FY2012 Financial Forecast and

Management Policy

Hiroshi Takenaka, President & CEO

May 13, 2011

CORP IR/May 13, 2011

FY2011 Review
FY2011 Consolidated Financial Results
(Billions of Yen)

FY2010 FY2011 YoY Change

Net Sales 418.6 668.7 +59.7%

Operating income -2.1 97.8 +100.0
Operating margin -0.5% 14.6% +15.1pts
Income before income
-7.7 99.5 +107.3
taxes
Net income -9.0 71.9 +80.9

Dividend per share (Yen) 12 114 +102

CORP IR/May 13, 2011

FY2011 Results

▶ Net sales ¥668.7 billion, up 59.7%

▶ Operating income ¥97.8 billion, up ¥100 billion
▶ Profitability improved
• Gross profit margin: 35.1%
• SPE segment pre-tax profit margin: 23.6%
▶ R&D expenses: ¥70.5 billion, record level
▶ Operating cash flow: ¥83.2 billion generated
▶ Executing production facility strategy
• Started construction of new Miyagi Plant
• Decided to construct new plant in Kunshan City, Jiangsu Province, China

CORP IR/May 13, 2011

 FY2011 New Products
Introduced high performance, high productivity and low power
consumption products

• RLSA plasma etch system “Tactras™ RLSA™ Etch”

• Plasma enhanced batch thermal ALD system “TELINDY PLUS™ IRad ™ SA”
• Plasma processing system “Trias™ e+ SPAi ”
• Gas chemical etch system “Certas WING™ ”
• SiC epitaxial system “Probus-SiC™”

Tactras™ RLSA ™ Etch TELINDY PLUS ™ IRad™ SA Trias™ e+ SPAi Certas WING™ Probus-SiC ™

CORP IR/May 13, 2011

Business Environment
CY2011 Business Environment
▶ SPE capex
Although 1st first half capex is expected to be slightly below the initial
forecast due to the effects of the Japan earthquake, expecting increase in
2nd half. Because investments for NAND, Logic/Foundry are still strong,
overall capex for the year is expected to increase 10%.
▶ FPD capex
Although large panel investment in adjustment phase, small and mid-sized
panel investment for smartphones is strong and overall capex expected to
be about same level as 2010

▶ PV capex
Currently, single crystal silicon and Cd-Te strong, good future potential for
thin-film silicon as conversion efficiency improves

FPD: Flat Panel Display PV: Photovoltaic Cell

7

CORP IR/May 13, 2011

CY2011 WFE CAPEX by Application

($B)
40 34.1B

30
Logic/Foundry
20 +27%

10 NAND +34%
DRAM -35%
0
2006 2007 2008 2009 2010 2011E

Investments for NAND & Logic/Foundry are expanding

Source: Gartner Dataquest, TEL 8

CORP IR/May 13, 2011

 Quarterly Orders
（Billions of yen） Jan-Mar/2011
300 SPE 155.8（+21%）
SPE Order FPD/PVE Order
FPD/PVE 26.3（+73%）
250
Total: 182.1（+27%）
( ): change from Oct-Dec/2010
% is calculated using full amounts

200

150

100

50

0
4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9

4-6
7-9
00/7-9

01/1-3

02/1-3

03/1-3

04/1-3

06/1-3

07/1-3

08/1-3

09/1-3

10/1-3

11/1-3
05/1-3
10-12

10-12

10-12

10-12

10-12

10-12

10-12

10-12

10-12

10-12

10-12
9

CORP IR/May 13, 2011

 SPE Orders by Application
(equipment only)

100%
17 18 15 17 19 16
22 25 22 24 23 27
28 33 31
80% 34 37 4 6
7 8 41 46 44
11 4 15 58 52
12 15
16 21 27 23
60% 8 6 33 49 35 26
36 0 22 28
21 15 3 22
37 18
26 42 9
40% 35 24
12 12 19 16
10 18 32
11 15
55 55 52 8 51
20% 39 45 39 39
32 30 32 29 26 27 30
22 24 22 24 23 23
15
0%
4-6

7-9

4-6

7-9

4-6

7-9

4-6

7-9

4-6

7-9
06/1-3

07/1-3

08/1-3

09/1-3

11/1-3
10/1-3
10-12

10-12

10-12

10-12

10-12
05/10-12

Logic & others (MPU, System LSI, Others）

Logic foundry
Flash
DRAM

10

CORP IR/May 13, 2011

FY2012 Financial Estimates
 The Great East Japan Earthquake Status
Tokyo Electron Tohoku (Iwate)
Thermal Processing System
Already resumed its
operation in late March

Tokyo Electron Miyagi (Miyagi)

Etch System
Already resumed its operation on
May 9th
Tokyo Electron Miyagi (Miyagi)
Office/R&D will open in July
Production will begin in Oct Tokyo Electron Technology
Development Institute (Miyagi)
RLSA Etch System
Already resumed its operation in
late March

All TEL group plants and facilities in affected area (Tohoku area)
are now in operations 12

CORP IR/May 13, 2011

Disaster Response

• Confirmed the status of around 300 suppliers in the six

Suppliers prefectures of Tohoku + Ibaraki prefecture
• Responding by making operational adjustments and by
using temporarily alternative production, etc.

• All equipment and parts shipped overseas are tested

• Following IATA regulations
Radiation
(IATA: International Air Transport Association)

Electric • Summer plans: Reduce 25% from last year’s peak

• Will utilize solar power generation (2000kW), new turbo
Power refrigeration units, emergency generators and shift work.

13

CORP IR/May 13, 2011

 FY2012 Financial Estimates
(Billions of Yen)

FY2012 (E)
FY2011
1st half 2nd half Full year YoY change
Net Sales 668.7 335.0 395.0 730.0 +9%
SPE 511.3 253.0 306.0 559.0 +9%
FPD/PVE 66.7 38.0 38.0 76.0 +14%
EC/CN 90.2 44.0 51.0 95.0 +5%
Others 0.4 - - - -
Operating income 97.8 35.0 65.0 100.0 +2.1
14.6% 10.4% 16.5% 13.7% -0.9pts
Income before income 99.5 36.0 66.0 102.0 +2.4
taxes
Net income 71.9 23.0 43.0 66.0 -5.9

EPS (Yen) 401.7 128.5 240.1 368.6 -33.1

1. SPE: Semiconductor Production Equipment, FPD/PVE: Flat Panel Display and Photovoltaic Cell Production Equipment,
EC/CN: Electronic Components and Computer Networks
2 YoY changes and profit ratios are calculated using full amounts, before rounding.

Although there are some earthquake effects in the 1st half,

overall sales and operating profit increase YoY
14

CORP IR/May 13, 2011

 R&D Expenses and CAPEX
R&D Expenses CAPEX
（Billions of Yen） （Billions of Yen）
100 50
R&D expenses CAPEX 45.0
79.0 40 Depreciation expense 39.1
75 70.5
66.0
60.9
54.0 30
25.0
50 22.7 21.4 23.0
20.0
20 18.1 17.7
14.9
25
10

0 0
FY08 FY09 FY10 FY11 FY12(E) FY08 FY09 FY10 FY11 FY12(E)

FY12（E） R&D details FY12（E） CAPEX details

 Existing business: around 60%  New Miyagi plant
 New business field: around 40%  New Kunshan (China) plant
(RLSA application expansion, 3DI, OLED, Test, PV, etc)  Process Technology Center (Korea)
 TEL Technology Center Tsukuba
 Equipment and measurement tools

¥12 billion out of total investments are for new plants and
new business expansion 15

CORP IR/May 13, 2011

 FY12 Dividend Forecast

Dividend per share (E)

Interim Year-end Year total
¥45 ¥85 ¥130

(Yen)
150
130
125
114
103
100

55
50 38 45
24
8 8 10 12
0
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
(Forecast)

Dividend payout ratio 35.3%, expecting dividend per share increase

*Changed dividend payout ratio from 20% to 35% from FY11 year end dividend. 16

CORP IR/May 13, 2011

 Consolidated Financial Outlook
(Billions of Yen)
Net Sales Operating income R&D expenses Operating margin
1,000 50%
906.0
851.9

800 40%
730.0
673.6 668.7

600 30%
508.0

418.6
18.6%
400 16.9% 20%
14.6% 13.7%
11.2%
200 168.4 10%
143.9
75.7
2.9% 97.8 100.0
79.0
56.9 66.0 60.9 54.0 70.5
49.1
14.7 -0.5%
0 0%
-2.1
FY06 FY07 FY08 FY09 FY10 FY11 FY12(E)

-200 -10%

While keeping proactive investments in R&D,

improving profitability at the same time
17

CORP IR/May 13, 2011

Management Policy
Changes in Markets and Technology: SPE

Market changes

• Customers becoming oligopolies

• As mobile market expands, NAND and foundry demand
increasing
• Increasing lifespan of equipment

Technology changes

• Increasing complexity of technology - Double patterning, EUV,

3D memory
• New Solutions— 3DI technology

19

CORP IR/May 13, 2011

SPE Business Strategy

1. Unify development and manufacturing in high growth etcher business

at new Miyagi plant
2. Enhance our position in the wafer cleaning market
3. Enhance technology differentiation of our SPE products
4. Pursue new technologies (3DI, test systems)
5. Expand field solutions business
6. Enhance upstream collaboration with customers

New Miyagi Plant TEL Technology Center, Process Technology Center

Taiwan （Korea）
20

CORP IR/May 13, 2011

 Etcher
($M）
6,000

5,000

4,000

3,000
Etch market
28% 29% TEL share
2,000 26%
1,000

0
2008 2009 2010 2011E
Market: Gartner Dataquest
TEL share: TEL estimate

• Share slightly declined from CY2009 (due to increase in proportion of memory capex)
• Oxide etcher：Expanded share in HARC for DRAMs and BEOL
• Silicon etcher: Won new POR orders from several customers (including RLSA etcher)
• POR net increase: Over 20 processes

21

CORP IR/May 13, 2011

Cleaning System
($M)
3,000

2,500

2,000
Cleaning system
1,500 18% market
14%
1,000 12% TEL share
500

0
2008 2009 2010 2011E
Market: Gartner Dataquest
TEL share: TEL estimate

• Share slightly increased from CY2009

• Single wafer cleaning: succeeded in placing evaluation tools in several customers
• Scrubbers share 40%, dry cleaning share 60%

22

CORP IR/May 13, 2011

 Global R&D Bases

Imec (EU)
TEKS (Korea) Process Technology TTCA (US)
Center (Korea)
TEL Epion
Timbre
Technologies

TDC, TDI, LPDC (Japan)

TTCT (Taiwan)
TDC: Technology Development Center
LPDC: Leading Edge Process Development Center
TDI: Tokyo Electron Technology Development Institute
TEKS: Tokyo Electron Korea Solution
TTCA: TEL Technology Center, America
TTCT: TEL Technology Center, Taiwan

Expanding R&D functions focusing on leading edge technology

23

CORP IR/May 13, 2011

Main Businesses: Key Actions in FY2012

Coater /Developer
• Maintain/grow share for immersion lithography
• Develop technology with EUV lithography products in an inline
environment
Thermal processing system
• Grow share and enhance position especially in Korean market
• Strengthen business base through full-scale entry into ALD and other
new markets
Single wafer deposition system
• Develop new products to address broad needs in metal film deposition
• Establish process using Ru and lead its broad adoption
RLSA
• Accelerate widespread sales for low-damage Poly etch processes
• Build a ¥50 billion business including application of CVD

24

CORP IR/May 13, 2011

Main Businesses: Key Actions in FY2012
3DI
• Promote evaluation and adoption of etching/deposition/bonding
tools by multiple customers
• Expand sales of reverse exposure Fusion Bonder for CIS*
Test system
• Further enhance profitability
• Develop new systems to meet decline in test costs

Field solutions
• Respond flexibly to new investment and expansion mainly in the
commodity device market
• Targeting ¥150 billion sales through used equipment, modification
and service contract business

CIS: C-MOS Image Sensor

25

CORP IR/May 13, 2011

Changes in Markets and Technology: FPD

Market changes

• Capex for large TV displays becoming centered on China

• Active investment in small- and mid-sized displays for touch panels
• Emergence of Korean equipment makers, intensifying cost
competition

Technology changes

• Trend for enlarging mother glass size has peaked,

small, mid-sized ratio increasing
• High definition, high speed
• Post liquid crystal — OLED

26

CORP IR/May 13, 2011

 Establishing FPD Plant in China

Objectives • Strengthen our customer response capabilities

• Enhance cost competitiveness

Business details • Preventative maintenance for electrode of FPD production

equipment for Chinese market
• To become a base for modification and manufacturing of
certain existing equipment

Location: Kunshan, Jiangsu Province

Construction start: January 2011
Planned completion: January 2012
Total investment: ¥5.0 billion

27

CORP IR/May 13, 2011

Initiatives in the Growing OLED Market

Inkjet Method
Evaporation Method
Collaboration with Seiko
TEL own technology Epson
Separate RGB layers with one
Precision deposition control coating

Effective use of highly organic Accumulated knowledge of

materials large glass substrate production

Space saving design High quality print technology

28

CORP IR/May 13, 2011

OLED Roadmap

2011 2012 2013

Development

Evaporation Evaluation

Production

Development
Evaluation
Inkjet
Production

29

CORP IR/May 13, 2011

PV Market Forecast （2010-2020）

160
Compound type

120
Thin-film silicon

(GWp*) 80
Single crystal silicon

40

0
2010 2012 2014 2016 2018 2020
GWp (Giga watt peak) is the unit for the maximum level of output: the normal output level of one nuclear reactor is about 1GW
Source: TEL forecasts based on EPIA (European Photovoltaic Industry Association) announcement

30

CORP IR/May 13, 2011

PV Business Strategy

Product Inroad into Process

development Asian market development

Shipped to Achieving TEL own

Japan & EU €0.5/wp technology

31

CORP IR/May 13, 2011

 Establish TEL Technology Center Tsukuba

Objectives • Accelerate R&D in base and core technologies

• Develop technology to raise efficiency of thin film Si PVE

Expected benefits • Collaborate with research institutes and universities etc.

in Japan’s largest research location
• Promote networking with other industries
• Recruit top class engineers

Location: Tsukuba, Ibaraki

Construction start： August 2011
Planned completion: March 2012
Total investment: ¥7.0 billion
Staffing: approx. 100

32

CORP IR/May 13, 2011

 FY2012 Overview
▶ SPE
Strengthen existing business
Specifically, improve upon our position in etch and cleaning systems
Promote 3DI and test system business development
▶ FPD, OLED, PV
Enhance competitiveness by new China plant
Upfront investment to secure medium-term growth
▶ Start-up in each new facility
Miyagi, Tsukuba, Korea

Strengthen our core technologies and developments of adjacent areas,

and lead the markets in technology and products

33

CORP IR/May 13, 2011

 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/PV 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/PV cell
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.

FPD/PV: Flat panel display/Photovoltaic

34

CORP IR/May 13, 2011