The Internet of Things (IoT) is a structure that offers mutual control through the exchange of information via not only communication equipment, but also automobiles, infrastructure, industrial equipment, and all “things” connected to the Internet. Development of sensor technology designed to accumulate information, such as angles and humidity, on “things,” as well as information and communication technology designed to exchange information through the Internet, is picking up steam in the hope that it may be applied to such technology as self-driving cars.
At TDK, we are striving to gain business opportunities in the IoT market by focusing on three priority sectors: “Automotive,” “ICT,” and “Industrial Equipment and Energy.” Technology such as sensors, actuators, and thin-film components are products that exercise the strengths of TDK and will help to usher in future growth. In addition, we are proceeding with development of energy units that combine such features as batteries, power sources, and wireless power transfer systems.
In the approaching age of IoT, TDK aspires to be the company that is society's top choice and is thus pushing forward with bold reforms.
Source: Gartner Press Release
“Gartner Says 6.4 Billion Connected "Things" Will Be in Use in 2016, Up 30 Percent From 2015”, November 10, 2015
(Created all graphs/charts by TDK on the basis of the Gartner Research.)
Disclaimer: The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Annual Report) and the opinions expressed in the Gartner Report(s) are subject to change without notice.
The drivers of growth for TDK used to be magnetic heads for hard disk drives and electronic components for smartphones, especially high-frequency components. However, the worldwide demand for HDDs peaked in 2010 and the market is showing signs of contracting. The growth in shipping numbers of smartphones is also gradually slowing.
On the other hand, we are devoting more management resources to automotive products. Already more than 40 years ago, TDK took note of the increasing “electrification” of the automobile and expanded its range of products in this area. We are now concentrating on magnetic sensors that will be an important product category, and we also have the configuration of wireless power transfer systems in our sights.
Source: Techno Systems Research Co., Ltd.
1. The market size is based on the shipment values at manufacturers.
2. The numerical values of 2015 are prospective
and those of 2016 to 2020 are forecast.
Source: Yano Research Institute Ltd. Global Smartphone Market:
Key Research Findings 2015 (Released June 23, 2015)
History of withdrawing
from non-core businesses
In the past, TDK has successfully implemented strategic withdrawals from non-core businesses in order to optimize its business portfolio. During the previous Medium-Term Plan (fiscal 2012 to fiscal 2015), we terminated operations in areas such as OLED displays, LTO (Linear Tape-Open) media for computers, and Blu-ray discs. This enabled a reorganization of our activities and products. We also closed down or merged some sites both in Japan and overseas, to strengthen our Monozukuri power through a return to integrated production. Organizational structures and business processes were streamlined to shorten lead times, and other reform measures were also successfully implemented.
M&A to accelerate growth and complement products and technologies
With a view toward the IoT market where further growth is expected, TDK aggressively pursued a policy of M&A to complement its own range of products and technologies. For example, aiming to expand our presence in the automotive sensor market, we acquired Micronas, a Swiss manufacturer of Hall sensors. To further energize our SESUB business, we established a cooperative framework with ASE. We also agreed to take over the Tsuruoka Factory of Renesas Semiconductor Manufacturing Co., Ltd. as a production base for thin-film passive components.
Business cooperation and joint venture with Qualcomm expected to boost future growth
Of particular importance for TDK's envisioned strong presence on the IoT market is the business alliance with Qualcomm, a global leader in next-generation wireless technology. By expanding cooperation to key technology areas including passive components, batteries, wireless power transfer, sensors, and MEMS, the competitive superiority of both sides is expected to gain a significant boost.
TDK and Qualcomm agreed to establish a joint venture called RF360 Holdings Singapore to supply high-frequency front-end modules and other high-frequency components for use in applications such as mobile devices, IoT products, drones, robots, and automobiles. The aim here is further improved performance and higher integration.
Remaining an indispensable source in the shrinking market for HDD magnetic heads
We have also taken appropriate measures in the contracting HDD market. For one, we have consolidated the bases for the frontend process from two locations into a single base, and the back-end process in China has also been concentrated and restructured to achieve a reduction in costs. In the Philippines, we have started to manufacture passive components in addition to HDD magnetic heads. With regard to the industry as a whole, we are strengthening vertical collaboration in development and manufacturing, and we are supporting research into leading-edge technology, while promoting horizontal division of labor to avoid overlapping investments and cost increases. Within TDK, significant development efforts are under way, directed at new technology targets such as thermal assisted magnetic heads, two dimensional magnetic recording, and micro DSA.
The magnetic sensors that TDK is focusing on at the moment benefit greatly from thin-film process technology and know-how gained in the HDD magnetic heads sector. The sensors offer high accuracy and dramatically reduced errors, for example, in detecting the steering wheel angle in automobiles, thereby contributing to better fuel economy and lower power requirements. They truly represent the best of magnetics technology perfected over a period of many years.
Actuator for camera module
Starting with automotive applications, we will aim to expand both the scope and our customer base in the magnetic sensor business. Relying on advantages such as high accuracy and low power draw, we plan to explore and develop demand for consumer applications. Integrating TMR elements from TDK and Hall elements from Micronas, we will combine the strengths of both to create sensors with even higher performance. Eventually, these will be offered as modular and system solutions that cover a range of customer needs.
In the field of actuators as well, we will be creating new business opportunities by harnessing proprietary and new technologies to bring products with high accuracy and low power consumption to this market. Optical image stabilizers (OIS) are a strategic growth product mainly used in the camera modules of smartphones to prevent blurry photos. We have established mass production capacities aimed at the Chinese market, and are aiming for further expansion.
Gear tooth sensor
When a magnetic field is applied perpendicular to a flowing current, a force called electromotive force is generated in a direction perpendicular to both the current and the magnetic field. This is called the Hall effect, and an element using this effect to detect a magnetic field is called a Hall element. Micronas, a major Swiss sensor manufacturer also renowned for its circuit design and packaging technology, manufactures Hall sensors used in the power transmissions of automobiles, for engine control, and various other applications. The objective for the future is further business expansion in the automotive sector.
An energy unit is defined as a unit that comprises a combination of hardware and software for conversion, storage, and control of electrical energy. TDK plans to combine and link elements that so far have been developed separately, such as DC-DC converters with power conversion functionality, wireless power transfer systems, different types of lithium-ion batteries for storage, and various sensors for energy control applications. With the addition of dedicated software, these will become sophisticated energy units that operate as a system. This is expected to bring a number of advantages, including improved energy efficiency and safety, higher integration, and also lower cost. With regard to automotive inverters, an agreement has been reached with Toshiba Corporation to establish a joint venture.
Bidirectional DC-DC converter
Energy units will be particularly attractive for the automotive sector and for industrial equipment and energy applications. In the automotive market, vehicles adopting wireless power transfer systems are expected to become practical in the near future, and the number of automated guided vehicles (AGVs) is also expected to grow. In these new areas, we will be offering energy units with sophisticated software technology, destined to become a major pillar of earnings in the future.
DC-DC converter for xEV
TDK plans to introduce next-generation electronic components and modules through a fusion of SESUB technology, thin-film technology, and materials technology. Moving toward this aim, we have implemented a number of initiatives in fiscal 2016. First, we are taking over the Tsuruoka Factory of Renesas Semiconductor Manufacturing Co., Ltd., a company with extensive experience in automotive products and semiconductor manufacturing processes. The facility will be used as a manufacturing base for thin-film passive components, contributing to expanded production capacity and also providing a technology boost. We also established a joint venture with Taiwan's ASE for the fabrication of semiconductor embedded substrate products utilizing SESUB technology. The target here is expanded orders in the wearable and health care devices sector.
The technological building blocks for the conquering of the IoT market are in place. Using a rich arsenal of technology accumulated over a period of 80 years, we will bring value to society.
TDK is home to some of the best engineering talent around the globe. However, rather than having our engineers work individually on projects, we believe we can energize their potential even further through organization-wide cooperation. This in turn will further enhance the value we provide to customers. One of my roles is acting as a facilitating link for engineers around the world, in order to create various synergy effects. The aim is to establish a framework that fosters innovation and makes it possible to design and offer devices and system solutions of direct merit to the customer.
Until now, former President Kamigama served concurrently as CTO, and the focus of information tended to be more oriented toward a management point of view. I on the other hand intend to convey TDK's competitive superiority from a more technical perspective.
TDK's product portfolio has greatly changed in keeping with the times and with customers' needs, and as the age of IoT arrives, there will certainly be further changes. However, we have always maintained continuity in the strong technological basis that supports our operations. In a word, that basis is magnetism. Since the company's inception, we have cultivated magnetics technology, pursuing the characteristics of product materials from the atomic level, achieving the required characteristics through combinations on the order of nanometers. We also have gained mastery of the art of imparting additives to materials to achieve a targeted functionality, and we possess process technology that enables complete control over thickness or size, again as measured in nanometers. Our arsenal of many different but complementary technologies makes it possible to create just what the customer is seeking. Furthermore, we also develop production equipment in-house to realize mass production of designed products with high quality. This kind of technical resourcefulness is something that companies from emerging countries or other competitors cannot simply copy. We often get requests from customers for next-generation products and are always involved in various research projects aimed at a range of different characteristics.
We therefore believe that by increasing the speed of the cycle from idea to production, we can maximize the value that we provide to customers. To achieve this aim and reduce the distance between the customer and the development base, we are going to establish four new R&D centers around the globe, focused on different product aspects and operating in close proximity to their respective markets.
Big strides are currently being made in areas such as sensor technology for obtaining sophisticated information about the state of objects, communication technology for sharing such information, and energy technology for powering them. Other exciting developments as a result of these technologies are automobiles that can drive themselves and wearable devices for health monitoring and management.
TDK is harnessing magnetics technology gained while developing high-precision HDD magnetic heads, along with thin-film technology, sensing technology utilizing fine processing technology, and other advanced methods to create sensors with various characteristics for automotive use, and also for medical and industrial equipment applications. The resulting highly compact and highly capable sensors cannot easily be rivaled by competitors using only standard materials. Within TDK, the building blocks for bringing high added value to the IoT market are in place. Extending to sensors and beyond, we will be creating original high-value-added products for this market.
The pursuit of originality with a strong technological foundation is at the root of all our R&D activities. TDK's founder who formed the company in 1935 to produce ferrite cores believed in creating new products of value with a hands-on approach, and this spirit is still alive in the engineers working here today. I am convinced that this will remain so in the company's future as well.
View the full text of “TDK's Future Strategy” on the PDF version.TDK's Future Strategy