The 55th Annual General Meeting of Shareholders June 19, 2018

Transcription

1 The 55th Annual General Meeting of Shareholders June 19, 2018 The 55 th Annual General Meeting of Shareholders 1

2 FY2018 Financial Report (FY2018: April 1, 2017 March 31, 2018) The 55 th Annual General Meeting of Shareholders 2

3 Consolidated Statement of Income (Billion Yen) FY2017 (%) FY 期 (%) (%) Variance Net sales , , SPE , , FPD Others SPE: Semiconductor Production Equipment FPD: Flat Panel Display Production Equipment Consolidated sales up 41% YoY exceeding the market growth rate, over 1,000 Billion yen for the first time The 55 th Annual General Meeting of Shareholders 3

4 Consolidated Statement of Income FY2017 (%) 第 FY 期 (%) Variance Net sales , , Gross profit , Operating income , Ordinary income , Unusual or infrequent profit Unusual or infrequent loss Income before income taxes , Net income attributable to (Billion Yen) owners of parent Consolidated sales, and respective income all reached new record highs. The 55 th Annual General Meeting of Shareholders 4

5 FY2018 (April 2017-March 2018) highlights 1, Net Sales and Gross Profit Margin 33.0% Net sales ( B) Gross profit margin 39.6% % 40.3% FY'14 FY'15 FY'16 FY'17 FY' % Operating income ( B) 24.9% 1, Operating Income and Operating Margin 5.3% 32.2 Operating margin 14.4% % The 55 th Annual General Meeting of Shareholders % FY'14 FY'15 FY'16 FY'17 FY' % 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Net Income Attributable to Owners of Parent and ROE -3.3% In addition to high sales and profit, large improvement in profit margin Net income attributable to owners of parent ( B) ROE % 13.0% % FY'14 FY'15 FY'16 FY'17 FY' % 204.3

6 Growth drivers FY 18 (vs. FY 17) WFE* market growth +37% WFE market growth based on CY numbers Etch system TEL sales growth +41% TEL operating income growth +81% Cleaning system *WFE: Wafer Fab Equipment ALD system *ALD: Atomic layer deposition tools Entered and increased market share in growth areas Outperformed overall market growth The 55 th Annual General Meeting of Shareholders 6

7 Consolidated Balance Sheet Assets (Billion Yen) 1, Cash & cash equivalents* Liabilities & Net Assets (Billion Yen) , Liabilities Trade notes, accounts receivables /3/ /3/31 Inventories Other current assets Tangible assets Intangible assets Investment & other assets /3/ /3/31 Net assets *Include time deposits + Short-term investments, etc. (Securities on B/S). The 55 th Annual General Meeting of Shareholders 7

8 Non-consolidated Financial Statement (Billion Yen) Statement of Income FY2017 (%) FY2018 (%) Variance Net sales Operating income Ordinary income Income before income 1, taxes Net income Balance Sheet FY2017 (%) FY2018 (%) Variance Total assets Total liabilities Total net assets Total liabilities & net assets The 55 th Annual General Meeting of Shareholders 8

9 FY2018 Dividends Annual dividend per share FY2014 FY2015 FY2016 FY2017 FY2018 (Yen) Interim Year-end Annual dividends Total dividends Payout ratio FY yen 347yen 624yen Billion yen 50.1% The 55 th Annual General Meeting of Shareholders 9

10 FY2019 Financial Estimates (FY2019: April 1, 2018 March 31, 2019) The 55 th Annual General Meeting of Shareholders 10

11 Business Environment SPE Capex CY2018 WFE capex forecast to increase by around 15% YoY driven by buoyant demand for memory FPD Capex CY2018 demand for FPD manufacturing equipment forecast to increase 10% YoY despite adjustments to investment in small/medium panels for mobile devices, with demand driven by significantly expanded investment on demand for large panels The 55 th Annual General Meeting of Shareholders 11

12 FY2019 Consolidated Financial Estimates 1 st Half 2 nd Half Full 通期 year YoY changes Net Sales , % SPE , % FPD % % Operating Income 25.1% 27.2% 26.1% +1.2pts Ordinary Income % Income before income taxes % Net income attributable to owners of parent % SPE: Semiconductor Production Equipment FPD: Flat Panel Display Production Equipment (Billion Yen) Expect sales growth to exceed market growth, Generating record high profits* for third consecutive year The 55 th Annual General Meeting of Shareholders *Net income attributable to owners of parent 12

13 Aiming for further growth 1. Business environment and TEL 2. New financial model 3. Supporting sustainable development of society 4. Returns to shareholders The 55 th Annual General Meeting of Shareholders 13

14 Business environment and TEL The 55 th Annual General Meeting of Shareholders 14

15 We are now at an inflection point IOT World IP traffic Data centric Computer centric Mobile centric With the spread of IoT technology, the age of big data is beginning The 55 th Annual General Meeting of Shareholders 15

16 Big data Tremendous possibilities Medical treatment Public services Disaster prediction/prevention Environmental protection CLOUD Data is fostering a more prosperous society The 55 th Annual General Meeting of Shareholders 16

17 Applications and services Big Data will realize Smart mobility Telemedicine Smart cities Smart grids Autonomous driving Smart fabs Industrial automation Further semiconductor evolution required The 55 th Annual General Meeting of Shareholders 17

18 Large investment in the Cloud Hyperscale data center* Construction boom locations CY2016 CY2021 Source: CISCO Continued data growth (CAGR27% *2 ) Necessary to replace servers every 5 years *1: CISCO s definition: Operator with annual revenue of over $1B from IaaS/Paas, over $2B from SaaS, over $4B from internet, search and social networking, and over $8B in e-commerce/payment processing. *2: Source: CISCO GCI CAGR of data center traffic Continued strong demand for memory The 55 th Annual General Meeting of Shareholders 18

19 New trend: Edge computing Cloud computing Edge computing Real-time data processing from a close location Health platforms Autonomous driving Smart fabs Market growth for services where delays are unacceptable Leading-edge chips with high speed and lower power consumption are essential The 55 th Annual General Meeting of Shareholders 19

20 Artificial intelligence (AI) $15.8B AI spreading with amazing speed Competition of AI chip development intensifying $1.2B CAGR 67% 2017F 2018F 2019F 2020F 2021F 2022F Source: Gartner Forecast : AI Neural Network Processing Semiconductor Revenue, Worldwide, 2018, issued on 11 January 2018 Graph based on Gartner research; created by TEL The 55 th Annual General Meeting of Shareholders 20

21 Data-driven society is driving growth of semiconductor industry The 55 th Annual General Meeting of Shareholders 21

22 Semiconductors in Era of IoT and Big Data High capacity Low power consumption High speed High reliability Large amount of diverse, more sophisticated semiconductors required The 55 th Annual General Meeting of Shareholders 22

23 Surprising microscopic level of semiconductors 1/10, mm 6~8 micron nanometer nanometer <10 nanometer Diameter of human hair Red blood cells Smoke particles Smallest virus Semiconductor process scale Semiconductor technology moving toward the ultimate nano-electronics The 55 th Annual General Meeting of Shareholders 23

24 3D NAND memory process Deep trench etching Structure of a 3D NAND memory cell 64 layers 4~5 microns Aspect ratio of 50:1 Equivalent to the height of 5 Tokyo Sky Trees 100 nanometers across Ultrafine process technology required The 55 th Annual General Meeting of Shareholders 24

25 Semiconductor evolution continues Advanced patterning EUV DSA Multiple patterning New structure/ New materials Carbon/CNT SiGe/III-V 3D NAND FinFET High-k metal gate MRAM Semiconductor manufacturing technology New memory ReRAM PcRAM FeRAM Advanced packaging Panel scale package FO-WLP TSV Wide variety of new technologies will support evolution of semiconductors The 55 th Annual General Meeting of Shareholders 25

26 In the IoT era, displays will also change TOKYO 2020 Applications for display are expanding The 55 th Annual General Meeting of Shareholders 26

27 Technological trends in displays Increase in size High resolution OLED Design (Flexible, Bending, Free format) Technological evolution of displays continues The 55 th Annual General Meeting of Shareholders 27

28 Technological innovation will continue to expand the market The 55 th Annual General Meeting of Shareholders 28

29 WFE Market outlook ($ Billion) $30B $40B Source: 2001~2017; SEAJ, SEMI, SEMI Japan (Wafer Process +Test), 2018~2021; TEL estimate WFE semiconductor equipment market moving into a new phase The 55 th Annual General Meeting of Shareholders 29

30 TEL s product line-up Coater / Developer Inkjet printing Cleaning Semiconductor Production Equipment Prober FPD Production Equipment Etching Thin Film Formation ALD Single Wafer Deposition ALD: Atomic layer deposition tools Etching/Ashing FPD: Flat Panel Display Driving technology innovation with a diverse product portfolio and leading-edge technology Coater / Developer The 55 th Annual General Meeting of Shareholders 30

31 Revising financial model based on further market expansion and high growth opportunities The 55 th Annual General Meeting of Shareholders 31

32 New financial model The 55 th Annual General Meeting of Shareholders 32

33 Progress on previous medium-term management plan WFE FY 16 (Actual) FY 17 (Actual) FY 18 (Actual) FY 19 (Estimate) (Previous) FY 20 financial model Market size $31B $37 $51B $58B $42B $45B Net sales 663.9B 799.7B 1.13T 1.40T 1.05T 1.20T Operating margin 17.6% 19.5% 24.9% 26.1% 24% 26% ROE 13.0% 19.1% 29.0% - 20~25% Continuing with our plan to strengthen competitiveness of products and raising profitability The 55 th Annual General Meeting of Shareholders 33

34 New financial model (FY2021) WFE Market size $55B $62B Net sales Operating margin 1.5T 26.5% 1.7T 28% ROE 30% ~ 35% Aiming for a world-class operating margin greater than 30% in the medium- to long-term The 55 th Annual General Meeting of Shareholders 34

35 Three focus areas for new growth Product competitiveness Create strong next-generation products Be the sole strategic partner Customer responsiveness Higher productivity Continually improve operational efficiency The 55 th Annual General Meeting of Shareholders 35

36 Investment in R&D B~145B 120B B 50 0 FY'10 FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 (Estimated) FY'21 (Planned) Investing in focus areas and future technology The 55 th Annual General Meeting of Shareholders 36

37 Increasing development and production capability Miyagi plant Sept 2018 Planned completion Yamanashi plant April 2020 Planned completion Tohoku plant Sept 2019 Planned completion New development building New production building New production building エッチング装置 Etch systems Deposition systems Gas chemical etch systems Test systems Expanding development and production for growth areas: etch and deposition The 55 th Annual General Meeting of Shareholders 37

38 Field solutions business expanding ( Billion) FS sales 340B 280B Worldwide install base Largest in industry FY'15 FY'16 FY'17 FY'18 FY'19 FY' Field solutions sales are included in SPE and FPD sales. Numbers are approximate. (Estimated) (Target) Used equipment Parts 66,000 machines Service contracts Remote troubleshooting TELeMetrics Previously sold equipment brings additional business opportunities and value Repairs Modifications The 55 th Annual General Meeting of Shareholders 38

39 Market expansion in China Proportion of global semiconductor equipment investment in China ( Billion) 200 TEL sales in China* 164.3B 12% Approx.30% CY2017 CY2020(E) TEL projection *SPE+FPD Building a solid base for this growth market The 55 th Annual General Meeting of Shareholders 39

40 TEL is focused on ultimate miniaturization technology, high reliability, and world-class post-sales services The 55 th Annual General Meeting of Shareholders 40

41 Supporting sustainable development of society (ESG) The 55 th Annual General Meeting of Shareholders 41

42 Further improve value for society Trust ESG Programs E: Environment S: Social G: Governance Climate change, Water, Biodiversity, Environmental management Human rights, Employment/labor, Health & safety, Supply chain management, Local community Corporate governance, Compliance, Risk management Continue to grow with the trust of all stakeholders The 55 th Annual General Meeting of Shareholders 42

43 External assessments ESG が長期的な価値を高める TEL is included on several ESG-related indices TEL ESG (Environmental, Social, Governance) programs have received very positive reviews The 55 th Annual General Meeting of Shareholders 43

44 TEL named as one of Thomson Reuters Top 100 Global Tech Leaders Jan 2018 The 55 th Annual General Meeting of Shareholders 44

45 Contributing to the environment Continuing to reduce energy consumption is a big challenge in the IoT era Tokyo Electron Ltd. supports the SDGs. TEL is creating a better society by providing technological solutions The 55 th Annual General Meeting of Shareholders 45

46 TEL s mission and responsibility to provide cutting-edge technology for society will continue to increase in the future The 55 th Annual General Meeting of Shareholders 46

47 Returns to shareholders The 55 th Annual General Meeting of Shareholders 47

48 Basic approach for shareholder returns Create value through innovative technologies and proactive, groundbreaking solutions Pursue profits, enhance corporate value Appropriate returns to shareholders The 55 th Annual General Meeting of Shareholders 48

49 TEL shareholder return policy Dividend payout ratio: 50% Annual DPS of not less than 150 yen We will review our dividend policy if the company does not generate net income for two consecutive fiscal years. The 55 th Annual General Meeting of Shareholders 49

50 Dividend forecast Dividend per share 1,000 ((Yen) 円 ) Year-end 433 Mid-year 390 DPS for March 2019 expected to increase over 30% YoY 0 (FY) Estimate The 55 th Annual General Meeting of Shareholders 50

51 The 55 th Annual General Meeting of Shareholders 51