fy2009 financial estimates and management approachcorp ir/may 13, 2008 46 26 42 32 22 30 39 55 55 45...

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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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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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FY2008 Achievements

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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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(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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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

7


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

8


Market Outlook

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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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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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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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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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-

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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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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FY2009 Financial Estimates and Management Approach

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-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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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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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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65.0

49.143.844.1

50.153.852.9 56.966.0

0

20

40

60

80


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


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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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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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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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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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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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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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.

fy2009 financial estimates and management approachcorp ir/may 13, 2008 46 26 42 32 22 30 39 55 55 45...

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