- Q1. What were the factors behind the upward revision for forecast operating profit for FY March 2027 for each segment?
- A1. We project an increase in operating profit across all segments. In Passive Components, we forecast that increased net sales will lead to significant growth in operating profit. We believe that sales prices for automotive products will incorporate discount rates on par with a typical year. We have also factored in the impact of sharply rising metal prices. In Sensor Application Products, we expect net sales to remain largely flat, but we committed to the 10% target operating profit margin for the final year of our Medium-term Plan. We project a decline in TMR sensor volume based on an expected 10% decline in smartphone production volume, but since current conditions remain strong, we believe there is minimal downside risk. MEMS sensors returned to profitability in FY March 2026, and thanks to expanded sales of MEMS microphones, we plan to further expand this profit. We expect Magnetic Application Products to have the strongest increase in net sales among all segments. This is based on the assumption of robust sales volume for nearline HDD heads. We also expect to see increased net sales and profit in part due to increased capacity for HDD heads and HDD suspensions. For HDD heads, we have factored in the increase in R&D expenses for head-assisted magnetic recording (HAMR) and increased depreciation due to capital expenditure (CAPEX), and still project increased profit of around 20% year on year in relation to HDD heads and HDD suspensions. In the Energy Application Products segment, given the decrease in smartphone production volume, we plan to maintain profitability on par with the previous year by improving our market share and increasing the percentage of high value-added products in the product mix. Also factoring in a recovery in demand for industrial equipment power supplies and transfer of the unprofitable EV power supplies new development business, we project that operating profit in the Energy Application Products segment overall will remain flat compared with FY March 2026.
- Q2. Your forecast CAPEX of 370 billion yen for this period is eye-catching. Where will you prioritize these outlays? Also, what is the background to accelerating investment in this way?
- A2. First and foremost are batteries. This is investment in new technologies and the ramping up to volume production of new products for small capacity batteries. Due to memory shortages and other factors, production volumes are trending downward, notably for smartphones, but this will not continue indefinitely. We believe that it is not the time to be easing off investments in silicon anodes or metal cases. Another area is new products such as smart glass, and the launch of these new products. Due to the ever-advancing AI ecosystem, we expect that a variety of wearable products will emerge. We expect to engage in development and a ramp-up to volume production to address those developments. In Magnetic Application Products, we expect to undertake investments in response to demand for HDD heads and HDD suspensions. For HDD heads, the bulk of our investment will be for HAMR in particular.
- Q3. I interpreted your remarks about the AI ecosystem as a topic that will lead into the next Medium-term Plan. Which products do you have the clearest outlook on at the moment?
- A3. There is so much potential in the AI ecosystem that it is difficult to rank the opportunities accurately. Firstly, I think we have high visibility with respect to HDD heads and HDD suspensions. With Passive Components, while there has been an overemphasis on xEVs, we will work to expand applications for the AI ecosystem. We are also exploring the possibilities of increasing production of aluminum electrolytic capacitors. In addition, we have seen an uptick in business inquiries regarding inductors that support low-voltage and high-current operation, and we are making upfront capital expenditures in that area. For MLCCs, we have already been making capital investments, and visibility with respect to the AI ecosystem is currently improving. In the area of medium capacity batteries, from this fiscal year and beyond, we will expand the business for BBUs. Regarding semiconductor manufacturing equipment, orders for load ports and flip-chip bonding systems are strong. For the bonding materials we described during this presentation, we plan to shift to volume production during the next fiscal year. Lastly, looking at the software-driven business, we expect to achieve growth during the next Medium-term Plan and beyond. We plan to speak in more detail about these points on Investor Day in September 2026.
- Q4. What impact will the recent situation in the Middle East have on TDK?
- A4. The main impact will be related to solvents. We are monitoring developments closely. Regarding the prospect of passing on price increases, rather than looking at any one specific factor, we will look at the overall situation before determining the appropriate prices at which to sell our products. In parallel with those efforts, we will place an even stronger focus on cost reductions and quality enhancements.
- Q5. You mentioned that unit prices for automotive products will fall to some extent, but having considered the next fiscal year and beyond, is it possible that your price strategy could change, in light of sharply rising prices for raw materials such as solvents and rare metals, and a tightening demand-supply balance?
- A5. We plan to enter negotiations with customers toward the end of the year, and we recognize the need to closely watch developments, including market conditions, the situation in the Middle East and price trends for rare metals. Rather than focusing solely on price, we will prioritize continuous supply, and on that basis hope to engage in various discussions with customers.
- Q6. Please talk about your results and where small capacity batteries will fall in the sales mix this fiscal year. Also, what are your projections for medium capacity batteries?
- A6. The results came in at the level we had expected. This fiscal year, for silicon anodes, we will launch next-generation products in the first half of the year. In terms of the sales mix, we expect a slight increase year on year to the mid-10% range. Our products have achieved adoption to some degree, and in part due to rising memory prices, there are customers who are holding off on adopting silicon anodes. We expect metal cases to double this fiscal year. Net sales of medium capacity batteries are expected to increase by around 30% year on year. In the previous year, we achieved a double-digit operating profit margin for medium-capacity batteries. We expect these products to further contribute to profit this fiscal year thanks to higher net sales.
- Q7. When you announced your financial results for the third quarter, you mentioned that sales volume for HDD heads for this fiscal year would increase by approximately 30% compared with the previous fiscal year. In this presentation, you mentioned an increase of around 40%. What is behind this change? Additionally, you mentioned increasing capacity for HDD suspensions and HDD heads, but can you share to what extent you plan to increase capacity?
- A7. Inquiries from captive customers have increased since the previous briefing. This fiscal year, we expect to increase production of HDD suspensions by around 20%.
