Investor Relations | IR Events | Performance Briefing

[ Financial Results for Fiscal 2018 Performance Briefing ]Q&A

Q1. What has been included in one-time expenses for the Magnetic Application Products segment in the fourth quarter of fiscal 2018? What about one-time expenses for other segments?
A1. As for one-time expenses for the Magnetic Application Products segment in the fourth quarter, a little over 1 billion yen of devaluation on wafers for EOL products is recorded in addition to restructuring costs. As for the Passive Components segment, we expect that expenses of around 1.5 billion yen have been incurred as a result of quickly launching the Camera Module immediately following the Lunar New Year. A little over 1 billion yen from rising material prices remained in the fourth quarter for the Film Application Products segment.
Q2. What led sales of Film Application Products to increase significantly?
A2. The increase in sales was due to higher sales price in line with an improved product mix such as increase in volume of large products for tablets and PCs. Enhanced production capacity contributed as well while the exchange rate made a slight contribution. We will continue aiming for improved production capacity in fiscal 2019 as well.
Q3. Please tell us about the details of expected capital expenditure of 210 billion yen for fiscal 2019.
A3. By segment, about 40% of capital expenditure will go toward a newly established Energy Application Products segment, and the Passive Components segment and the Magnetic Application Products segment will each receive about 30%. Any remaining funds we expect will go toward the Sensor Application Products and Other.
Batteries will be the core of the Energy Application Products segment and we will construct a new plant at the ATL site in China and introduce production lines there. We will also invest in automated inspection equipment. Capital expenditure for the Passive Components segment consist mainly of investment in new buildings completed in Akita Prefecture in 2016. As for the Magnetic Application Products segment, we are planning to enhance production capacity for HDD Heads and micro dual actuators. Metal magnets for automotive applications will be the main target of production increase in Magnets. We are thinking of establishing new production lines based on a concept of integrated production, which we have engaged in from traditional facilities for the Passive Components segment.
Q4. How do you expect the credibility of cash return from each business?
A4. We will make a sizeable advance investment in batteries this time around as it is necessary for speeding up development and getting a head start in launching next-generation products on the market and securing profit. Although cash was mounting until now, gaining back sufficient return is becoming visible. Therefore, we want to collect a return even if it requires slightly more investment. As for HDD Heads, we believe we can collect a return if we keep investment related to technology at a minimum. Passive Components is performing very strongly but we would like to further improve profitability. On the other hand, the state of Power Supplies is unpredictable as of present. Although investment in production lines and such will be required as they are of an assembly variant, the margin for profit is slim and a bigger investment will be required for automotive applications. Although we believe it will be a large business, we will continue considering what is the most effective investment.
Q5. How much will you enhance the capacity for capacitors?
A5. We have enhanced the production capacity by about 20% over the last 2 years and during this fiscal year we will strive to enhance the capacity by moving up the schedule of next fiscal year. Our plan is to introduce a production facility as quickly as possible and increase profit. The pillar of such will be large-sized capacitors and the profitability will be extremely high. Furthermore, inquiries remain brisk for high-reliability components and redundancy design products related to ADAS (Advanced Driving Assistance System) and automated driving, and we expect they will remain to be the pillars of profit into the future.
Q6. It was projected that the Sensor Application Products segment will grow by about 30% in fiscal 2019 from the previous fiscal year. What are the factors behind the growth?
A6. First of all, the sales of Temperature and Pressure Sensors for automotive applications will grow steadily. As for the sales of Magnetic Sensors, especially TMR Sensors, we will also aim doubling those for automotive applications from the previous fiscal year. We can expect increase in sales of those for ICT markets as their adoption ratio will increase. Customer acquisition for InvenSense’s motion sensors is steadily progressing through full utilization of our customer portfolio. Although the amount will not be large, the sensors will start to enter the market for automotive applications. As for microphones, we will increase sales not only for mobile but also for voice recognition use such as through AI speakers. In addition, we have integrated roadmaps of InvenSense and TDK and created a system that enables us to expand sales as the TDK Group, and we can expect increase in sales in terms of such as well. As for ultrasonic fingerprint sensors, we are projecting to launch them in the second half of fiscal 2019. Furthermore, we are also planning to launch Chirp’s sensors for VR use, which were announced at the M&A near the end of February, between summer and autumn.