Investor Relations | IR Events | Performance Briefing
[ Financial Results for Fiscal 2015 Performance Briefing ]Q&A
- Q1. I believe that TDK is now moving onto the offensive in quite a big way in terms of its growth investments. Could you please share your outlook for these investments? That is, in which businesses do you intend to increase production capacity? Will this include investments in thin-film components and other fields where TDK excels?
- A1. Our main planned investments in increasing production capacity in our priority five businesses will be focused on rechargeable batteries, high-frequency components such as surface acoustic wave (SAW) filters and bulk acoustic wave (BAW) filters, and inductive devices. Investments are also planned in areas such as new businesses, new factory buildings, and rationalization. In the field of rechargeable batteries, we will invest in a new production line to improve throughput, in addition to investing in rechargeable batteries for quick charging and rechargeable batteries with three-dimensional structures. In inductive devices, we will invest in enhancing thin-film inductors and other products for which sales are currently growing. In high-frequency components, we will invest in temperature compensated SAW (TC-SAW) filters (SAW filters that minimize temperature drift) and BAW filters. We also intend to invest in new film packaging needed to develop thin-profile products. In the field of thin-film components, we will set up the Thin-Film Device Center as a Company-wide organization to develop thin-film components for compact, light-weight, low-profile and miniature products.
- Q2. In your results for the year ended March 2015, the operating income margin for passive components, excluding Head Office expenses, was 7.4%. What are the main points for increasing the operating income margin further?
- A2. We are focusing on three broad product areas. The first area is high-frequency components, which we intend to expand further. Looking ahead, the number of bandwidths will continue to increase, so we expect to see growth particularly in BAW filters, not just SAW filters. BAW filters will be embedded into new products that utilize innovative packaging technologies. The second product area is inductive devices. Besides the aforementioned thin-film inductors, we will roll out new multi-layered products. We expect firm growth in these sorts of products. The third product area is piezoelectric material products. In particular, we expect growth to come from voice coil motors (VCM) for camera modules and camera module actuators that prevent camera shake, otherwise known as optical image stabilizers (OIS). For OIS, the main point will be that these components will be embedded in high-end models for the Chinese market.
- Q3. How will the HDD market shipment volume and the number of HDD heads used per HDD change from the previous fiscal year, the year ended March 2015, to the current fiscal year, the year ending March 2016? In addition, could you please discuss your schedule for commencing mass production of heat-assisted heads?
- A3. We project that the HDD market shipment volume will decrease by around 20 million units to 530 million units in the current fiscal year, compared with just over 550 million units in the previous fiscal year. The average number of HDD heads used per HDD is forecast at around 3.3 at this time. The HDD shipment volume itself is projected to decrease slightly. However, looking at the HDD product mix, the number of HDDs with a large number of disks will increase. Accordingly, we expect the number of HDD heads used per HDD to increase in stages.
As for the schedule for starting mass production of heat-assisted heads, there has been no change to our previous forecast. In the year ending March 2017, we expect to establish a mass production framework for heat-assisted heads as part of our lineup of HDD head materials. - Q4. How do you expect the HDD head shipment volume to change in the year ending March 2016?
- A4. We are forecasting a slight decrease in HDD head shipment volume from the previous to the current fiscal year.
- Q5. Could you please go over your capital expenditure plans? TDK is forecasting capital expenditures averaging around 130.0 billion yen per year over the next three years. At this rate, capital expenditures will exceed 10% of net sales for the next three consecutive years. In this sense, this is a fairly high level of capital expenditure. When considering these plans, I believe that you will naturally take into account the risk of any changes in the demand outlook over the next three years. Even if the demand picture should deteriorate, to what extent will these investments provide a competitive edge that will help TDK prevail against its competitors?
- A5. In rechargeable batteries, we will be launching extremely unique products, such as the aforementioned rechargeable batteries for quick charging and products with three-dimensional structures. Additionally, we will need to increase the energy density as a matter of course in tandem with achieving thinner battery profiles. These investments will be directed at launching these sorts of unique rechargeable batteries. Our thin-film components and other products will also be highly differentiated products. Accordingly, we plan to efficiently invest in these sorts of products.
Of course, we will constantly monitor conditions and put the brakes on investments as necessary. We will not necessarily execute the full amount of the planned investment as it stands now. In fact, we will do our utmost to minimize the investment by, for example, modifying existing equipment and facilities. In addition, we will see an increase in equipment and facilities engineered and built internally. Bearing these and other factors in mind, we intend to cautiously make investment decisions. - Q6. TDK is projecting a 25% increase in net sales in the rechargeable battery business in the year ending March 2016, compared with the year ended March 2015. What factors are behind this projected increase?
- A6. In the year ended March 2015, rechargeable battery sales increased to customers other than our primary customers in North America. In the year ending March 2016, we expect this trend to continue. We also expect greater adoption of lithium polymer batteries sold by TDK in smartphones, notebook PCs, tablets and other devices. These are the factors behind the projected increase in net sales.
