The 130th Ordinary General Meeting of Shareholders Q & A

Q1. What is the strategy for the re-growth of the MLCC (Multilayer Ceramic Chip Capacitors) business?

A1. TDK is strongly committed to driving further growth in the MLCC business. Specifically, in addition to our long-standing focus on the automotive market, we are expanding our focus areas by strengthening the supply to AI data centers, where demand is surging. Through the establishment of a joint venture with Nippon Chemical Industrial Co., Ltd., we will accelerate material development and expand our product lineup by pursuing miniaturization and high capacity—overcoming previous challenges—to establish a solid position in the AI Ecosystem.

Q2. What is the intention behind the new tagline, "In Everything, Better"?

A2. This tagline carries two meanings. "In Everything" reflects our desire for TDK's technology to be present in all aspects of life and to contribute to the transformation of society through our unique technologies. Additionally, "Better" represents our commitment to continue challenging ourselves for a better future by continuously transforming ourselves. It was formulated to communicate the concept of our Long-term Vision, "TDK Transformation"—to constantly change and keep improving—to all our stakeholders in simple and clear language.

Q3. What is the policy for responding to procurement risks for rare earths?

A3. We use rare earths mainly in magnet-related products, but at present, there is no impact on production. To prepare for future geopolitical and other risks, we are implementing three main measures: first, reducing dependence through technical "heavy rare earth-free or reduced-use technologies" initiatives (technologies that do not use or reduce the use of such materials); second, diversifying procurement sources by developing new suppliers; and third, strengthening the reuse of resources through collaboration with recycling companies. Through these initiatives, we will build a stable and sustainable material procurement system.

Q4. Please tell us about the evaluation of the Board of Directors' effectiveness and the content of discussions when formulating the Medium-term Plan.

A4. The Board of Directors conducts an effectiveness evaluation every year and shares challenges for enhancing corporate value. When formulating the Medium-term Plan, to bridge the information gap between internal and external directors, we utilized off-site meetings in addition to regular Board meetings to engage in active and thorough discussions on business portfolio reviews and profitability improvements. Through these discussions, we have incorporated important themes, such as cash flow management and the strengthening of pre-financial capital, into the plan./dd>

Q5. Please explain the status of capital expenditures and future plans.

A5. In Fiscal 2026 (the fiscal year ended March 31, 2026), we implemented capital expenditures of approximately 300.0 billion yen, of which about 60% was invested in the Energy Application Products business, centered on rechargeable batteries, which is a growth business. In Fiscal 2027 (the fiscal year ending March 31, 2027), we plan to further expand investment to 370.0 billion yen. We will continue to actively allocate resources to growth areas such as rechargeable batteries, where TDK has a competitive advantage, to further enhance corporate value.

Q6. What measures are being taken to expand the number of shareholders and improve brand awareness?

A6. To expand the investor base, we are working to lower the investment unit through stock splits and strengthen our IR activities. As a result, the number of individual shareholders has been steadily increasing. Although TDK is primarily a B2B business and has fewer opportunities to be seen by general consumers, we recognize the low awareness among the younger generation as a challenge and are striving to improve global recognition through sponsorship of Formula E and the World Athletics Championships, as well as refreshing our brand identity. We also maintain a basic policy of providing long-term stable dividends with a target dividend payout ratio of 35%, aiming to achieve both shareholder returns and the enhancement of corporate value through the maximization of business results.

Q7. What is the concept of "pre-financial capital" and how does it lead to improved business performance?

A7. We refer to what is generally called non-financial capital as "pre-financial capital." This is based on the idea that elements such as human capital, technological capabilities, and the customer base are not separate from financial figures, but are the "sources" that will generate sales, profits, and cash flows in the future. Although these are capitals that have not yet been manifested as financial figures, we believe that fulfilling them through continuous investment will lead directly to the creation of financial value—namely, improved business performance. We will continue to place great importance on investing in these capitals for medium- to long-term enhancement of corporate value.

Q8. What are the factors behind the significant improvement in operating profit in the Sensor Application Products and Magnetic Application Products segments, and what is the outlook for the future?

A8. In the Sensor Application Products business, the growth of high-profit TMR sensors and the improvement in profitability of motion sensors and microphones, which had been a challenge, contributed to the results. Looking ahead, we expect an expansion in demand for sensing, which is essential for data generation, as AI becomes more widespread. In the Magnetic Application Products business, in addition to the results of structural reforms, a recovery in demand for nearline HDDs (Hard Disk Drives) for AI data centers boosted profits. Having emerged from a period of inventory adjustment, we aim for growth by reliably capturing the robust demand in the AI market.

Q9. How will TDK be involved in technological advances such as humanoid robots and "Physical AI" in the future?

A9. The progress of robotics, including humanoid robots, and "Physical AI," where AI functions in the real world, represents a significant opportunity for TDK. Among these, we position "sensors", which are essential for robots to detect and acquire information, as a focus area. To strengthen our supply system, we have decided to build a new factory in Ojiya City, Niigata Prefecture. Through our broad portfolio, including rechargeable batteries and various electronic components, we will contribute to the further development of this field and drive our business growth.

Q10. Please tell us about your initiatives for ensuring the safety of rechargeable batteries.

A10. In our rechargeable battery business, there have been no serious fire incidents to date. We pursue "Zero Defect" (the concept of building quality from the design stage and never manufacturing or delivering a single defective product), conduct strict management of raw materials, and maintain thorough quality control in the manufacturing process. Furthermore, in collaboration with the head office quality assurance department, we implement recurrence prevention activities based on the analysis of past non-conformance cases. We will continue to raise the level of safety through material development and other means, while advancing R&D of next-generation technologies to supply safe, high-quality products.

Q11. Please tell us about the current status of your human resource strategy, including the promotion of women's participation, and your development plans.

A11. The active participation of a diverse workforce is essential for TDK’s sustainable growth. Regarding the ratio of female managers, we have set targets of 25% globally by 2030 and 15% in Japan by 2035. To achieve these, we are promoting female participation in management development programs that train future executive candidates, with the participation rate reaching 20% this year. We are also strengthening overseas assignments for female technical employees to gain field experience, aiming to broaden the pool of future executive candidates and create an environment where a diverse workforce can thrive.

Q12. What are the roles and specific activities of the General Manager of Humidifier Countermeasures HQ, a position also held by the President?

A12. Based on our determination to collect every last unit of the products subject to humidifier accidents, TDK established the Humidifier Countermeasures HQ in 2013, with the President serving as the General Manager. Currently, as President, I continue this activity as the person in charge, regularly reviewing the collection status and measures. We will continue to make every effort to ensure the reliable collection of the target products, placing the highest priority on the safety of our customers.