 1,55,234 FPD production equipment 88,17 71,361 66,721 69,888 2,16 28,317 32,79 44,687 49,387 75,68 PV production equipment 3,85 3,617 Computer network 94,27 84,473 9,216 84,867 84,664 1,726 Electronic components Other , Gross profit 137,48 18, , , ,754 21, , ,29 322, ,32 Gross profit margin 27.% 25.9% 35.1% 33.4% 31.9% 33.% 39.6% 4.2% 4.3% 42.% SG&A expenses 122,697 11, , ,1 146,26 169, ,66 15,42 166, ,86 Operating income 14,71-2,18 97,87 6,443 12,548 32,24 88, , , ,172 Operating margin 2.9% -.5% 14.6% 9.5% 2.5% 5.3% 14.4% 17.6% 19.5% 24.9% Ordinary income 2,555 2,558 11,919 64,46 16,696 35,487 92, , ,549 28,737 Income before income taxes 9,636-7,767 99,579 6,62 17,766-11,756 86,827 16, , ,242 Net income attributable to owners of parent 7,543-9,33 71,924 36,725 6,76-19,48 71,888 77, ,28 24,371 Depreciation and amortization 23,68 2,1 17,77 24,197 26,63 24,888 2,878 19,257 17,872 2,619 Capital expenditures 18,17 14,918 39,14 39,541 21,773 12,799 13,183 13,341 2,697 45,63 R&D expenses 6,987 54,74 7,568 81,56 73,248 78,663 71,349 76,286 83,8 97,13 Interest-bearing debt 3,86 5,15 7,996 4,42 3,756 13,531 Equity 518, , , , ,32 578,91 639, , ,94 767,146 Total assets 668, ,351 89,25 783,61 775, , , , ,447 1,28,75 Debt-to-equity ratio.7% 1.% 1.4%.8%.6% 2.3% Equity ratio 77.5% 73.5% 7.8% 74.9% 76.5% 69.8% 73.% 7.9% 67.2% 63.5% ROE 1.4% -1.8% 13.3% 6.3% 1.% -3.3% 11.8% 13.% 19.1% 29.% Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Net income per share Cash dividends per share 81,3 48,284 83,238 29,712 84,266 44,449 71,86 69, , ,582-16,621 9,613-35,881-8, ,769-19, ,737-15,13-28,893-11,833-46, ,236-27,334-1, , ,6-39,38-82, , Number of employees 1,391 1,68 1,343 1,684 12,21 12,34 1,844 1,629 11,241 11,946 58

59 Disclaimer regarding forward-looking statement Forecast of TEL s performance and future prospects and other sort of information published are made based on information available at the time of publication. Actual performance and results may differ significantly from the forecast described here due to changes in various external and internal factors, including the economic situation, semiconductor/fpd market conditions, intensification of sales competition, safety and product quality management, and intellectual property-related risks. Processing of numbers For the amount listed, because fractions are rounded down, there may be the cases where the total for certain account titles does not correspond to the sum of the respective figures for account titles. Percentages are calculated using full amounts, before rounding. Exchange risk In principle, export sales of Tokyo Electron s mainstay semiconductor and FPD panel production equipment are denominated in yen. While some settlements are denominated in dollars, exchange risk is hedged as forward exchange contracts are made individually at the time of booking. Accordingly, the effect of exchange rates on profits is negligible. Disclaimer regarding IHS Markit data (Page 39, 41) The IHS Markit reports and information referenced herein (the "IHS Markit Materials") are the copyrighted property of IHS Markit Ltd. ( IHS Markit ) and represent data, research, opinions or viewpoints published by IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof (and not as of the date of this offering document). The information and opinions expressed in the IHS Markit Materials are subject to change without notice and IHS Markit has no duty or responsibility to update the IHS Markit Materials. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable, the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. To the extent permitted by law, IHS Markit shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on the IHS Markit Materials or any statement contained herein, or resulting from any omission. No portion of the IHS Markit Materials may be reproduced, reused, or otherwise distributed in any form without the prior written consent of IHS Markit. Content reproduced or redistributed with IHS Markit s permission must display IHS Markit s legal notices and attributions of authorship. IHS Markit and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the property of IHS Markit or their respective owners. Disclaimer regarding Gartner data (Page 6, 7, 12, 19) All statements in this presentation attributable to Gartner represent Tokyo Electron s interpretation of data, research opinion or viewpoints published as part of a syndicated subscription service by Gartner, Inc., and have not been reviewed by Gartner. Each Gartner publication speaks as of its original publication date (and not as of the date of this presentation). The opinions expressed in Gartner publications are not representations of fact, and are subject to change without notice. FPD: Flat panel display 59

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