The 128th Ordinary General Meeting of Shareholders Q & A

Q1. What is the composition of the Board of Directors (proportion of internal and external directors)?

A1. Our Board of Directors is composed of seven members, aiming to be a small organ for active discussions. We determine the proportion of internal and external directors based on the effectiveness evaluation of the Board of Directors, various discussions at the Nomination Advisory Committee meeting and other meetings, and requests from outside. The agenda for the appointment of directors is proposed for this General Meeting considering these factors. If Agenda Item No. 2 is approved, the Board will comprise three internal and four external directors. We will continue monitoring the composition of the Board of Directors and the proportion of internal and external directors.

Q2. What is your policy for appointing directors with skills in technology and R&D?

A2. We now have two directors with skills in technology, both internal directors. If the proposed Agenda Item No. 2 is approved, we will continue to have two directors with technology skills, one internal and one external. By effectively using our internal and external eyes and our technology governance, we will strive to achieve the company's sustainable growth.

Q3. What impact will the development of materials for all-solid-state batteries, which you announced on June 17, 2024, have on the performance?

A3. Thank you for your interest in our research and development. I can't tell you more than what we announced in the press release, but we plan to deliver product samples to our customers in 2025 and finalize specifications before deciding on a specific launch date. It is a highly anticipated material development, so we will work hard for its commercialization.

Q4. What is your specific strategy for the sensor business?

A4. The role of sensors is expected to become increasingly important with the progress of society's digitization, as represented by DX (digital transformation). Under our corporate motto, “Contribute to culture and industry through creativity,” we aim to contribute to our customers and society by creating and combining DIFFERENCES that are unique to the company. We will strive for KOTOZUKURI by cycling the MARKET IN process to capture customers' and the market's needs and the CONCEPT OUT process to provide products customized to these needs. We will also aim to build a competitive business structure by taking on challenging issues and expanding our product portfolio by transforming customized products into general-purpose products. We will also strive to enhance our MONOZUKURI capabilities, which are essential for conducting our operations, such as quality and production, and to improve our cost competitiveness.

Q5. How often do you meet with institutional investors in Japan and overseas, and what do you discuss in these meetings?

A5. We conduct regular meetings with institutional investors in Japan and overseas. From this fiscal year, outside directors have also participated in the meetings, holding active discussions. During the dialogue, investors often ask about our medium- and long-term growth strategies. We explain that we will firmly grow our strategic growth businesses, namely the applied energy products business, the passive components business centered on ceramic capacitors, and the applied sensor products business, over the medium to long term. Investors are also highly interested in our efforts regarding non-financial capital (human capital). We explain that we are committed to investing in human capital on a global basis and utilizing and developing human resources.

Q6. I feel that the targeted sales growth rate for FY2025 is low compared to the last year’s sales results. I think more aggressive performance targets could be set. What is your policy?

A6. Due to the recent worsening of the US-China relationship and concerns about the Middle East situation, we expect the global economy to remain uncertain in the fiscal year ending March 31, 2025. On the other hand, demand for ICT (Information and Communication Technology), mainly for smartphones, seems to have bottomed out, and growth is expected in the automotive market, especially for xEVs (various types of electric vehicles). We have set targets for the fiscal year ending March 31, 2025 based on these negative macroeconomic conditions and the medium to long-term positive market trends. We will continue to enhance our capabilities firmly to achieve solid results in the short term as well as the medium to long term.

Q7. What is your policy for stock splits?

A7. We recognize that reducing the size of the investment unit through a stock split will improve the liquidity of our stock and expand the investor base. We will continue to consider stock splits comprehensively taking into account the stock price and liquidity.

Q8. TDK has a high percentage of sales in China. What is your policy on business development in China?

A8. Not only does China account for a high percentage of our sales by region, but also a high percentage of production in China. Basically, our business structure is to make products in China and sell them in China. However, since markets outside of China are also expanding, we will implement a strategy to establish business sites by closely monitoring market trends, including expansion into other Asian markets.