Investor Relations | IR Events | Performance Briefing

[ 3rd Quarter of fiscal 2014 Performance Briefing ]Passive Components Business

Mr. Hiroyuki Uemura

Mr. Hiroyuki Uemura
Executive Vice President

My name is Hiroyuki Uemura. Let me explain the passive components business.

The passive components business has become profitable due to structural reforms and increasing sales. We believe that the passive components business will grow further in the following fiscal year. In particular, TDK places top priority on the business of on-board electronic components, information and communication technology (ICT) and industrial machines. We will make efforts to expand the sales of such products to increase profit.

Let me explain about the individual business.

Ceramic capacitors

In ceramic capacitors, TDK implemented structural reforms as you may know. In particular, we believe that demand for on-board electronic components will stably grow due to the increasing adoption of on-board electronic components and the increasing sales of eco-friendly vehicles. TDK will continue to develop, and increase the sales of, such on-board products and other application products which have features differentiated from those of our competitors. In particular, in the case of application products, sales of three-terminal capacitors, mega cap capacitors, and safe termination capacitors, etc., are increasing. TDK intends to aggressively expand sales of these products for purposes (telecommunications and industrial machines) other than on-board purposes.

Inductive devices

In inductive devices, TDK has introduced a full lineup of inductive devices such as power coils, especially thin-film, wire-wound and multilayer products. TDK intends to expand sales of these products by enhancing systems, including the reference design system, to meet the needs of many clients. Regarding thin-film coated metal coils, TDK completed both product improvement and quality improvement. We want to respond to strong demand for these products by enhancing the sales system in and after the 4th quarter. In response to demand for small-sized high current products, TDK will offer products manufactured based on its thin-film technology. In laminated products, we want to improve productivity by expanding our market shares of on-board products and high-frequency coils. Regarding high-frequency coils, TDK will respond to market requirements by enhancing price competitiveness since it has established an integrated production system in overseas markets.

Piezoelectric material products (VCMs, OISs)

In VCMs, TDK mainly conducted business with local manufacturers in Taiwan and China. In the first half of the current fiscal year, demand for the products far exceeded production and selling capacity. In the second half, however, the inventories of assembly manufacturers, agents and other clients became excessive. Adjustments of such excessive inventories were made in the 3rd quarter. In the case of low pixel resolution products, competition with other manufacturers, including a Chinese one, became intensive. However, TDK intends to expand sales of differentiated, high-performance products such as high pixel resolution 8 and 13 mega pixel products.

In OISs, Chinese and Taiwanese manufacturers may adopt OISs depending on the development of new model products by leading manufacturers in North America and Korea. Although cost will be a problem, there is a possibility that OISs will be adopted for some of the high-end products. Therefore, TDK will exploit its strengths to respond to such moves in a flexible manner.

High-frequency devices

In high-frequency devices, the improvement of profitability was slower than expected in the 3rd quarter. Firstly, sales of module products and laminated products slightly decreased due to adjustments made by leading Korean manufacturers. Secondly, TDK failed to achieve profit on a regular basis because the single-product business with local manufacturers in China didn’t grow as expected. However, the benefits of past IC collaboration and reference have recently seen recently. We expect that new demand will be generated for module products toward the end of the 4th quarter. Therefore, we want to achieve good results in the high-frequency devices business.

That’s all. Thank you.