The 124th Ordinary General Meeting of Shareholders Q & A
- Q1. I would like to ask about your battery business strategies, including how to manage risks and threats.
- A1. By taking advantage of our strengths, including promptly responding to customers’ needs, and flexible production systems, as well as offering products that feature high quality and high reliability due to reduced ignition risks and other properties, we have been expanding our share in the ICT (Information & Communication Technology) field, such as in the smartphone market. We have also been driving forward the expansion of our business in fields other than ICT, such as in the energy storage system and drone markets. We aim to gain sufficient understanding of the purpose of customers’ battery use and the environment in which they use batteries, by enhancing partnerships with customers for the safer use of batteries; establish a mass production system that ensures high quality; design and develop safe batteries, including peripheral circuits; and take other necessary measures. We thereby intend to maintain and enhance competitiveness, as well as facilitate further growth of the business.
As part of our risk management, we have been diversifying production sites, since they are concentrated in China.
- Q2. All director candidates brought forward for this meeting are 60 years of age or older. What are the company’s views on the age composition of directors and corporate officers?
- A2. We have selected the candidates based on their personality, insight, and other factors, in light of the heavy responsibility that directors bear. Consequently, the age composition is as you pointed out. In addition, outside directors have sufficient experience in and knowledge of corporate management, and are in a position to monitor the operation of the company, which does not necessarily suggest that they should be younger. On the other hand, we have been promoting young and competent employees and letting the younger generation take the lead when it comes to corporate officers and lesser positions, in order to respond to EX (energy transformation) and DX (digital transformation) and facilitate the transformation into Digi-TDK as I have explained in the pressing issues to be addressed. We believe that such initiatives enrich human resources of the TDK Group and will drive forward stable management of the Group.
- Q3. How do you plan to develop the business for the market associated with 5G (the fifth generation mobile communications system)?
- A3. We consider the expansion of the 5G-related market as an extremely important business opportunity for the TDK Group. The demand for various electronic components, such as those for communications, sensing, and power management functions; actuators for higher resolution smartphone cameras; and coils, capacitors, and other noise suppression components, is expected to increase. By taking advantage of the comprehensive collaboration framework with Qualcomm Incorporated in the United States, including that in the communications field, we aim to firmly seize this business opportunity.
We would like to expand the sales of electronic components for the smartphone, 5G communication base station, and car (especially connected car) markets, as well as the market associated with IoT (Internet of Things).
- Q4. How have business conditions been after publication on May 15, 2020 of the projections on the consolidated business performance for FY March 2021?
- A4. I cannot comment on the current business conditions here. The worldwide spread of COVID-19 has yet to be contained and we cannot be optimistic about the overall business environment. We will keep a close eye on trends in the global economy and the impact on the electronics market.
- Q5. What measures have been taken in the company to prevent the spread of COVID-19?
- A5. We launched the Corporate Crisis Management Headquarters in January of this year when the virus began to spread in China, and have been taking measures to prevent the spread of the virus since then. As part of these measures, the company allowed employees to work from home, especially in the Tokyo metropolitan area. We introduced a system for working from home as well as the so-called super flextime system without core hours a few years ago, and have been striving to make arrangements to accommodate diverse workstyles in a flexible manner. This can be considered as one of the reasons for the smooth implementation of telecommuting as part of the countermeasures implemented. We would like to regard the response to COVID-19 as an opportunity for transformation, and make necessary changes, such as the transformation into Digi-TDK as I have explained in the pressing issues to be addressed, to arrangements and systems in the company. I would like to add that almost all production sites around the world have now resumed normal operations.
- Q6. Could you elaborate on the influence of US-China trade friction and the company’s response to the situation?
- A6. China is an important country for the TDK Group both as a production site and as a market. First of all, the influence of the additional tariffs imposed by the United States under Section 301 of the Trade Act of 1974 is negligible mainly because of the small amount of export from the Group’s production sites in China to the United States. While export by our customers in China to the United States, as well as demand for electronic components, is expected to decrease, we have been working to expand the customer base and seize the opportunity to sell our products to customers outside of China. In addition, specific details regarding emerging and foundational technologies, which are essential to the national security of the United States and of which exports from the United States are restricted under ECRA (Export Control Reform Act), have not been provided. We especially at the Americas Headquarters and the China Headquarters are working with external experts, and are striving to collect and analyze information concerning details of the specific restrictions that will be provided in the future, and will also be discussing how we should deal with the situation.
- Q7. I would like to ask about the prospects for the business for 5G base stations.
- A7. We have been working to expand the sales of high-frequency devices and other products for 5G base stations. It has been said that Chinese base station manufacturers have a large share in the 5G base station market. In developing our business for base stations, we would like to diversify our business partners and reduce the risk of focusing on specific customers, by promoting the expansion of sales to other base station manufacturers, including those in Europe.
- Q8. What measures have you been taking for the stable procurement of raw materials, including cobalt and lithium?
- A8. To realize stable procurement, we have been working on the reduction of risk by diversifying procurement sources. Meanwhile, we intend to address the risk of raw materials price increases by strengthening partnerships with specific procurement sources and implementing other necessary measures.