Message from the President and CEO​

Since I took over as CEO, I have continuously stated that a company’s value is the sum of the value created by each employee. This reflects my belief that people are everything and the idea that the sum of the value created by 100,000 team members (employees) will lead to tremendous corporate value. Over the past four years, I have constantly encouraged an approach of taking ownership and thinking about what actions are needed now. My hope is that this way of thinking will promote an awareness that the collective our own capabilities of all of TDK’s members is linked to TDK’s corporate value.

Geopolitical risks and other uncertainties in our external environment only continue to increase. Even in such an environment, there are endless opportunities to enhance our own capabilities. In FY March 2026, we recorded new highs for net sales and all profit items. We also achieved our plan targets outlined at the beginning of the fiscal year for all financial KPI. I view these successes as a result of our global team members comprising TDK United working towards the enhancement of their own capabilities in their respective roles.

I feel like we have made progress on the three points raised in the Medium-term Plan. Looking at the first point, strengthening management focusing on cash flows, we had forecast cumulative operating cash flow of ¥1 trillion for the three-year period of the Medium-term Plan. However, thanks to an upward increase in profit before tax, we are forecasting the three-year total to outperform initial plans by roughly ¥300.0 billion.

Looking at the second point, enhancing business portfolio management (emphasizing ROIC), we promoted proactive initiatives primarily focused on advancing growth strategy with the medium- to long-term goal of achieving an ROE of 15% or higher and an ROIC of 12% or higher. These initiatives are linked to our desire to move TDK towards a new growth stage. We are promoting business portfolio management from three perspectives: organic growth & profitability improvement for growth-driving businesses, actions for businesses to be intensively monitored, and inorganic growth. An example of a growth-driving business would be contributions to the AI ecosystem market, which I will touch on later. This year marks the third year of taking actions for businesses to be intensively monitored. Our policy for businesses with both low BizROA (ROIC) and low business potential will be to clarify direction by the end of the current Medium-term Plan and take decisive action. As for inorganic growth, we will enhance investments in the AI ecosystem and other related areas.

With the third point, strengthen pre-financial capital, as well, we are steadily coming closer to achieving the target values for communication score and other indicators set as important KPI. Pre-financial capital, however, involves numerous elements, such as technological capability, human capital, and organizational capability, that are difficult to quantify or represent numerically. In this sense, there is still a gap between our ideal situation and actual results.

I view the gap between our ideal situation and actual results as something that can never be completely filled. However, this is not a negative. In fact, it is the opposite. This is also why I avoid using the word “best.” Once you believe something is the best, then progress stops. This is why I will always pursue “better.” The TDK Transformation we outline in our Long-term Vision is, to put it another way, indeed the endless pursuit of “better.” This belief is also linked to our adopting “In Everything, Better” in 2025 as the tagline associated with our brand identity.

I have proactively disseminated TDK United both internally and externally as the phrase that represents the corporate culture of TDK. This does not refer to some uniform integration but, rather, reflects our desire as an organization to achieve the gentle fusion of various members from diverse backgrounds using teamwork to create value. This desire remains unchanged. However, moving forward, I want to further deepen this fusion while also transforming into “RENDO (連動)”. This means maintaining this gentle fusion while exploring which parts should be linked together and then more tightly linking the functions that should be combined together.

For human resources, which serves as the most important capital within the framework of strengthening pre-financial capital, I think it is critical that we align corporate strategy and human resources strategy. This will require that we strengthen human resources strategy as a core component of our overall Group strategy.

Truthfully speaking, I do not think the past approach of matching the human resource development plans of each department with company policy was sufficient. Looking at the company overall, there were aspects of both sides lacking a sense of alignment. Learning from the past, in April 2025 we re-positioned the Human Resources HQ as a core function in the promotion of corporate strategy and appointed Andreas Keller, who was serving as General Manager of the Human Resources HQ, as the Chief Human Resources Officer (CHRO). This move was made to clearly align human resources strategy as a core component of corporate strategy. This fiscal year, I think it will be necessary to further advance detailed policies. One of those policies is strengthening human resources in the software domain.

To convey to our stakeholders how investments in human resources are aligned with financial results, TDK issued its first ever Human Capital Report. We also indicate trends in our human resources ROI ( p. 41). While the issues affecting each global region differ, efficiently promoting initiatives such as education and AI utilization to enhance our competitiveness and increasing returns on our investments in people will serve as a driving force for corporate value. As someone who believes that people are everything, I believe it is important that we provide a visual representation of the RENDO between pre-financial and financial capital.

We have positioned the AI ecosystem market ( p. 28), which includes various applications related to AI, as a growth-driving business related to enhancing business portfolio management, and are making investments targeting this market.

Social issues in the AI ecosystem market include the massive electricity consumption associated with the dissemination of AI. Current TDK businesses such as passive components, sensors, products for the HDD market, and batteries can all make significant contributions to reducing power consumption.

In addition to these existing domains, we will also contribute to business performance in new business domains. In particular, in businesses related to semiconductor manufacturing equipment, in addition to sales of load ports and flip-chip bonders, we also plan to mass produce semiconductor bonding materials. We will expand this business by combining highly reliable, high thermal dissipation materials that contribute to reduced power consumption.

In the medium to long term, we forecast a compound annual growth rate (CAGR) of 25 to 30% for net sales of products for the AI ecosystem market. At present, progress for these initiatives is largely on par with plans. With sales of these products comprising over 10% of total company net sales in FY March 2026, we are forecasting this to increase to roughly 15% in FY March 2027.

Our Long-term Vision outlines the initiative of strengthening our capability to envision the future. Even in just the past two years, I feel that we are transforming in that sense. We were already creating a value creation chain aimed at enhancing dynamic Groupwide initiatives. This framework involves TDK Ventures serving as a corporate venture capital (CVC) function and acting as an antenna for the early identification of new business seeds and the Corporate R&D and Corporate Marketing & Incubation (CM&I) evaluating how such seeds would lead to value for TDK. Our success in developing a solutions business like TDK SensEI, which combines hardware with software, is due to this value creation chain functioning so well.

At the same time, rather than view this as the best, we implemented an organizational restructuring in April 2026 with a long-term perspective through which we are aiming for Episode 2 or the next “better” in our evolution. Specifically, we proactively dissolved the CM&I HQ and established a new Sales & Marketing HQ ( p. 42) by integrating the marketing functions previously handled by CM&I HQ with the sales functions for the passive components and sensor businesses. The objective was to combine the frontline insights gained through direct customer interaction with a medium- to long-term marketing perspective.

Additionally, we transferred the incubation function previously handled by that HQ to the Incubation Center within the Technology & Intellectual Property HQ. The aim here is to leverage a perspective that encompasses both R&D and business operations, enabling a seamless, end-to-end process that spans everything from technology development to the launch of new businesses.

At TDK, we depict the links and growth trajectory of our technology and business as a tree we call the Ferrite Tree ( p. 6) . Elements playing an extremely important role in the growth of the Ferrite Tree are the roots, which are comprised of pre-financial capital such as human capital, our customer base, organizational capabilities and technological capabilities. By extending its roots widely and deeply into the earth, a tree gains the vitality to sprout new branches and leaves. Recognizing that technological capability is a crucial form of pre-financial capital, comparable in importance to human capital, we have consistently allocated 10% or more of annual net sales to R&D investments. In addition to this robust foundation of internal technological capability, TDK Ventures, our CVC ( p. 43) , plays a pivotal role in strengthening our incubation capabilities. Established to generate synergy with promising startups that are tackling social challenges and possess cutting-edge technologies with the potential to become core businesses for the company, TDK Ventures has reached a total investment scale of ¥50.0 billion, with a portfolio exceeding 50 companies. By evolving our RENDO of Interorganizational Organization and transforming our value creation chain in this manner, we will drive the sustainable growth of the Ferrite Tree.

I believe that our greatest competitive advantage at TDK lies in our unique corporate culture, as it serves as the fertile ground for cultivating the human resources who drive that competitive advantage.

On this subject, the first strength I want to highlight is our respect for diversity. Among our 100,000 team members, nearly 90% are non-Japanese and approximately 75% joined the company through M&A. This diversity fosters the ability to adapt to changing environments. However, diversity alone does not automatically equate to strength. What is important is that the entire group shares the understanding that we grow by respecting and acknowledging our respective differences and learning from each other. Our governance policy of Empowerment & Transparency reflects our commitment to empowering to a diverse range of team members while ensuring full transparency. Another key strength is our culture of functional equality, the principle that while job titles may imply a hierarchy, the roles (functions) themselves do not. This approach fosters connections and active communication among diverse team members, which ultimately promotes new value creation.

There is another aspect that I consider a strength of TDK. Perhaps an odd way to put this, but I believe we have a certain healthy looseness or flexibility about us. Much like the play in a car’s steering wheel, TDK fosters a culture that allows for a degree of freedom rather than rigidly controlling every single detail. I view TDK as a great venture enterprise, and think that this quality of having a balanced flexibility may be what fuels our venture spirit.

Shareholders and investors might argue that we don’t need such flexibility and that, instead, we should focus on maximizing earnings and investment efficiency. However, what cannot be denied is that our organizational culture has enabled us to take on challenges freely and generate diverse forms of value. One example is the TMR sensor, which is now the driving force behind our sensor business. This sensor actually began as research pursued by an engineer out of personal interest, rather than as an official work assignment. Pursuing an endeavor that others approach with a mixture of annoyance and skepticism led to a product that has become the cornerstone of our sensor business.

I believe that TDK is able to extract the true value in respect for diversity and functional equality because of our group’s culture that embraces free experimentation and accepts failure. This is the result of a long line of management teams recognizing this value and passing it down to the present day. I also believe that my goal, to be United rather than aim for uniform integration, is driven by a desire to pass this unique strength on to the next generation.