Mr. Shinichi Araya
Senior Vice President
Magnetics Business Group
I'm Shinichi Araya and I would like to report on TDK's inductive devices business.
Sales continued to grow in fiscal 2008, rising 7% year on year. Particularly strong were inductive devices for digital TVs, notebook PCs, video game consoles, portable media players and other mobile devices, which all recorded double-digit increases. Inductive devices for automotive applications similarly grew by 10%.
By product, multilayer chip inductors saw sales grow considerably on a total volume basis. Thin-film common-mode filters and power supply coils also grew. Transformers, meanwhile, posted double-digit growth.
However, on a less positive note, the rate of growth is slowing when one compares the single-digit growth in fiscal 2008 with a growth rate of more than 10% two fiscal years ago. There are two main reasons. One is a change in the number of components used in finished products. In particular, the number of noise suppression products has decreased with respect to notebook PCs and digital still cameras as prices for these finished products have fallen. The other factor is a drop in sales prices. Including the impact of the yen's appreciation, sales prices fell 14%. Higher volumes of multilayer products, particularly low-priced multilayer products, have dragged down prices.
I would now like to discuss key initiatives planned for the inductive devices business in fiscal 2009. Demand in fiscal 2009 is projected to rise around 5%, largely on a par with fiscal 2008. We hope, therefore, to maintain the same level of growth in sales as in the past fiscal year. However, profits are coming under greater pressure from soaring material prices and falling product prices. In response, we plan to redouble efforts to improve our earnings.
One way we can do this is by improving our product mix. In this regard, we will endeavor to make devices that are even more compact with lower profiles. We also plan to design products that cost less to manufacture using cheaper materials. At the same time, with demand in the market shifting from wire coils to multilayered, thin-film products, we plan to raise production in anticipation that this shift will continue.
Another way we can improve earnings is by strengthening our transformer business. This business has been integrated with other operations since the previous fiscal year. In the previous fiscal year, we fully reviewed customer specifications, using this review as the basis for redesigning products. This prompted us to start using new materials and yielded higher productivity. Leveraging these successes, we plan now to launch products for digital TVs and other home electronics to make earnings more certain. Our ultimate goal is to make transformers a third pillar of the inductive devices business.
Next, let me discuss the performance of the inductive devices business in the January-March quarter and the outlook for the April-June quarter. Sales were down in the IT home electronics, and high-speed, large-capacity networks fields in the fiscal 2008 fourth quarter due in part to seasonal factors. Seasonal factors had a particularly large impact on game consoles and portable media players. In the car electronics field, strong demand in the third quarter, spilled over to the fourth quarter. The average unit price dropped in part because of a stronger yen.
The outlook for the April-June quarter calls for an upturn in IT home electronics, with the end of a cycle of inventory reductions. The high-speed, large-capacity networks field is similarly expected to see an uptick in the same quarter. Car electronics should see results on a par with the April-June quarter of last year due to robust demand for products for car electronics and LANs in car.