Investor Relations | IR Events | Performance Briefing

[ 2nd Quarter of fiscal 2023 Performance Briefing ]Q&A

Q1. In your press release published on November 1, 2022, you announced that shares in the Indian company Navitasys India Private Limited, which is involved with rechargeable batteries pack manufacturing and sales companies, would be acquired from ATL. What is the aim of this acquisition?
It seems that this is related to small-sized batteries, but do you have similar plans for medium-sized batteries in the future?
A1. This release is part of a reorganization of the capital structure within the Group. ATL and Navitasys Technology Limited (NVT) had been involved in the battery business in China for some time and had also started in India. This acquisition was carried out to simplify our capital structure, and to optimize and streamline Group management. This recent acquisition related to a pack company, but there is also a company that separately deals with cells. We have expanded cell and pack businesses into India. For cells in particular, we completed the launch of a production line this year and have begun local production. Regarding medium-sized batteries, we are first focused on properly launching the joint ventures with CATL in the next period and beyond.
Q2. Regarding rechargeable batteries, you explained that the number produced for mobile applications was sluggish, but is there also a risk that production for notebook PCs and tablets will also decline?
A2. Based on our market predictions, we expect a 21% year-on-year decline for notebook PCs and an 11% year-on-year decline for tablets. We expect these figures to remain mostly flat into the next fiscal year, and we believe production for the ICT market will bottom out in the current and next fiscal years.
Q3. Looking at sales by region, in both the first half of the year and the second quarter, sales grew above the average year on year in the Americas and China. What factors were behind this?
A3. The growth in sales in China was mainly due to an increase in battery sales volume. In the Americas, one factor was significant growth in sales for the automotive market, including passive components and others.
Q4. You mentioned that sales for the automotive market increased significantly in the Americas. What kind of efforts are you making to develop the EV-related market?
A4. We have been developing and investing in EV-related products for the automotive market for some time, some of which have been included for the industrial equipment market. Looking at sales in the second quarter by market, almost half of passive component sales were for the automotive market, and those sales were mainly driven by eco-friendly cars, EVs in particular. To respond to the demands for these applications, we have continually refined our materials technologies and process technologies to achieve high reliability, high temperature guarantees and high voltage response, particularly with regard to MLCC. We believe this has yielded results, but to address the growth of market in the future, particularly the EV market, we will continue to engage in timely development and invest in increased production.
For the automotive market in particular, we are engaged in marketing and development activities in the form of backcasting from downstream of the value chain, in Europe in addition to the Americas. As we believe those efforts are now paying dividends, we will work to further expand our efforts going forward.
Q5. Regarding passive components, what is the state of business development for aluminum electrolytic capacitor and film capacitor business by region?
A5. For aluminum electrolytic capacitors and film capacitors, we maintain production sites in Europe, China, parts of Brazil and India, and our customers are mainly in the industrial equipment and automotive markets located in various regions including Europe and parts of Asia. This is the basis for our business expansion. Going forward, our ongoing basic plan is to cover the entire world. For film capacitors in particular, there is strong demand for EVs, and even on a regional basis, there is demand not only in Europe but in Asia and the US as well. We are currently increasing production worldwide.
Q6. I believe you have made adjustments to hard disk inventory, but when you consider the PC market and current inventory for servers, what conditions do you expect to develop in the hard disk market in the next fiscal year?
A6. We have seen a rapid slowdown in the hard disk market. The performance of hard disks in the third quarter was down from the second quarter, but we expect to see a slight recovery in the fourth quarter. The timing of a full-scale recovery has been pushed back to next year, and at this point we believe it will occur from around the second quarter of next fiscal year. Particularly in the market of hard disks for data centers, rapid adjustments took place over a short period of time. Even so, the trend of growth in data-driven society is not expected to change in the medium to long-term.
Q7. In the Sensor Application Products segment, what kind of market expansion do you foresee in the next fiscal year and beyond?
A7. The number of TMR sensors for the ICT market will increase in the next fiscal year and thereafter, and we are trying to roll them out for other uses, so we think that volume will increase even more than now. Adoption for automotive applications is proceeding steadily, and volume is expected to increase in the next fiscal year and beyond. For MEMS sensors, we are also continuing to expand our customer base and their applications.

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