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CORP IR/May 13, 2008
May 13, 2008
Ken Sato, President & COO
FY2009 Financial Estimates andManagement Approach
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CORP IR/May 13, 2008
Agenda
1. FY2008 Achievements2. Market Outlook3. FY2009 Financial Estimates and Management
Approach
FY2008: April 1, 2007 - March 31, 2008FY2009: April 1, 2008 - March 31, 2009
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CORP IR/May 13, 2008
FY2008 Achievements
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CORP IR/May 13, 2008
Achieved record earnings and stronger financial baseSales ¥906 bn; Operating income ¥168.4 bn (OPM 18.6%); Net income ¥106.2 bnFree cash flow: ¥86.7 bnDebt/Equity ratio: 6.7%ROE: 21.4%
Outperformed market growth in SPENew products contributed to sales expansion
Acquired orders for Gen.10 FPD equipmentOrders sharply increased in 2H
Moved to the second stage of manufacturing reformsStarted production at new-concept coater/developer plantFurther improved quality with associated cost reductions
Developed new business domainsEstablished the Tokyo Electron Technology Development Institute, Inc. to accelerate commercialization of RLSA technologyResolved to enter the photovoltaic production equipment market
FY2008 Achievements
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CORP IR/May 13, 2008
(Billions of yen)
723.8
417.8 460.5529.6
635.7
851.9906.0
143.9 168.4
673.6
121.0 1.1 22.2 63.9
-18.3
75.7
16.7%
4.2%
18.6%
-4.4%
10.1%11.2%
16.9%
0.2%
-200
0
200
400
600
800
1,000
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
-5%
0%
5%
10%
15%
20%
Net sales Operating income Operating margin
New Record for Earnings
Industrial electronic equipment segment (SPE+FPD)
20.7%18.8%
12.3%11.0%
0%
5%
10%
15%
20%
25%
FY05 FY06 FY07 FY08
Exceeded OPM target of 17% set as the 1st milestone
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CORP IR/May 13, 2008
Free Cash Flow Increased Generated free cash of ¥86.7bn owing to higher operating income
and asset turnover improvement
14.1
68.3
29.0
86.7
-27.8-91.8
-0.6
0.1 8.9
-43.5
25.441.7
106.9
-100
-50
0
50
100
150
FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
Operating CF
Investing CF
Free CF
(Billions of Yen)
Boom years
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CORP IR/May 13, 2008
8,40
9
5,03
0
4,53
8
2,36
2
2,20
1
1,88
1
1,90
7
1,63
7
1,26
3
1,32
3
1,33
0
1,44
5
1,55
5
1,65
7
2,00
02,62
4
2,78
1
5,14
56,29
1
8,52
3A
pplie
dM
ater
ials
TEL
ASM
Lith
ogra
phy
KLA
-Ten
cor
Lam
Res
earc
h
Nik
on
Adv
ante
st
Nov
ellu
s
Hita
chi H
igh-
Tech
Dai
nipp
onSc
reen
2006 200710.1%
11.6%12.9% 13.4%
12.6%14.0%
5%
10%
15%
20%
CY02 CY03 CY04 CY05 CY06 CY07
CY2007 SPE ManufacturerRevenue Top Ten
Millions of US$Source: VLSI Research (March 08)
Outperformed Market Growth
+25%
TE
L
Source: Gartner Dataquest (March 08)
TEL share in Wafer Fab. Equipment Market
TEL SPE growth far surpassed the market growth of +7% in 2007
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CORP IR/May 13, 2008
Market Outlook
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CORP IR/May 13, 2008
140.398.3
57.3
61.0
112.1141 126.8 105.4 117.2
82.9108.1 120.2
145.2
222.7196.4
188.6192.6
178.2
121.1
29.627.7
34.424.0
27.56.6
13.66.0
34.9
34.7
27.5 5.5
4.17.3
4.2
0
50
100
150
200
250
1-3/04
4-6/04
7-9/04
10-12/04
1-3/05
4-6/05
7-9/05
10-12/05
1-3/06
4-6/06
7-9/06
10-12/061-3/
074-6/
077-9
/0710-1
2/071-3/
08Quarterly SPE+FPD Orders
FPD Production EquipmentSemiconductor Production Equipment (Billions of Yen)
*Figures until Oct-Dec 2005 are non-consolidated, figures from Jan-Mar 2006 are consolidated.*Main difference between consolidated and non-consolidated: Consolidated figures include post-sales orders at overseas subsidiaries.
197.6
159.3149.3127.5
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CORP IR/May 13, 2008
Quarterly SPE+FPD Orders by Region(Billions of Yen)
0
50
100
150
200
250
Japan 65.2 47.1 35.5 36.7 66.6 67.7 41.4 45.1 62.4 57.8 37.8 61.5 57.4U.S. 16.3 16.9 18.8 26.4 39.9 28.5 34.4 26.4 28.3 17.2 8.1 20.4 18.4Europe 7.6 8.9 9.3 9.1 13.9 14.5 17.5 13.0 14.9 8.6 -0.8 7.3 4.9Korea 13.8 20.0 12.9 32.4 29.0 30.1 45.6 35.3 25.7 9.9 26.8 39.9 11.3Taiwan 24.5 16.0 46.8 44.5 45.7 52.9 47.6 71.0 80.4 40.9 47.0 49.8 53.4China,S.E.Asia,others 3.1 1.5 8.7 6.2 10.6 28.2 29.3 10.9 15.0 14.7 8.6 18.5 13.6
05/1-3 05/4-6 05/7-9 05/10-12 06/1-3 06/4-6 06/7-9 06/10-
12 07/1-3 07/4-6 07/7-9 07/10-12 08/1-3
Order numbers are on a consolidated basis from 2006/1-3 quarter.
155.6 149.3127.5
205.9222.2 216.1
202.0
226.9
197.6
130.8110.6
132.2159.3
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CORP IR/May 13, 2008
46
2642
3222
3039
55 5545 52
3924
21
23
11 2635
37 21
16 2133
2736
42
11
21 1616 19 6 14
11 8 3 7
4
9
114 8 6 11 12
4 7 4 6 815
1025
13 14 12 6 8 86
4 7 5 113 4 4 4 6 10 6 6 3 8 5 5 4
6
0%
20%
40%
60%
80%
100%
05/1-3 05/4-6 05/7-9 05/10-12
06/1-3 06/4-6 06/7-9 06/10-12
07/1-3 07/4-6 07/7-9 07/10-12
08/1-3
OthersSystem LSILogic foundryMPU, High-end logicFlash memoryDRAM
Quarterly SPE Orders by Application(Equipment only)
(TEL estimation included in memory portion)
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CORP IR/May 13, 2008
200
400
600
800
1,000
1,200
1,400
1,600
07/1Q 2Q 3Q 4Q
08/1Q 2Q 3Q 4Q
0%
10%
20%
30%
40%
50%
YoY growth in annual capacity
CY07 CY08
+35% +19%Growth Rate (%, YoY)
DRAM Production Capacity Forecasts
(Forecast)
Source: TEL estimate based on research companies’ data
Capacity (K wfs/Month(12” equivalents)
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CORP IR/May 13, 2008
-
1,000
2,000
3,000
4,000
5,000
6,000
06Q4
07Q1 2Q 3Q 4Q
081Q 2Q 3Q 4Q
0.80
0.90
1.00
1.10
1.20
(Supply/Demand)
(Forecast)
Demand Supply
shortage
over-supply
Improvement in supply/demand balance
expected
Million units (512Mb equivalents)
CY2008 DRAM Supply/Demand Balance Forecasts
Source: TEL estimate based on research companies’ data
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CORP IR/May 13, 2008
SPE capexDRAM: Tough environment expected until June as supply/demand gap adjustment continues. Demand then expected to firm, driven by laptop PCs, with more favorable investment environment and increase in orders from second halfNAND: Despite severe price falls, investment in technology to reduce bit costs and for increasing capacity is continuing steadilyLOGIC/Foundry: Investment in cutting edge equipment can be expected from second half to meet growing demand for digital electronics
Forecasting decline of around 30%
FPD capexInvestment expected to be strong, driven by equipment for large-scale substrates for expanding digital TV market
CY2008 Market Outlook
Forecasting growth of 40% plus
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CORP IR/May 13, 2008
FY2009 Financial Estimates and Management Approach
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CORP IR/May 13, 2008
-49%88.0 (12.6)60.0 (15.0)28.0 (9.3)172.7 (19.1)Ordinary income
-48%-48%
-50%+120%
+2%+32%-32%-23%
YoYchange
FY2009 (E)
55.0 (7.9)88.0 (12.6)
84.0 (12.0)1.0
113.090.0
496.052.068.0
60.0 (15.0)28.0 (9.3)169.2 (18.7)EBIT
58.0 (14.5)26.0 (8.7)168.4 (18.6)Operating income
700.0
Full year
0.559.5
288.0
0.553.538.0
208.0
0.4111.1
726.4
FY2008
OthersEC/CNFPDSPE
17.0 (5.7)
300.0
1H
38.0 (9.5)
400.0
2H
106.2 (11.7)
906.0
Full year
Net income
Net sales
FY2009 Financial EstimatesSPE showing slow-down, while FPD heading for strong growth
As a whole, FY2009 will be a very severe year
( )Profit ratio%
(Billions of Yen)
SPE: Semiconductor Production EquipmentFPD: FPD Production EquipmentEC/CN: Electronic Components and Computer Networks
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CORP IR/May 13, 2008
723.8
417.8 460.5529.6
635.7
851.9906.0
700.0
143.9 168.484.0
673.6
75.7
-18.3
63.922.21.1121.0
16.7%
0.2%
4.2%
16.9%18.6%
12.0%11.2%10.1%
-4.4%-200
0
200
400
600
800
1,000
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09(E)
-5%
0%
5%
10%
15%
20%
Net sales Operating income Operating margin
Net Sales, Operating Income, Operating Margin
(Billions of Yen)
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CORP IR/May 13, 2008
Management ApproachFY2009: Preparatory period for a new stage of growth
Steep cost-cutting- Review personnel placement on a global basis- Reduce outsourcing costs, etc.
Review/shrink
R&D / product development- Technology innovation in SPE (scaling, new materials,
3Di, etc.)- New business domains
Manufacturing- Reduce lead times- Prepare for new Miyagi plant
Post-sales businesses
Strengthen
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CORP IR/May 13, 2008
65.0
49.143.844.1
50.153.852.9 56.966.0
0
20
40
60
80
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09(E)
49.4
30.9
12.3 11.0 9.813.3
27.3 24.921.4 19.1
20.022.727.1 23.0
21.418.8
21.626.2
0
20
40
60
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09(E)
CAPEXDepreciation
R&D expenses
Projected R&D Expenses and CAPEX
(Billions of Yen)
(Billions of Yen)
Sustaining high level of R&D expenses despite a severe circumstance
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CORP IR/May 13, 2008
Accelerating R&D in New Business DomainsAiming to develop environmental and clean energy solutions
as new business pillar alongside SPE, FPD, MEMS
MEMS*
SPE
Environment/Clean Energy
FPD PV* production equipmentSiC epitaxial equipmentModification to environmentally-friendly equipment
Production equipment and electronic devices
RLSA* technology- CVD- Etch
GCIB* technologyCu barrier/seed CVD
High-density PECVD
*MEMS: Micro Electro Mechanical System *RLSA: Radial Line Slot Antenna *GCIB: Gas Cluster Ion Beam*PV: Photovoltaic
OLED production equipment
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CORP IR/May 13, 2008
Strengthening Post-sales BusinessDeveloping business area to reflect changes in the market and
in customers’ needs
Global service will continue to be administered by each business unit and the Sales and Services Division
200mm equipment modificationNew businessParts repairOther
EcologyEcology
EnhancementEnhancement
ExtendedExtended--lifelife
Create a Post Sales Division as a profit center
The 3Es of post sales business:
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CORP IR/May 13, 2008
Addressing Environmental Issues
Enhance energy efficiency of TEL products
Provide manufacturing equipment for clean energy
Provide manufacturing equipment for energy-saving devices
Our mission and responsibility—and also a considerable business opportunity
- Reduce CO2 emissions by reducing power consumption, chemical usage, etc.
- Photovoltaic production equipment
- SiC epitaxial equipment for power IC- OLED production equipment
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CORP IR/May 13, 2008
Fast Growing Photovoltaic Market
0
20
40
60
80
100
2007 2015 2020
Prod
uctio
n (G
W)
Crystal Si PVThin-film Si PV
0
3
6
9
12
15
18
2007 2015 2020M
arke
t siz
e (b
illio
n do
llar)
Thin-film Si PV proudction equipment
Thin-film Si photovoltaic production equipment
Photovoltaic production
Thin-film Si PV 2007-2020
CAGR 52%
Crystal Si PV 2007-2020
CAGR 25%
2007-2015
CAGR 44%
2007-2020
CAGR 37%
Source: TEL estimate based on a power demand forecast
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CORP IR/May 13, 2008
Development: Tokyo Electron PV (established in Feb. 2008)Manufacture/sales: Tokyo Electron
Entering the Photovoltaic Production Equipment Market
Product launchin 2009
Product launchOwn development
Joint venture with SHARP
1. Established a joint-development company with photovoltaic technology leader SHARP (Product: Plasma CVD system for thin-film Si PV)
2. Also undertaking independent R&D to develop proprietary technology
TEL proprietary products
Jointly-developed products
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CORP IR/May 13, 2008
Summary
Achieved record results in year to March 2008SPE environment: CY2008 will see a trough in capex. Recovery envisioned from second half.FPD environment: Forecasting high growth in capexTEL is aiming for a further jump in scale at the next cycle peak. The year to March 2009 is a period of preparation for this growth, and while controlling costs as much as possible, TEL will be working to create a structure for growth and strengthen R&D.