Reinventing
Ourselves
A N N U A L R E POR T 2017
English Version
The Story of TDK’s Sustainable Corporate Value Creation
Constantly Refined
Magnetics
Technology
Constantly Upholding
a Spirit of
Originality
1935
One of four great
world-class Innovations
Ferrite core
Corporate Motto
Contribute to
culture and industry
through creativity
“A more than 80-year history in
tandem with magnetism”
The magnetic material “ferrite” is an original
Japanese invention of Dr. Yogoro Kato and
Dr. Takeshi Takei of the Tokyo Institute of
Technology. As an important magnetic mate-
rial for cutting-edge electronic equipment,
ferrite continues to contribute widely to
society, and in 2009 was designated as an
IEEE Milestone. With its origins in this
landmark invention, TDK has continued to
refine its magnetics technology throughout
the course of its more than 80-year history.
“Creating value that does not yet exist
in the world on a material level”
Today’s TDK was founded in 1935 as Tokyo
Denki Kagaku Kogyo K.K., with the goal of
industrializing ferrite. Identifying with Dr.
Kato’s statement that, “the Japanese must
develop their own genuine industries,”
Kenzo Saito, the Company’s first president,
succeeded in commercializing a so-called
“ferrite core.” His philosophy of “creating
value that does not yet exist in the world on
a material level” continues to be handed
down at TDK today.
1
Annual Report 2017 The Story of TDK’s Sustainable Corporate Value Creation
MILESTONE
Innovation and
Self-Transformation as
Driving Forces
With magnetics technology as its core competence, TDK has devel-
oped a succession of global innovations that leverage its spirit of
originality. Continuous innovation in its existing products, a pro-
cess repeated throughout TDK’s more than 80-year history, along
with nonlinear innovation via strategic withdrawal from non-core
businesses and optimization of its business portfolio, will continue
to be the driving forces behind the Company’s ongoing growth.
Transformation
Governance
Number of Outside Officers
(Directors and Audit &
Supervisory Board Members)
2002
2017
1 person
6 people
(As of end of
June 2017)
Magnetics
Technology
Spirit of
Originality
Net Sales
Capacitors
Magnets
Inductors
The TDK of the Future
Transformation
Transformation
Next-generation electronic components
Globalization
Shift to Growth Areas
Overseas Production Ratio
Expansion of Automotive Sales
1995
42%
2017
86%
2010
12%
2018 (Target)
30%
Sensors & Actuators
Power supplies
Batteries
High-frequency components
HDD magnetic heads
TDK = Electronic
components for
smartphones
Magnetic tapes
TDK = HDD magnetic heads
TDK = Magnetic tapes
Transformation
Portfolio Shift
Corporate
History
1935
Founded in Shiba-ku, Tokyo, with the
goal of industrializing the world’s first
ferrite core.
1961
TDK shares listed on
the First Section of the
Tokyo Stock Exchange.
1965
Establishes TDK Electronics Corporation, a local
subsidiary in New York (with manufacturing and
sales sites later established around the world).
1986
Acquires SAE Magnetics
(H.K.) Ltd., a Hong Kong-
based magnetic head
manufacturer.
2000
Acquires Headway Technologies Inc., a U.S.-based
magnetic head manufacturer.
2005
Acquires Amperex Technology Limited of Hong Kong,
a manufacturer and seller of lithium polymer batteries.
Acquires Lambda Power Group, the power supply
business of U.K.-based Invensys plc.
2008
Acquires the EPCOS Group,
a German electronic device
manufacturer.
2016
Acquires Micronas
Semiconductor Holding AG, a
Swiss developer and manufac-
turer of magnetic sensors.
1970
1980
1990
2000
2010
2016
2020
Innovation That Drives Transformation
Continuous Innovation in
Passive Components
The multilayer chip inductor, based
on the world-leading fine multilayer-
ing technology developed by TDK in
1980, contributed greatly to the cre-
ation of small, thinner electronic
equipment. Continuous innovation
in these types of passive components
and other existing products is one
driver of TDK’s sustainable growth.
1980
One of four great
world-class innovations
Fine multilayering
technology
2
Nonlinear Innovation with
Magnetism at Its Core
Commoditization
New
innovation
SESUB (semiconductor embedded
substrate) developed through appli-
cation of materials technology and
fine processing technology
While its main products are doing well,
TDK works to forecast long-term tech-
nology trends and develop core busi-
nesses for the future, sometimes boldly
replacing its main business focus. This is
what we call “nonlinear innovation,” and
it provides a schematic for TDK’s sus-
tainable growth. HDD magnetic heads
that have achieved phenomenal record-
ing density are one such example.
Growth
Sowing
Commoditization
Sowing
Commoditization
Sowing
1968
One of four great
world-class innovations
Magnetic tape
Growth
Growth
1987
One of four great
world-class innovations
HDD magnetic
head
Annual Report 2017
3
TDK Corporation TDK素素素素素素素素素素素素素素素素素
The Story of TDK’s Sustainable Corporate Value Creation
INNOVATION PROCESS
INNOVATION PROCESS
Achieving Sustainable Growth
5素素素素素素素素
in Corporate Value through
素素素素素素素素素素素素素
5 Competitive Advantages
素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素
Competitive advantages, including materials and process technologies,
素素素素素素素素素素素素素素TDK素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素
a customer base, strength of diversity, a global business base, and
素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素素
integrated production, are the foundation of TDK’s growth. Synergies
between these competitive advantages, which stand solidly on the
magnetics technology TDK has cultivated over many years, are a hidden
strength supporting the sustainable growth in corporate value.
Magnetics
Technology
磁 性 技 術
Spirit of
独創の精神
Originality
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5
5
Film capacitors
フフフフ
フフフフフ
Transponder
フフフフフフフフフフ
coils
フフフフフフフフフ
Camera module
actuators
フフフフフフフ
Multilayer
フフ
ceramic
フフフフフフフフフ
capacitors
フ
フフフ
Power
inductors
フフフフフ
フフフフ
Choke
inductors
フフフフフ
NTC
NTC
sensors
フフフ
Pressure
フフフフフ
sensors
Aluminum
フフフフフ
electrolytic
フフフフフ
capacitors
Current
フフフフフ
sensors
Piezo
フフフ
actuators
フフフフフフフ
フフフフ
Trans-
formers
Ferrite
フフフフフ
cores
フフ
Hall sensors
フフフフフフ
EMC
EMC
filters
フフフフ
Inductors
フフフフフ
Varistors
フフフフ
Noise
フフフフフ
suppression
フフフ
sheets
フェライト
Ferrite
フフフフフ
Ferrite
magnets
フフ
フフフフ
Neodymium
magnets
フフフフフ
フフフフ
Radio wave
anechoic
chambers
Lithium ion
フフフフ
batteries
フフフフフ
HDD magnetic
HDDフフフ
heads
フフフ
Switching
フフフフフフ
power
フフ
supplies
Chip beads
フフフ
フフフ
LTCC-RF
LTCC-RF
(HMLTM)
フHMLTMフ
フフフフフ
Bond
magnets
Radio wave
フフフフフ
absorbers
xEVフフフ
DC-DC converters
for xEV
DC-DCフフフフフ
HDD
HDDフ
suspensions
フフフフフフフ
TMR sensors
TMRフフフ
Competitive Advantages Supporting Sustainable Growth at TDK
TDKフフフフフフフフフフフフフフフ
1
1
2
2
3
3
4
4
5
5
Hidden
見えざる強み
Strength
素材・プロセス
Materials and
Process Technologies
技術
Customer
顧客基盤
Base
多様性の
Strength of
強さ
Diversity
グローバル
Global
Business Base
事業基盤
Integrated
一貫生産
Production
With ferrite as a starting point, TDK has extended
フフフフフフフフフフフフフフフフフフフフフフフフフフ
the boundless potential of innovation by refining
フフフフフフフフフフフフフフフフフフフフTDKフフ
and exerting its competitive advantages, and today,
フフフフフフフフフフフフフフフフフフフフフフフフフ
we are taking on the challenge of new business innovation.
4
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TDK Corporation
TDK 株式会社
Annual Report 2017
アニュアルレポート 2017
アニュアルレポート 2017
5
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5
Infinite InnovationInfinite Innovation 1 Materials and
Process Technologies
Creating “Black Boxes” to Prevent Imitation
Materials technology elicits the targeted properties in a product through advanced expertise in
complex composition processes and control of additives. Process technology maximizes the
properties of these materials while also expanding the scope of their application in products.
Creating “black boxes” for techniques for controlling crystal particles at the atomic level, for
intellectual property, and for other know-how makes them difficult to imitate overnight.
Materials
Development
and Design
Evaluation and
Simulation
Front-End
Process
Back-End
Process
Competitive Advantages
Supporting the Creation
of Innovation and
Long-Term Value
5 Integrated Production
A Powerful Advantage in the Age of IoT
Integrated production, where everything from materials to the final product is handled in-house,
allows TDK to take the initiative in product evolution, and we have successfully increased pro-
ductivity through the introduction of IoT and robots. Our ability to also control quality entirely
in-house gives TDK a competitive advantage in areas of the IoT market where quality require-
ments are particularly high, including the automotive and robotics fields.
Honjo Factory East Site
Location: 1-8 Manganji, Yurihonjo City,
Akita Prefecture, Japan
Floor space: Approximately 50,000 m2
Building structure: Two-story building
Main business: Development, design, and manu-
facture of high-frequency compo-
nents, piezoelectric components,
and other electronic components
2
Customer
Base
Automotive
ICT
Enabling Investment from a Long-Term Perspective
TDK has built strong relationships with its customers in the automotive,
ICT, industrial and energy markets, and other markets. This competitive
advantage allows us to more accurately forecast future changes in tech-
nology trends, and reduces the risks involved in making aggressive R&D
and capital investments.
Industrial
and Energy
3
Strength of
Diversity
A Spirit of Equality Leading to M&A Success
TDK has built its relationships with the companies it acquired based
not on controlling them, but on positioning them as equal partners.
This expertise in post-merger integration, cultivated over long years
of experience in M&A, is a powerful weapon in ensuring the success
of our business portfolio.
Non-Japanese
Corporate Officers
6 people
Japanese Corporate Officers 12 people
(As of end of June 2017)
4 Global
Business Base
Overseas Sales in Excess of 90%
TDK began full-scale globalization efforts in the 1960s, enhancing its local
production and technical support infrastructure overseas and expanding
its business with manufacturers outside Japan. This global business base,
with approximately 90% of production and sales generated overseas, is a
competitive advantage that will allow us to capture business opportunities
in the IoT market, which is expected to expand worldwide.
Percentage of
Overseas Production
86.1%
Percentage of
Non-Japanese
Employees
90.7%
Percentage of
Overseas Sales
91.1%
6
TDK Corporation
Annual Report 2017
7
The Story of TDK’s Sustainable Corporate Value Creation
BUSINESS PORTFOLIO
Net Sales
by Product Segment
Other
2.7% (¥32.1 billion)
• Mechatronics (Production Equipment), etc.
Film Application
Products
21.0% (¥247.7 billion)
• Energy Devices (Rechargeable Batteries)
Consolidated Net Sales
¥1 ,178.3 billion
Passive Components
46.6% (¥548.7 billion)
• Capacitors
• Inductive Devices
• High-Frequency Components
• Piezoelectric Material Components and
Circuit Protection Components
• Sensors
Magnetic Application
Products
29.7% (¥349.7 billion)
• Recording Devices (HDD Magnetic Heads,
HDD Suspensions)
• Power Supplies
• Magnets
Focusing on High-Potential Markets
Net Sales
by Region
Consolidated Net Sales
(external)
¥1,178.3 billion
Consolidated Employees
(internal)
99,693 people
Americas
Net Sales (external)
8.9% (¥104.9 billion)
Number of Employees (internal)
4.2% (4,216 people)
Europe
Net Sales (external)
12.4% (¥146.2 billion)
Number of Employees (internal)
7.7% (7,674 people)
Japan
Net Sales (external)
8.9% (¥105.2 billion)
Number of Employees (internal)
9.3% (9,308 people)
Asia and others
Net Sales (external)
69.8% (¥821.9 billion)
Number of Employees (internal)
78.7% (78,495 people)
Automotive Market
Leveraging Relationships with Automobile Manufacturers
and a Broad Portfolio to Accelerate Business Expansion
TDK has worked to enhance its product portfolio in such areas as
passive components, magnets, and power supply, contributing to the
increased use of electronics by offering products compatible with
demands for high reliability. The expected widespread use of xEV
(HEV, PHEV, BEV, etc.) and the rapid development of IoT mean that
the market for electronic components for automobiles is also
expected to expand. By adding a broad array of non-optical sensors
and wireless power transfer systems to its portfolio, TDK is expand-
ing its business in the automotive market.
Industrial and
Energy Market
Contributing to Energy Savings and
Efficiency with a Focus on Power-Related
Components and Sensors
The industrial and energy market is also a priority
for TDK. We provide highly reliable, highly efficient
electronic components for renewable energy sys-
tems, railways, and industrial robots, contributing
to energy savings and efficiency. In addition to
wireless power transfer coils and other power-
related components that control and supply electri-
cal power and which take advantage of our core
competence in magnetics technology, we are
working to expand sales with a focus on sensors.
We are also working to provide high-value-added
solutions for industrial robots, an area where
particularly rapid growth is expected.
ICT Market
Contributing to the Evolution of ICT
Devices through Use of Thin-Film
Technology and Modularization
TDK offers more than 20 types of products
for smartphones, including lithium polymer
batteries, thin-film power inductors, and
various types of sensors. As smartphones
simultaneously become more highly func-
tional, incorporate a wider range of func-
tions, and become thinner, the electronic
components built into them will require
even greater integration. TDK will support
the evolution of ICT devices by accelerating
the creation of next-generation electronic
components that take advantage of its
strength in thin-film technology, and the
modularization of electronic components
utilizing SESUB, TDK’s innovative semi-
conductor embedded substrate technology
that allows for high-density mounting.
8
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TDK CorporationAnnual Report 2017 Product Brand Marks
Product Brand Marks
The Story of TDK’s Sustainable Corporate Value Creation
We Are Ready to
Transform
Product Brand Marks
TDK Product Brands
Sensor Solutions
Product Brand Marks
Collaboration with IC Manufacturers
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Transformation
Shift to a High-Value-Added
Business Model
Taking advantage of its strengths as a comprehensive
manufacturer of electronic components, TDK will go
beyond stand-alone sales of those products to provide
solutions centered on sensors, building a business
model with even higher added value.
Transformation
Product Brand Marks
Product Brand Marks
Display ratios
Another Re-Invention
Product Brand Marks
Display ratios
RF360
Product Brand Marks
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1W
≤ 1.2W
≤ 1.1W
Display ratios
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1W
≤ 1.2W
Power Solutions
≤ 1.1W
By shifting the focus of its business from the product-
dependent Monozukuri (manufacturing excellence)
model of the past to a Kotozukuri (integrated solutions)
model based on offering the optimal solutions for
leading customers to business success, TDK will
capture the unlimited potential of the vast IoT market,
achieving sustainable growth in corporate value.
Display ratios
Display ratios
Display ratios
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
W
≤ 1.2W
≤ 0.65W
Through a series of M&As, beginning with Micronas in 2016 and concluding with
InvenSense in 2017, through its business tie-up with Qualcomm, and through the
establishment of the joint venture company RF360, TDK has prepared for the
transformation to a hybrid business model. Building on a foundation of materials
and electronic components differentiated by advanced technology, we will provide
≤ 1.2W
sensor solutions and power solutions, creating a high-value-added business model
and pushing forward with market expansion.
≤ 1.1W
≤ 1W
≤ 1.2W
≤ 1W
Transformation
≤ 1.2W
Market Expansion
≤ 1.1W
In addition to developing new customers in the
automotive, ICT, and industrial and energy markets,
and expanding the scope of applications for its
products, TDK will work closely with Qualcomm and
other IC manufacturers as it looks to develop demand
for consumer applications, which represent an even
larger market.
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1W
≤ 1.2W
≤ 1.1W
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1W
≤ 1.2W
≤ 1.1W
10
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TDK CorporationAnnual Report 2017 Management Philosophy
Contents
Financial Information
http://www.global.tdk.com/corp/en/ir/index.htm
Consolidated Business Results Highlights
Business Trends
CORPORATE MOTTO
Contribute to
culture and industry
through creativity
CORPORATE PRINCIPLES
“Vision”
Always take a new step forward with a vision in mind.
Creation and construction are not born without vision.
“Courage”
Always perform with courage.
Performing power is born by confronting contradiction and overcoming it.
“Trust”
Always try to build trust.
Trust is born from a spirit of honesty and service.
Investor Relations (IR)
• Securities Reports
• Quarterly Financial Statements
• Operational Risks
Non-Financial Information
http://www.global.tdk.com/csr/index.htm
• TDK CSR REPORT 2017
• CSR Activities
Product Information and Services
https://product.tdk.com/info/en/index.html
TDK Product Center
Cautionary Statements with Respect to
Forward-Looking Statements
This report contains forward-looking statements,
including projections, plans, policies, management
strategies, targets, schedules, understandings, and
evaluations about TDK and/or its Group companies (“the
TDK Group”). These forward-looking statements are
based on the current forecasts, estimates, assumptions,
plans, beliefs, and evaluations of the TDK Group in light
of information currently available to it, and contain known
and unknown risks, uncertainties, and other factors.
The TDK Group therefore wishes to caution readers that,
being subject to risks, uncertainties, and other factors,
the TDK Group’s actual results, performance, achieve-
ments, or financial positions could be materially different
from any future results, performance, achievements, or
financial positions expressed or implied by these
forward-looking statements, and the TDK Group under-
takes no obligation to publicly update or revise any
forward-looking statements after the issue of Annual
Report 2017 except as provided for in applicable laws
and ordinances.
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46
54
62
64
65
Understand How Management Thinks
To Our Stakeholders
Learn about TDK’s Future Strategy
Medium-Term Plan
Finance and Capital Strategy during Transformative Phase
Overview of Business Conditions by Segment
Corporate Value
Special Feature The Start of a New “Nonlinear Progress”
Find Out Information on Business Strategy
Segments at a Glance
Business Segment Strategies
Discover the Sustainability of Our Business Model
Business Model Continuity as Seen through the Value Chain
Human Resource Strategy
Check Out TDK’s Corporate Governance
Message from the Chairman
TDK Governance Snapshot
Everything Is Aimed at Long-Term, Sustainable Improvement in Corporate Value 66
Future-Oriented Governance
Directors, Audit & Supervisory Board Members, and Corporate Officers
Access TDK’s Financial Information
Operating Results
Financial Condition
Cash Flow Status
Major Business Risks and Risk Management System
Consolidated Balance Sheets
71
72
74
76
78
79
80
Consolidated Statements of Income and Statements of Comprehensive Income (Loss) 82
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Overview of TDK
Corporate Information
83
84
85
Editorial Policy
Annual Report 2017 provides financial data, including information on business results, business and marketing
activities, the Medium-Term Plan, and related topics. In addition, it also contains general information on environmental
(E), social (S), and governance (G) topics. For further information on financial topics not covered here, as well as on
topics related to corporate social responsibility (CSR), and for product information, please visit the TDK website.
12
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TDK CorporationAnnual Report 2017 Consolidated Business Results Highlights
Years ended March 31
Consolidated Business Highlights
Net sales
(Overseas sales)
Cost of sales
Selling, general and
administrative expenses
Operating income (loss)
Income (loss) before income taxes
Income (loss) from continuing
operations before income taxes
Net income (loss) attributable to TDK
Capital expenditures
Depreciation and amortization
Research and
development expenses
Ratio of overseas production to
net sales (%)
Net cash provided by
operating activities
Net cash used in
investing activities
Net cash provided by (used in)
financing activities
Cash and Cash equivalents at
end of period
Total assets
Stockholders’ equity
Working capital
Number of shares issued (thousands)
Per Share Data
Net income (loss) attributable to
TDK (basic)
Net assets
Dividends
Payout ratio (%)
Key Financial Ratios
Overseas sales ratio (%)
SG&A ratio (%)
Operating income ratio (%)
ROE (%)
ROA (%)
Non-Financial Indicators
Number of employees
Overseas employees ratio (%)
CO2 emissions in production
activities (t-CO2)
CO2 emissions reduction in
manufacturing (t-CO2)
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Yen millions
2017
¥862,025
¥ 866,285
¥ 727,400
¥ 792,624
¥ 862,492
¥ 802,534
¥ 841,847
¥ 984,525
¥1,082,560
¥1,152,255
¥1,178,257
Breakdown of Operating Income Changes
Yen billions
690,673
622,819
714,172
635,529
159,616
143,581
79,590
88,665
70,125
70,440
65,337
87,175
91,505
71,461
84,312
71,297
610,944
605,943
175,762
(54,305)
(81,630)
(63,160)
98,425
89,567
704,874
604,454
158,727
29,443
25,576
13,520
64,370
83,788
764,807
645,514
149,114
67,864
64,519
45,264
78,638
77,594
702,469
624,271
157,724
20,539
14,668
(2,454)
99,653
80,197
747,062
668,258
151,535
22,054
19,765
1,195
85,606
77,938
890,520
763,572
184,337
36,616
39,772
16,288
68,606
83,109
207,876
227,718
72,459
74,517
93,414
91,839
49,440
102,525
80,249
64,828
160,674
83,224
113,649
208,660
211,717
145,099
167,631
87,491
989,348
802,225
1,061,203
1,073,024
831,123
855,948
Fiscal 2016
93.4
50,058
57,387
57,645
53,942
52,973
52,551
53,943
63,385
70,644
84,920
91,254
62.2
70.1
74.0
80.5
83.6
80.2
81.8
86.7
87.9
86.3
86.1
145,483
119,413
59,189
118,247
101,879
55,334
108,942
127,308
142,850
151,563
160,136
(81,488)
(141,892)
(275,410)
(105,963)
(61,341)
(29,898)
(90,156)
(55,438)
(127,312)
(140,585)
(71,111)
(15,862)
(75,941)
223,637
(38,369)
(31,860)
12,929
4,395
(56,118)
(35,243)
29,305
(37,753)
Fiscal 2017
208.7
+64.2
Changes in sales
–67.9
Sales price
reduction
–26.7
Exchange rate fluctuation
(U.S.$1.00 = ¥108.46)
+42.0
Rationalization,
cost reduction
+2.4
Benefits from
restructuring
–23.7
SG&A expenses
increase*
+144.4
Gain on
transfer
–19.4
Restructuring
cost
289,169
989,304
762,712
449,830
133,190
166,105
935,533
716,577
300,859
129,591
165,705
132,984
129,091
167,015
1,101,036
1,091,458
1,060,853
1,072,829
554,218
281,536
129,591
543,756
286,370
129,591
534,273
199,186
129,591
498,159
219,918
129,591
213,687
250,848
265,104
285,468
330,388
1,169,575
1,239,553
1,404,253
1,450,564
1,664,333
561,169
232,693
129,591
635,327
279,504
129,591
738,861
352,364
129,591
675,361
289,760
129,591
793,614
388,542
129,591
¥529.88
¥551.72
¥(489.71)
¥104.82
¥350.90
¥(19.06)
¥ 9.50
¥129.47
¥392.78
¥514.23
¥1,150.16
5,759
110.00
20.8
5,557
130.00
23.4
4,297
130.00
—
4,215
60.00
57.2
4,142
80.00
22.8
3,957
80.00
—
4,461
70.00
737.2
5,050
70.00
54.1
5,865
90.00
22.9
5,355
120.00
23.3
6,289
120.00
10.4
Yen
80.1
18.5
9.2
9.6
7.3
82.4
16.6
10.1
9.7
7.4
84.0
24.2
(7.5)
(9.9)
(6.2)
88.9
20.0
3.7
2.5
1.2
88.7
17.3
7.9
8.4
4.2
89.8
19.6
2.6
(0.5)
(0.2)
88.7
18.0
2.6
0.2
0.1
90.5
18.7
3.7
2.7
1.4
91.4
19.2
6.7
7.2
3.7
92.1
19.8
8.1
9.2
4.5
91.1
9.7
17.7
19.8
9.3
51,614
80.1
60,212
82.8
66,429
84.1
80,590
87.2
87,809
88.5
79,175
87.4
79,863
88.2
83,581
89.1
88,076
89.8
91,648
90.3
99,693
90.7
857,213
926,695
909,747
878,303
1,095,462
1,109,926
1,102,989
1,190,458
1,269,086
1,474,119
1,463,396
321,000
498,000
886,000
1,251,000
1,581,000
1,675,000
* Selling, general and administrative expenses
shown on the graph include a portion of
business transfer-related expenses.
Breakdown of Free Cash Flows
Yen billions
Net cash provided
by operating
activities
Capital
expenditures
160.1
–167.6
+21.1
Proceeds from sales of tangible
and intangible assets
+38.7
–73.6
Proceeds from sale and
maturity of short-term
investments
Payment for purchase
of short-term
investments
+0.5
Proceeds from sale and
maturity of securities
–0.8
Payment for purchase of securities
+128.2
Acquisition of
subsidiaries, net
of cash acquired
Proceeds from sale
of business, net of
cash transferred
–16.8
+0.6
Receipt from
collection of loans
made by TDK
–1.3
Other–net
Free cash
flows
89.0
15
Notes: 1. In accordance with the provisions of ASC No. 205-20, “Presentation of Financial Statements–Discontinued Operations,” operating results related to the data tape business and the
blu-ray business are separately presented as discontinued operations in the consolidated statements of operations for the year ended March 31, 2014. Also, reclassifications are
made to the consolidated statements of operations after the year ended March 31, 2010, to conform to the presentation used for the year ended March 31, 2014.
2. Because the TDK Environmental Action 2020 Plan came into effect from fiscal 2011, the “CO2 emissions through products (environmental contributions) (t-CO2)” figures are for fiscal
2012 onward.
14
TDK CorporationAnnual Report 2017
Business Trends
Years ended March 31
Net Sales / Overseas Sales Ratio
Yen billions
1,200
900
600
300
0
1,178.3
91.1
%
100
75
50
25
0
Operating Income (Loss) / Operating Income Ratio
Yen billions
208.7
17.7
240
200
160
120
80
40
0
−40
−80
%
24
20
16
12
8
4
0
–4
–8
ROE / ROA
%
20
10
0
–10
–20
19.8
9.3
Cash Flows
Yen billions
200
100
0
–100
–200
–300
160.1
89.0
–71.1
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
Net sales (left)
Overseas sales ratio (right)
Operating income (loss) (left)
Operating income ratio (right)
ROE
ROA
The HDD market exceeded initial assumptions, and strong sales of products for the
automotive markets in Europe and North America continued, resulting in record-
high net sales of ¥1,178.3 billion in fiscal 2017. The overseas sales ratio has increased
over the past 10 years, particularly in the United States and Asia, and in fiscal 2017,
sales outside Japan accounted for 91.1% of total net sales.
As a result of structural reforms that have continued since fiscal 2012, a profit
structure with a good balance among the three main segments has been firmly
established. In fiscal 2017, capital gains of ¥144.4 billion were recorded in conjunction
with the business tie-up with Qualcomm and the agreement to establish a joint
venture, and operating income was up 123.4% year on year, to ¥208.7 billion, while
the operating income ratio increased 9.6 percentage points, to 17.7%.
ROE and ROA declined sharply in fiscal 2009 following the global economic down-
turn, but after the implementation of structural reforms, both have improved as a
result of higher net income and other factors. In fiscal 2017, profits increased signifi-
cantly due to the business transfer to Qualcomm, with ROE growing 10.6 percentage
points year on year, to 19.8%, and ROA increasing by 4.8 percentage points year on
year, to 9.3%.
Net cash provided by operating activities
Net cash used in investing activities
Free cash flows
The business transfer to Qualcomm in fiscal 2017 resulted in a significant improve-
ment in free cash flows. Funds obtained as compensation for the business transfer
are being utilized in new M&A in accordance with our growth strategy, and we are
working to further strengthen our earnings structure.
Net Income (Loss) Attributable to TDK
Yen billions
Capital Expenditures / Depreciation and Amortization
Yen billions
Working Capital
Yen billions
R&D Expenses / R&D Expenses to Net Sales Ratio
Yen billions
150
100
50
0
−50
−100
145.1
200
150
100
50
0
167.6
87.5
500
400
300
200
100
0
388.5
100
80
60
40
20
0
91.3
7.7
%
10
8
6
4
2
0
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
Performance was sluggish from fiscal 2009 due to reduced demand for electronic
components resulting from the global economic slowdown, the impact of the Great
East Japan Earthquake, and other factors. After structural reforms were implemented
beginning in fiscal 2012, however, results drastically improved. Net income in fiscal
2017 reached ¥145.1 billion, up 123.8% year on year, partly due to the impact of the
capital gains recorded in the transfer of business to Qualcomm.
Capital expenditures
Depreciation and amortization
Under the Medium-Term Plan that covers the three-year period from fiscal 2016 to
fiscal 2018, TDK announced a plan to budget ¥430-¥480 billion for investments in
new facilities. TDK is actively pursuing capital investments aimed at accelerating
strategic growth product expansion, strengthening its overseas R&D base, accelerat-
ing existing core business expansion, and accelerating Monozukuri Innovation.
The Group’s working capital was expended primarily for the acquisition of raw
materials and components used in manufacturing products, and these expenditures
are reported as manufacturing expenses. Necessary capital is provided by funds
generated from operating activities; working capital in fiscal 2017 was ¥388.5 billion.
TDK has invested over ¥50 billion in R&D each year so that it can respond to rapid
technological innovation in electronics markets and maintain high competitiveness.
Going forward, we will continue to actively invest in the development of new technol-
ogy and further reinforce our R&D structures.
R&D expenses (left)
R&D expenses to net sales ratio (right)
Total Assets
Yen billions
1,800
1,500
1,200
900
600
300
0
Stockholders’ Equity / Stockholders’ Equity Ratio
Yen billions
1,664.3
800
600
400
200
0
793.6
47.7
%
80
60
40
20
0
Overseas Production Ratio
%
Number of Employees
People
100
80
60
40
20
0
86.1
100,000
75,000
50,000
25,000
0
99,693
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
08
09
10
11
12
13
14
15
16
17
Stockholders’ equity (left)
Stockholders’ equity ratio (right)
Total assets rose sharply as a result of the acquisition of the EPCOS Group in fiscal
2009. Total assets have continued to gradually increase since fiscal 2011 due to higher
tangible fixed assets and investment. In fiscal 2017, total assets reached ¥1,664.3
billion, up 14.7% year on year, due in part to increases in liquidity on hand, by ¥79.1
billion, and net trade receivables, by ¥28.7 billion.
Stockholders’ equity and the stockholders’ equity ratio both declined in fiscal 2009 due
to the acquisition of the EPCOS Group, but have gradually increased in subsequent
years. In fiscal 2017, the business transfer to Qualcomm resulted in a significant
increase in profits, with stockholders’ equity rising 17.5% year on year, to ¥793.6 billion,
and the stockholders’ equity ratio climbing by 1.1 percentage points year on year, to 47.7%.
Compared with fiscal 2008, the overseas production ratio in fiscal 2017 was up 16
percentage points, reaching 86.1%. TDK seeks to establish location independent
production systems and is working to establish the ability to supply products with the
same high quality from any location.
Although the number of employees showed an upward trend after the acquisition of
the EPCOS Group in fiscal 2009, TDK worked to streamline its workforce during the
period of structural reforms undertaken from fiscal 2012. Starting in fiscal 2016, the
first year of the current Medium-Term Plan, TDK has been increasing personnel in
order to bolster competitiveness.
16
17
TDK CorporationAnnual Report 2017
To Our Stakeholders
Driven by the spirit of our founder,
handed down for more than 80 years,
we will open up the future for TDK.
The TDK Group is bringing a sense of speed to driving self-transformation forward.
By resolving social issues through a hybrid business model combining materials,
components, and solutions, we will achieve sustainable growth in corporate value.
Always quick to sense society’s changing needs
TDK has achieved sustainable growth
through nonlinear change
About 80 years ago, TDK (then known as Tokyo
Denki Kagaku Kogyo K.K.) was founded with the
goal of turning “ferrite,” a unique Japanese inven-
tion, into a commercial product. At the time, ferrite
was a completely unknown quantity, both in terms
of its applications and its potential for commer-
cialization. Our corporate motto, “Contribute to
culture and industry through creativity,” embodies
the spirit of originality expressed in the words of
TDK’s founder, Kenzo Saito, who spoke of “creating
value that does not yet exist in the world on a
material level,” and also his belief that “if there is a
will that something is truly of social value, there is
a way.”
Over the years, this spirit of originality has been
handed down at TDK, which has always concerned
itself with what society will need next, and we have
continued to generate original innovation—includ-
ing the cassette tape in 1968, fine multilayering
technology in 1980, and HDD magnetic heads in
1987—and contribute to society’s development.
This ability to quickly sense society’s needs is what
has enabled us to replace our product portfolio
before our main products enter their decline, and
has allowed us to undertake a transformation of
our business structure, leading to our sustainable
growth.
Today, TDK is facing a new time of change.
Growth has slowed in HDD magnetic heads, our
mainstay product since the 1990s, and commoditi-
zation is expected to progress further across a wide
variety of components we supply for use in smart-
phones and other information and communication
technology (ICT) equipment. As we look ahead to
this new society, concern is growing that reliance
on Monozukuri (manufacturing excellence) alone,
on our founding strengths in materials technology
and process technology, will limit our ability to
deliver sustainable growth.
To continue to “contribute to culture and indus-
try” in the years ahead, TDK is embarking on a
transformation, not only of its business portfolio,
but of the very nature of the business itself.
Shigenao Ishiguro
President & CEO
18
19
TDK CorporationAnnual Report 2017 To Our Stakeholders
Capturing the limitless potential of electronic components
To create “something that does not exist in the world”
today requires change
It is difficult to accurately predict how future soci-
ety will be shaped by the Internet of Things (IoT),
artificial intelligence (AI), and other technologies.
Still, we are confident in the limitless potential of
electronic components. In 2015, TDK launched
production of highly accurate, highly sensitive
tunnel magneto resistance (TMR) sensors applying
HDD magnetic head technology, marking its full-
scale entry into the sensor market. Going forward,
sensors will begin replacing functions in which
people had previously intervened across a variety
of fields, including automobiles, public infrastruc-
ture, and healthcare, and their potential will
expand endlessly.
Power electronics is another very promising field,
and power electronics technology and products are
nothing less than TDK’s core competence. I believe
their potential for us is even greater than that of
sensors, as the need for power electronics grows in
every field—including in the home—to efficiently
generate, supply, convert, and store electricity.
In the past, single issues were solved with single
components. Going forward, however, problem-
solving will become more difficult without a
composite of multiple, varied components. For
example, the spread of xEV has brought us con-
nected cars. However, as they are more widely
equipped with advanced driver-assistance systems
(ADASs), not only will they require multiple compo-
nents to sense vibration, slope, temperature, and
other factors, but they will also need wireless com-
munications capability to accumulate and analyze
that data. There is a countless number of fields
where this kind of integration is needed. In addi-
tion, many of these processes require electricity.
TDK has the potential to assemble and provide all
of these components.
In many cases, these are things that currently
“do not exist in the world.” To create them, we
must reshape our business into something not
found on just an extension of our traditional path.
We need to shift from our origins in Monozukuri,
providing customers with products that respond
to their needs, to a focus on Kotozukuri (integrated
solutions), offering solutions that anticipate those
needs. Doing so will require a wide-ranging arse-
nal of technology.
M&A as a means to an end
The TDK approach to post-merger integration means
respect for diversity and a willingness to hand over the
leading initiative
TDK has, since prior times, made active use of
M&A as a means of transforming its business port-
folio. In many cases, we have developed our own
acquisition candidates that have the technology
we need to achieve our long-term growth strategy,
examining them carefully in terms of whether or
not our philosophies can be shared and our tech-
nologies integrated. We have also consistently taken
an approach that gives the leading initiative in the
business to the respective acquired companies,
resulting in growth in corporate value for both sides.
For example, our HDD magnetic head business
expanded significantly with our 1986 acquisition
of SAE Magnetics (H.K.) Ltd. (SAE). Thanks to the
contributions of Amperex Technology Limited
(ATL), acquired in 2005, TDK saw solid growth
in net sales of rechargeable batteries. The EPCOS
Group, a major German components manufacturer
acquired in 2008, played a leading role in our
growth in the smartphone market with, among
others, its high-frequency components. Around
2015, we began moving forward with M&A cen-
tered on the sensor business, with an eye on pos-
sible gains from a sale through the transfer of the
EPCOS Group’s high-frequency components busi-
ness. In that process, we narrowed our focus to
non-optical sensors, rather than optical sensors,
a field in which we had no core technology and in
which other companies already had a strong lead.
In March 2016, we made Micronas Semiconductor
Holdings AG (Micronas) a subsidiary, building a
beachhead in the market for Hall sensors, which
make up 80% of magnetic sensors. At the same
time, along with TMR sensors, pressure sensors,
and temperature sensors, we bolstered our portfo-
lio for the automobile industry and enhanced our
expertise, enabling us to expand our sales chan-
nels. In December 2016, we added inertial sensors
with high-accuracy MEMS technology to our port-
folio with the acquisition of Tronics Microsystems
SA (Tronics) as a subsidiary, marking the beginning
of our entry into the aviation market. In May 2017,
we completed our acquisition of InvenSense, Inc.
(InvenSense), which developed the world’s first
six- and nine-axis motion sensors. By adding
MEMS technology-based inertial sensors, pressure
sensors and ultrasonic sensors, microphones, and
other products to our portfolio, we can now con-
sider the entire non-optical sensor market a target.
In March 2017, we completed our acquisition of
ICsense NV (ICsense), which develops and supplies
Application Specific Integrated Circuit (ASIC) tech-
nology to read values detected by sensors and
perform signal processing, as well as offering
custom IC design services. This will enable TDK to
design ASICs tailored to the characteristics of spe-
cific sensors, building an end-to-end value chain
that extends from materials technology to sensor
elements, signal processing, and software provision.
Through these M&As, TDK has built a balanced
portfolio that allows it to approach a wide range
of markets.
Open collaboration and an internal focus on continuing to develop competitive advantage
Materials and components refined over 80 years
Today, with the rapid changes taking places across
all areas of society, we believe that basing ourselves
in an open environment that includes other indus-
tries is the way to expand the range of solutions we
can offer. For example, in wearable devices we are
seeing an increase in opportunities for collabora-
tion with universities and other institutions with
the expertise to make use of data on vital signs to
improve health. This is a new development that is
different from the conventional electronic compo-
nents business.
Semiconductor manufacturers will be particu-
larly important partners as we work to create a
new business model. Fourth generation mobile
communication system (4G) smartphones today
increasingly offer multiband capability, and also
need to support a diverse wireless environment
that includes wireless LAN and Bluetooth connec-
tivity. With 5G expected to bring further complex-
ity, IoT devices must be small and highly integrated
while achieving sophisticated multi-functionality.
Modularization technology is essential to that
complexity. We believe that a rational approach
going forward will be not to work alone, or to work
with high-frequency components alone, but to
offer modules and solutions by developing close
relationships with semiconductor manufacturers.
This was behind the February 2017 establishment
of our joint venture with Qualcomm Incorporated
(Qualcomm), RF360 Holdings Singapore PTE Ltd.
(RF360), a carve-out of our high-frequency com-
ponents business. We are now working with
Qualcomm on high-frequency solutions across a
broad range of areas, including next-generation
mobile telecommunications, IoT, and automotive-
related fields. We are also engaged in a variety of
joint development projects, including sensor refer-
ence design. Our hope is to build relationships with
a wide range of semiconductor manufacturers,
using our technology and products to give form to
algorithms and leveraging our mutual strengths to
generate new value.
While intensifying efforts toward open collabo-
ration, there is another area we need to continue
refining internally, and that is the competitiveness
of our materials technology and process technology
centered on magnetics, and of the passive compo-
nents developed utilizing those technologies. These
represent a competitive advantage TDK has worked
to establish throughout its more than 80-year
history, and a base for sustainable growth that
cannot easily be imitated by other companies. They
also form a solid foundation for our new business
model.
20
21
TDK CorporationAnnual Report 2017
To Our Stakeholders
A new business model
Creating a virtuous cycle of materials,
components, and solutions
Our technology arsenal is in place, and TDK is
embarking on a new, hybrid business model that
combines materials, components, and solutions.
By refining our materials and components tech-
nologies, we have built a base of competitive,
single components, and utilizing the resources
of Qualcomm and other IC partners, we will offer
high-value-added sensor solutions and power
solutions in the priority ICT, automotive, and
industrial and energy markets. By quickly tying
the needs of these industries to our development
efforts, we will further enhance the competitiveness
of our components and expand volume, creating a
virtuous cycle by connecting those components to
high-value-added solutions. This in turn will
increase the value of the business model as a
whole, and result in expanded earnings.
In the sensor business, we will take advantage of
our world-leading lineup of non-optical products,
contributing to resolving customer issues with a
variety of advanced compound sensors while also
expanding into sensor fusion with the addition of
software. At the same time, we will move forward
to offer total solutions across a wide range of mar-
kets, not only for the automotive industry, but also
for fields such as entertainment, IoT, and industrial
equipment, including robotics. Our goal is to
P.36 Special Feature: Sensor Solutions).
become the world’s No. 1 sensor solution provider
(
With regard to power solutions, enormous
potential exists even when narrowed down to bat-
teries alone. Smartphones and automobiles are not
the only things that run on batteries. There are
many other familiar areas where solutions can be
provided using light, safe, high-efficiency pouch
cell batteries, including power tools and home
appliances. The possibilities are also limitless for
new applications, including drones, industrial
robots, and automated guided vehicles (AGVs). TDK
is proud to offer a broad array of products for the
power conversion field, including DC-DC and
AC-DC converters, as well as for the power control
field. Further, we plan to offer high-value-added
power solutions leveraging these technologies that
allow for freedom of control over energy. One
example is in the automotive market, where our
magnets for power generating motors contribute
to efficient power generation, and in power supply
and charging, where we are going beyond sales of
individual products such as compact, on-board
chargers and coils to push ahead with practical
development of a magnetic resonance wireless
power transfer system for charging moving vehi-
cles (
P.38 Special Feature: Power Solutions).
Goals of the InvenSense acquisition
The foremost objective is to obtain the ability to conduct
a fast-paced business and draw out future needs
The background to our approximately U.S.$1.3
billion investment in acquiring InvenSense requires,
I think, a more detailed explanation. This acquisi-
tion aims for an impact viewed from a long-term,
big-picture perspective.
One reason for the decision was, as mentioned
earlier, the fact that this will enable us to target the
entire non-optical sensor market through the
acquisition of MEMS sensor technology.
Also a factor was our determination that we
could significantly increase the corporate value of
InvenSense. While the company’s portfolio is cen-
tered primarily on inertial sensors for the mobile
and IoT markets, it has particular strengths in
MEMS technology. By combining that technology
with a wide variety of the TDK Group’s sensors,
and by utilizing our sales channels, we can expand
the potential for market development and build a
balanced customer portfolio. In doing so, we will
enhance corporate stability, and, by further lever-
aging our piezoelectric elements, also bolster our
development of next-generation products.
Additionally, use of mounting technology and
semiconductor embedded substrate (SESUB)
technology will make a variety of other composite
products possible.
InvenSense is the first fabless company acquired
by TDK. Previously, we had sought out value in
companies that vertically integrated everything
from development to production, acquiring
manufacturing firms. Meanwhile, the value in
InvenSense, a fabless company, lies not in its man-
ufacturing capabilities, but in its ability to accu-
rately translate customer needs into the product
designs and prototypes it provides. This ability to
conduct a fast-paced business and draw out future
needs is precisely the value in which I have the
highest expectations. It would not be exaggerating
to say that InvenSense holds the key as TDK looks
to expand its solutions business. In the sensor
business, we have already begun sharing in their
expertise. We hope to work together from a short-
term, medium-term, and long-term perspective to
utilize our customer bases, expand our portfolio of
products that apply our respective technologies
and applications, and ensure this partnership
generates synergy.
Speed increases competitiveness and profitability
Under a “First-to-Market” approach, we are working to
increase our speed Companywide
The cassette tapes and HDD magnetic heads that
have driven our growth, and the battery business
led by ATL, all have speed in common—the ability
to quickly deliver products that anticipate market
needs. As change accelerates in the years to come,
speed will become an increasingly important factor
in business.
Speed is also an important target of M&As
and business tie-ups. For example, the ability of
InvenSense to respond quickly directly accelerates
the speed of business, and by bringing their pro-
duction in-house at TDK, we can significantly reduce
the lead times required for prototype development
compared with contracting production outside.
The total value chain we have built through our
collaboration with Qualcomm and our acquisition
of ICsense similarly bring speed to development.
Based on this thinking, I have proposed a “First-
to-Market” approach, and by involving develop-
ment, production sites, and all of our other
organizations and personnel in the effort, we are
making a strong push to speed up our business.
Development is being encouraged to of course
anticipate the needs of the market, but also to stay
ahead of our road map by getting an early start on
development efforts. The value-added time when
we manufacture at our production sites in fact
represents only about 20-30% of the overall time.
The rest can be considered non-value-added time,
during which for one reason or another the flow of
production has fallen behind. We are now promot-
ing reduction of non-value-added time, not just at
our production sites but in all of our divisions. We
are also advancing efforts to shift our business
from a monthly to a weekly basis. This allows for a
more flexible response to changing plans, and also
reduces waste, which we believe will greatly
shorten the business cycle.
I believe that improving our cost rate and short-
ening our cash conversion cycle are certain to lead
to a stronger earnings structure for TDK. By short-
ening working hours, efforts to reduce non-value-
added time will, I think, also contribute to
enhancing human productivity.
22
23
TDK CorporationAnnual Report 2017
To Our Stakeholders
Near-term performance trends and an outline for medium-term growth
Many seeds being planted for growth under the next
Medium-Term Plan
Fiscal 2017 was positioned as the year we decided
and embarked on building a new business portfolio
aimed at future growth. While operating income
increased 2.2 times year on year, excluding the
¥144.4 billion gain on the sale of our high-frequency
components business, it actually fell by 9.2%. Our
goal for fiscal 2018 will be to bring our operating
income ratio to levels sufficient to fill in for what
was carved out, but it is expected to remain at 7.2%,
and neither the operating income ratio nor ROE
will achieve the target of greater than 10% set out
in our current Medium-Term Plan.
Next year, we will be announcing our upcoming
three-year Medium-Term Plan, and a clear expla-
nation of TDK’s growth strategy for building a new
business model, upon which we have already
embarked, will be provided then. At that time, we
will also officially report on our numerical targets,
but for now, I would like to just touch on the out-
lines. In fiscal 2021, the sensor business is expected
to still be in the midst of generating synergies with
the companies we have acquired. However, we
hope to increase our share of that market, which
is expected to grow at an annual rate of 8%, from
approximately 13% today to around 20%. We envi-
sion net sales roughly doubling from current levels,
reaching the ¥200.0 billion range. Given the cur-
rent situation, I think we have the ingredients
to make that happen. In addition, there will be
¥1,200.0 billion from organic growth* in our exist-
ing components business, as well as ¥200.0 billion
in net sales from sensors and an additional ¥100.0
billion in power solution-related sales, centered
on power supply products. That total of ¥1,500.0
billion in consolidated net sales is what we are
picturing for the final fiscal year of the plan. As we
build a new business model, we will simultaneously
strengthen our earnings structure. We will be
examining our income goals more closely going
forward, but my hope is to attempt to generate
operating income on a scale of ¥200.0 billion.
* Growth realized by utilizing internal resources to expand current
product sales.
Laying a foothold for the next Medium-Term Plan
Focusing on building a strategic foundation
In fiscal 2018, we will move steadily ahead with
preparations for our next Medium-Term Plan.
Our most important issue will be to strengthen
our passive components and materials businesses,
which form our strategic foundation. We will focus
particularly on enhancing QDC (Quality, Delivery,
and Cost) competitiveness by strengthening our
Monozukuri power.
TDK will be expanding its business in the auto-
motive market and other fields where the quality of
components involves human lives. Product life
cycles are expected to extend from about three to
five years for home appliances, and to 10 years or
more for components in continuous use in auto-
mobiles and public infrastructure. Our mission
thus becomes one of not only providing conven-
tional quality assurance at the time of shipment but
also ensuring post-shipment quality assurance. I
think this will, in turn, lead to greater competitive
strength. TDK combines “Industry 4.0” concepts
with a “zero defect” quality approach, pursuing not
only production efficiency, but ensuring rigorous
quality control from the initial materials by utilizing
IoT in upstream management, enabling us to achieve
overwhelmingly reliable quality. At our new facto-
ries in Akita Prefecture, we are moving forward
with deployment of a new model line, beginning
with our multilayer ceramic capacitor production
line, that will take data on energy consumption
patterns, vibrations, and other information detected
by a variety of sensors to form a store of big data,
which will be compared with and analyzed against
quality data. Eventually, this will be extended to
ferrite, magnets, batteries, and other products,
then rolled out at production sites around the
world, allowing us to achieve location independent
production that will ensure identical quality
worldwide.
24
In the sensor business, we have integrated an
organization that was scattered across a variety
of business units, establishing Sensor Systems
Business Company, comprising six Group compa-
nies with development and production sites in 13
countries worldwide. We will ensure a speedy
launch of the sensor business by sharing resources
and promoting cross-divisional collaboration in
development, marketing, and production. We also
plan to begin putting structures in place for the
expansion of our energy-related businesses.
Maturation of the market for HDD magnetic
heads is expected to progress further, with the
exception of HDDs for nearline applications, where
the number of heads installed in each HDD is
expected to increase. By providing thermal-assisted
recording and other advanced technology, we aim
to support our customers while building a lean
operation centered on Headway Technologies, Inc.
(Headway Technologies) of the United States and
SAE to ensure stable earnings. We also plan to
merge the production and development technology
of Hutchinson Technology Incorporated
(Hutchinson), acquired in October 2016, achieve
vertical integration of the suspension business, and
maximize the synergies of the business merger,
under a policy of extending application of the com-
pany’s technology to new components in the ICT
market and elsewhere.
Pushing forward to become a “centennial company”
Continuing to pursue what society needs
P.64
Having embarked on new reforms, no issue is more
important for TDK than people as we solidly exe-
cute our strategy, prepare to mark our 100th anni-
versary in 2035, and work toward the continued
expansion of corporate value beyond that mile-
stone. Since first setting out to globalize its busi-
ness in 1950, TDK has cultivated strength of
diversity, readily accepting the varied cultures and
values of the companies we have acquired and
incorporating their dynamism in our business.
Of our 18 current corporate officers, six are non-
Japanese, and we have made steady progress in
diversifying our management ranks (
Corporate Governance). Still, for TDK, which has
become an even more diverse group through its
M&As in recent years, to grow into a truly global
company, we must strengthen our human resource
management to ensure the entire Group is headed
in a common direction. In April 2017, Andreas Keller
was appointed as General Manager of Human
Resources and Administration HQ at TDK
Corporation, and we are moving forward with
efforts to promote cross-border personnel
exchanges and establish human resource develop-
ment and training policies that are consistent
across the Group. We are also working to identify
talented personnel on a global basis and put in
place structures for making high-level use of their
capabilities.
The most important thing we must continue to
protect and put into practice if we are to maintain
sustainable growth is the founding spirit I referred
to at the beginning. I intend to see that our Group-
wide motto, “Contribute to culture and industry
through creativity,” spreads even further within the
Group, so that we remain sensitive to identifying
what society needs next and able to resolve soci-
ety’s issues with a creativity unique to TDK. In
addition, with locations in approximately 30 coun-
tries worldwide, and with over 90% of its net sales
occurring overseas, TDK is also dealing with an
expanding supply chain as globalization has accel-
erated in recent years. This brings a commensurate
increase in the risk that we may place a greater
burden on regional communities and the environ-
ment. Our hope is that as we offer a competent
response to sustainable development goals (SDGs)
and other societal demands, we can work with
society to achieve sustainable growth.
The road ahead for TDK does not exist as an
extension of the roads we have already traveled.
More than 80 years ago, Kenzo Sato held to the
belief that “if there is a will that something is truly
of social value, there is a way.” We carry that belief
with us today, and as one TDK Group, we continue
the challenge of opening up the future.
October 2017
President & CEO
25
TDK CorporationAnnual Report 2017
Medium-Term Plan (Fiscal 2016 to fiscal 2018)
Starting from fiscal 2016, TDK has enacted the Medium-Term Plan that covers the three-year period to fiscal
2018, and actively targets further enhanced corporate value through sustainable growth. In accordance with its
basic policy to “advance autonomous collaboration within the Group and realize further growth,” the TDK Group
is pursuing “zero defect” quality based on superior technological competence, and promoting true globalization
through swift and efficient management.
POINT 1
Focusing on Five Priority Businesses and New Businesses
Increasing automotive sales
to 30% of total net sales
Expansion of new businesses
in growth fields
Fiscal 2015
Fiscal 2018 (target)
Fiscal 2015
Fiscal 2018 (target)
17%
30%
As automobiles rely more and more on electrical
and electronic equipment, we will work to solidly
capture growing demand not only for conventional
parts such as capacitors and inductors, but also
for customized products such as magnetic sen-
sors and on-board automotive chargers, as well as
wireless power transfer systems.
Automotive
1%
8%
On the strength of our global 4-pole network, we
are making full use of the rich and varied techno-
logical resources of the TDK Group to drive the
creation of new businesses.
Five Priority Businesses
New Businesses
Inductive Devices
High-Frequency
Components
Piezoelectric Material
Products
HDD Magnetic Heads
Rechargeable Batteries
1
4
2
3
Sensors for Automobiles and
Industrial Equipment
1 TMR sensor
2 MEMS pressure sensor die
Energy Units for Automobiles
and Industrial Equipment
3 Wireless power transmitting and
receiving coil unit for wireless power
transfer
4 Bidirectional DC-DC converter
Wearable and Healthcare
Devices
5 Semiconductor embedded substrate
(SESUB)
6 Wireless power transfer coil unit
Thin-Film Components
7 Thin-film power inductor
8 Thin-film capacitor (TFCP) for
embedding in substrate
5
ICT
6
Industrial and
Energy
7
8
26
POINT 2
Monozukuri Innovation—“Zero defect” quality based on superior technological competence—
1 “Industry 4.0” Monozukuri Innovation that greatly raises the level of digitization, automation,
and virtualization of production processes
2 Pursuit of “zero defect” through narrowed tolerances via product upstream management
3 Achieve “location independent,” whereby the same quality can be achieved regardless of actual production location
1
Industry 4.0
Monitoring system network with sensors and ICT
Monozukuri
innovation
Real-time control of manufacturing processes
Big data analysis and feedback to
production processes
Inventory control
innovation
2
Pursuit of “zero defect”
Building of upstream management type quality
assurance structure
Energy efficiency
innovation
Implement this
innovation at new
factories in Akita
Prefecture
Roll out to other
factories around
the world
3
With our new Akita factories
as the mother factory,
spread “location
independent” worldwide
POINT 3
Strengthening Growth Investment
1 Acceleration of strategic growth
product expansion
2 Strengthening of overseas R&D base
3 Acceleration of existing core
business expansion
4 Acceleration of Monozukuri Innovation
Capital Expenditure
¥256.7 billion
R&D Investment
¥188.0 billion
Capital Expenditure
About ¥488.0 billion
R&D Investment
About ¥270.0 billion
Previous Medium-Term Result
(Fiscal 2013 to fiscal 2015)
Current Medium-Term Forecast
(Totals for fiscal 2016 and fiscal 2017 results,
and fiscal 2018 forecast)
27
TDK CorporationAnnual Report 2017
Finance and Capital Strategy during Transformative Phase
Giving TDK’s
new nonlinear evolution
a strong push from the
finance side
Tetsuji Yamanishi
Director
Senior Vice President
General Manager of Finance &
Accounting HQ
Fiscal 2017 review
Placing emphasis on ensuring
procurement of capital for acquisitions
In fiscal 2017, TDK pushed forward with a large-scale con-
version of its business portfolio. Based on an agreement
with Qualcomm related to the establishment of RF360, a
joint venture company that provides high-frequency com-
ponents and other products, in February 2017, TDK received
approximately ¥130.0 billion, representing 51% of the funds
from the transfer of its high-frequency components related
business, and plans to receive the remaining equity amount,
equivalent to 49%, in August 2019. Because the Company
proceeded with M&As in fiscal 2017 ahead of the comple-
tion of this business transfer, ensuring we procured acqui-
sition capital was a top priority in terms of our finance and
capital strategies. We also set up a commitment line for the
first time, part of our effort to secure an adequate capital
procurement facility and ensuring our ability to carry
out M&As.
Net sales in fiscal 2017 increased 2.3% over the previous
fiscal year, while operating income rose by ¥115.3 billion
year on year. Deducting the ¥144.4 billion in capital gains
from the transfer of the high-frequency components busi-
ness, ¥21.2 billion in structural reform expenses, and other
one-time losses and gains for an actual operating income of
¥85.5 billion, the operating income ratio was 7.3%. Even
assuming the transfer of the high-frequency components
business, our outlook called for achieving the current
Medium-Term Plan (for fiscal 2016 to fiscal 2018). Several
factors, however, including (1) sluggish growth in profit
levels from passive components and rechargeable batteries;
(2) a delay in the timing of income contributions from
acquired companies; and (3) delays in profit improvements,
primarily in the magnet business, mean that achieving the
management targets we have set, which call for an operating
income ratio and ROE in excess of 10% each, will be difficult.
Fiscal 2018 positioning and priority measures
Working to stabilize our financial
constitution by bringing free cash flows
into positive territory
Fiscal 2018 is being positioned as a run-up period in prepa-
ration for the next Medium-Term Plan. The operating
income projection of about ¥80.0 billion, intended to
absorb the impact on results associated with the transfer of
the high-frequency components business, was compiled
assuming organic growth. Considering trends in orders
received in existing businesses, this target is well within
range. With impairment losses in the current fiscal year in
Organically linking strategy to the front lines
Ensuring growth strategy is incorporated
in front-line policies
P.41 Linking
We are also focused on increasing capital efficiency. We will
work to organically tie the growth vision conceived by man-
agement not only to our finance and capital strategy, but all
the way to policies on the front lines. Part of that effort is
our performance management framework (
Strategy to the Front Lines), which we are working to
strengthen. TDK has introduced TDK Value Added (TVA) as
a comparison of return against capital cost (the weighted
average cost of capital, or WACC, multiplied by invested
capital), which was introduced in 1999. Under the logic tree
tied to this TVA, we not only evaluate the profitability of
each business, the efficiency of business assets, and the
ability to capture cash, but also factorize and monitor KPIs
tailored to specific front-line policies and business charac-
teristics. This not only allows as to unite as a single company
in promoting our growth strategy, but, we believe, will enable
us to build a financial constitution capable of achieving ROE
of 15% or more by also tying that strategy to selection and
consolidation of capital expenditures through stronger
management of investment efficiency.
HDD magnetic heads, aluminum electrolytic capacitors, and
magnets, business structure reforms are in sight, and we
have paved the way for conversion of our profit structure in
fiscal 2018 as well.
Under the current Medium-Term Plan, investment has
taken precedence, with active M&As and a plan for capital
investment of about ¥490.0 billion over three years, equiva-
lent to slightly less than double depreciation and amortiza-
tion, and as a consequence, our stockholders’ equity ratio has
fallen to 47.7% as of the end of fiscal 2017. Because the acqui-
sition of InvenSense was covered by borrowing, that ratio is
expected to fall further in fiscal 2018, but through selection
and consolidation of capital expenditures, and by generating
solid results from our M&As, we will bring free cash flows
into positive territory while stabilizing our financial constitu-
tion in preparation for the next Medium-Term Plan.
Direction of the next Medium-Term Plan
Increasing capital efficiency through
investment based on rigorous selection
and consolidation
In April 2018, we plan to announce our next Medium-Term
Plan. We will offer an official briefing on our profit outlook
at that time.
With regard to capital structure, we are aiming for an
interim stockholders’ equity ratio of greater than 50%, and
improvement in our debt-to-equity ratio to approximately
0.3 from slightly more than 0.4 in fiscal 2017. This will allow
us to carry out investments from a long-term perspective
while ensuring flexibility in procuring capital, in the midst
of an industry in which technological innovation is extremely
rapid, and which is affected by currency exchange rates and
macro-environmental shifts. To accomplish this, we will
select and consolidate our capital expenditures, aiming for
slightly more than depreciation, and generate solid free
cash flows.
With regard to dividends, we have set a dividend payout
ratio target of 30%, under a policy of working to steadily
increase dividends through growth in profit per share.
During the period of the next Medium-Term Plan, demand
is expected to grow further, particularly in the market for
electric vehicles in 2020 and beyond, and that may require
investing in increased production. Acquisition of treasury
stock as part of returning profits to shareholders will be
included among our options for use of surplus funds gener-
ated through timely investment in response to increases
in demand.
28
29
TDK CorporationAnnual Report 2017 Overview of Business Conditions by Segment (Fiscal 2017)
Corporate Value
Note: Beginning in fiscal 2018, changes were made to reported segments. The following is an explanation of fiscal 2017 performance
Basic Policy and Prospects for Profit Distribution
under the former segments.
Passive Components Segment
Net sales
¥548,730 million (down
Operating income
¥204,681 million (up
6.0% year on year)
208.2% year on year)
Fiscal 2017 operating income includes ¥144.4 billion in business transfer
gains associated with the establishment of the joint venture business with
Qualcomm. Operating income excluding the impact of this amount was
Net Sales
Operating Income (Loss) /
Operating Income Ratio
Billions of yen
Billions of yen
600
400
548.7
down 9.2% year on year, to ¥60.3 billion, but the operating income ratio was
200
11%, on par with the previous fiscal year’s level. High-frequency components
saw particularly significant improvement in profitability through productiv-
ity improvements, with profits leading the segment as a whole. At the same
0
time, impairment losses, etc. associated with profit structure conversion in
FY
13
14
15
16
17
the aluminum electrolytic capacitor business resulted in the posting of ¥9.8
billion in structural reform expenses for the segment as a whole.
Operating income (loss) (left)
Operating income ratio (right)
Magnetic Application Products Segment
13
14
15
16
17
%
40
37.3
204.7
30
20
10
0
–10
240
180
120
60
0
–60
FY
Net Sales
Operating Income (Loss) /
Operating Income Ratio
Billions of yen
Billions of yen
Net sales
¥349,698 million (up
Operating loss
–¥1,802 million (— year on year)
10.9% year on year)
Thanks to strong shipments of HDD magnetic heads for a Japanese cus-
tomer, and solid sales of magnetic sensors from Micronas, acquired in
March of fiscal 2016, for the automotive market, net sales increased in
fiscal 2017. At the same time, as a result of an active push toward structural
reforms, the Magnetic Application Products segment as a whole posted ¥11.4
billion in structural reform expenses. We also completed our evaluation of
goodwill carve-out assets with regards to our acquisition of Micronas and
400
300
200
100
0
Hutchinson, which resulted in the posting of approximately ¥3.3 billion in
FY
13
14
15
16
17
depreciation and amortization expenses in the period under review.
349.7
40
30
20
10
0
–1.8
–10
FY
13
14
15
16
17
Operating income (loss) (left)
Operating income ratio (right)
Film Application Products Segment
12.6% year on year)
Net Sales
Operating Income /
Operating Income Ratio
Billions of yen
Billions of yen
Net sales
¥247,693 million (up
Operating income
¥41,217 million (up
11.3% year on year)
In rechargeable batteries, while sales to North America fell year on year,
sales to smartphone manufacturers in China increased significantly. Sales
also increased for new applications aside from smartphones, including
drones and game consoles. Timely efforts to boost production capacity and
improve production efficiency enabled us to respond to this increased
demand, and resulted in a significant increase in both net sales and income.
300
200
100
0
247.7
50
40
30
20
10
0
41.2
16.6
FY
13
14
15
16
17
FY
13
14
15
16
17
Operating income (left)
Operating income ratio (right)
%
16
12
8
4
0
–4
%
25
20
15
10
5
0
Cash Dividends per Share / Dividend Payout Ratio
Yen
200
150
100
50
0
FY
737.2
%
100
75
50
25
0
120
10.4
08
09
10
11
12
13
14
15
16
17
Cash dividends per share (left)
Dividend payout ratio (right)
Note: Since the fiscal years 2009 and 2012 recorded a net loss, the dividend payout ratio
cannot be calculated. However, a yearly dividend of 130 yen per common share
was paid in fiscal 2009 and 80 yen in fiscal 2012.
TDK’s basic policy with regard to dividends is a stable
increase through growth in profit per share, based on the
understanding that long-term expansion of corporate value
is the way to expand value to shareholders. In order to
respond to rapid technological innovation in the electronics
market, TDK aggressively invests for growth mainly in the
priority areas of new products and new technologies. The
aim is to further increase corporate value in the long term.
We aggressively reinvest profits in business activities, and
then base our dividends on a comprehensive evaluation,
taking into account consolidated base return on equity
(ROE) and dividend on equity (DOE) standards as well as
changes to the business environment.
For fiscal 2017, the yearly dividend amounted to ¥120 per
common share. Consequently, the dividend payout ratio
was 10.4% and the ratio of dividends to stockholders’ equity
was 1.9%.
For the next term, an interim dividend of ¥60 and a
year-end dividend of ¥70 are planned, resulting in an
expected yearly dividend of ¥130 per common share.
Comparison of Share Price and Tokyo Stock Price Index (TOPIX)
Comparison is based on monthly closing prices and a value of 1 for the April 2008 management integration.
Structural Reforms
Medium-Term Plan
TDK
TOPIX
1.5
1.0
0.5
0
Apr
2008
Apr
2009
Apr
2010
Apr
2011
Apr
2012
Apr
2013
Apr
2014
Apr
2015
Apr
2016
Apr
2017
PER (times)
PBR (times)
2008/3
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
2016/3
2017/3
10.7
1.1
—
0.8
59.3
1.5
14.0
1.2
— 344.2
1.2
0.7
33.3
0.9
21.7
1.5
12.2
1.2
6.1
1.1
Social Recognition by Outside Organizations
Member of Ethibel
EXCELLENCE
MS-SRI (Morningstar
Socially Responsible
Investment index)
TDK’s TMR angle sensor received
the Automotive Components
Award at the 2016 “CHO”
Monozukuri Awards
Received Human Resources
Development Award from
Malaysia’s Ministry of
Human Resources
TDK CSR REPORT 2016 received an
award at the 20th Environmental
Communication Awards for Excellence
30
31
TDK CorporationAnnual Report 2017 Special
Feature
Re-invention
1968
1935
Development of
ferrite cores
Development of
magnetic tapes
1980
Development of fine
multilayering technology
1987
2005
2008
Development of HDD
Acquisition of ATL, Hong Kong-based
Acquisition of the EPCOS Group,
magnetic heads
manufacturer of lithium polymer batteries
a German electronic device manufacturer
Power of Synergy
32
33
Over the years, TDK has achieved sustainable growth through “nonlinear progress,” our ability to remain alert to the future needs of society and make bold changes in our business portfolio before existing businesses enter a period of maturity. Today, in anticipation of the future before us, we are taking our powerful first steps toward a new nonlinear progress.The Start of a New “Nonlinear Progress”TDK CorporationAnnual Report 2017 Special Feature The Start of a New “Nonlinear Progress”
A Complete Technology Arsenal
Product Brand Marks
Beginning with our agreement to acquire Micronas at the end of 2015, TDK has pursued aggressive M&As,
primarily in the sensor field, and we have quickly moved to deepen our relationships with IC manufacturers,
starting with Qualcomm with which we established a joint venture to provide high-frequency components.
With the subsequent closing of our acquisition of InvenSense in May 2017, TDK now has a complete technology
arsenal and has begun a new series of reforms.
Product Brand Marks
Product Brand Marks
Product Brand Marks
Automotive and industrial equipment
Product Brand Marks
Existing sensors
Development
of advanced
compound
sensors
MEMS
Pressure sensors
Gas sensors
NTC/PTC
Temperature sensors
Hall elements
Angle sensors
Current sensors
Gear tooth sensors
Position sensors
TMR
Angle sensors
Linear sensors
Product Brand Marks
Non-magnetic,
MEMS
Development of sensor fusion and sensor solutions
Magnetic
Display ratios
MEMS
Microphones
TMR
Geomagnetic sensors
New
acquisitions
Display ratios
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1W
MEMS
Inertial sensors
Microphones
Barometric pressure sensors
Ultrasonic sensors
W
≤ 1.2W
≤ 1.2W
≤ 0.65W
≤ 1.1W
Display ratios
Development
of advanced
compound
sensors
≤ 1.2W
≤ 1W
≤ 1.2W
Product Brand Marks
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1W
≤ 1.2W
≤ 1.1W
Telecommunications equipment, IoT
Product Brand Marks
Product Brand Marks
W
Product Brand Marks
≤ 1.2W
≤ 0.65W
Product Brand Marks
Product Brand Marks
Product Brand Marks
Display ratios
Product Brand Marks
Display ratios
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
Outlook for Global Sensor Demand (Non-Optical)
By product
U.S.$ millions
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Key Factors behind New Reforms
Speed
The source of competitiveness in business lies in the speed with which needs can be captured, prototypes can be
offered, and those new offerings can be incorporated into products and solutions, and thus the cycle also leads
to improved profitability. TDK is engaged in a Companywide effort to increase the speed at which it does
business.
Speed-Related Synergies with InvenSense
1. Ability to offer solutions
The speed with which InvenSense is not only able to develop software, but to take a concept from the initial capturing of
market needs to actually providing a solution, will enhance the ability of the TDK Group as a whole to offer solutions.
2. Accelerated prototype development through in-house manufacturing
InvenSense is a fabless operation, and by bringing their production in-house within the TDK Group, we will significantly
shorten the time required to provide prototypes, as well as the time needed to offer solutions.
Accelerated Cycle Times
Customers and Business Partners
TDK is working to not only reduce lead times between develop-
ment, manufacturing, and sales, but is pushing to cut non-
value-added time Companywide, including in the back office, thus
P.59 Manufacturing).
accelerating the entire business cycle (
≤ 1.1W
Building a Total Value Chain in the
Sensor Business
≤ 1.2W
≤ 1.2W
≤ 1W
With our acquisition of ICsense, which deals in ASIC develop-
ment, TDK has built a consistent value chain, from materials to
solutions and fusion. This will not only allow us to respond
totally to our customers’ needs from materials onward, but also
increase the speed of business.
Solutions and fusion
Software
≤ 1.1W
Modules
Sensors
Materials and manufacturing technologies
≤ 1W
≤ 1.2W
Target Markets
Demand for the non-optical sensors TDK considers
its target is expected to grow at an annual rate of
8% up to fiscal 2020. Through its acquisition of
Product Brand Marks
InvenSense, TDK has obtained a platform for sen-
sors based on micro electro mechanical systems
(MEMS) technology, putting the entire non-optical
sensor market within range. It has also allowed us
to expand our target from our previous focus on the
automotive market to other fields, including mobile
and IoT, enabling us to build a more balanced
product portfolio.
Product Brand Marks
Product Brand Marks
Product Brand Marks
Display ratios
≤ 1.1W
14,000
12,000
%
A v e r a g e a n n u al g r o w th r ate of 8
Product Brand Marks
Product Brand Marks
10,000
8,000
6,000
4,000
2,000
0
FY
17
18
19
20
21
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
Display ratios
Microphones
Magnetic
≤ 1W
Pressure
Ultrasonic
Display ratios
(TDK estimates)
Display ratios
34
Display ratios
W
W
Display ratios
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1.2W
≤ 0.65W
≤ 1.2W
W
≤ 1.2W
≤ 1W
≤ 1W
Display ratios
≤ 1.1W
W
≤ 0.65W
≤ 1.2W
≤ 1.1W
≤ 1.1W
≤ 1W
Temperature
≤ 1.2W
Inertial
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1.2W
≤ 1.2W
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
≤ 1.1W
Driver of a New Business Model
Collaboration with Qualcomm
TDK’s collaborative relationship with Qualcomm is a powerful driving force behind our new business model.
Key Collaborative Synergies
• The ability to use advanced RF solutions to provide integrated systems via the joint venture RF360
• Technical cooperation across a wide range of advanced technologies in next-generation mobile communications, IoT,
and automotive-related sectors, including passive components, batteries, wireless power transfer, sensors, and MEMS
• Enhanced reference design capabilities through Qualcomm
• Early disclosure of Qualcomm technology road map
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TDK Corporation Special Feature The Start of a New “Nonlinear Progress”
What TDK Can Do
Sensor Solutions
With a full lineup of non-optical sensors, TDK is now prepared to respond to any market need. Our goal is to
contribute to resolving social issues and become the world’s No. 1 provider of sensor solutions by creating sensor
elements that offer higher sensitivity, higher accuracy, and lower power consumption; by developing compound
sensors and integrating sensors with arithmetic elements and memory; and, with the addition of software, by
increasing added value through sensor fusion.*
* Combining multiple sensors with software to achieve advanced sensing functions.
TDK’s Goals for Sensor Solutions
Advanced compound sensors
Compounding
Software, etc.
Sophisticated
sensor fusion
Key TDK Sensor
Products
Magnetic sensors
Humidity sensors
Temperature sensors
Pressure sensors
Gas sensors
Microphones
Gyro sensors
Acceleration sensors
Barometric pressure
sensors
Ultrasonic sensors
Others
Product Brand Marks
Strengthened reference designs, etc.
Product Brand Marks
Strengthened collaboration with IC manufacturers
Product Brand Marks
Sensor Systems
Business Company
Magnetic Sensor
Business Group
Management
Committee
• R&D
• Marketing
• Process engineering
• System engineering
Temperature and Pressure
Sensor Business Group
Display ratios
MEMS Sensor
Business Group
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Sensor Business Integration
and Rapid Launch
TDK integrated some divisions and related
companies belonging to disparate business
domains by fiscal 2017, including magnetic
sensors, temperature and pressure sensors,
MEMS and microphones, etc., and established
Sensor Systems Business Company. With six
Group companies in 13 locations worldwide
engaged in marketing and R&D efforts across
the Group, we are aiming toward a rapid
launch of the sensor business (note the addi-
tion of “Sensor Application Products” in our
Display ratios
segment reporting beginning in fiscal 2018).
Display ratios
Display ratios
Display ratios
Display ratios
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Examples of Compound Sensor and Software Application Solutions
Gyro Sensors
Software
⇒ Improved Workability and Efficiency
Gyro (angular velocity) sensors are used to detect the orientation and state of motion of a moving object. Familiar uses include car navigation
systems, camera image stabilization, and more. Gyro sensors can be adapted for use in anything that moves. Used in combination with
software in industrial and mobile robots, they contribute to improved workability and efficiency by enabling robots to create and learn new
motions. Installed in wearable devices, they can detect a person’s posture and movements, and may have applications in the sports and
healthcare sectors.
Ultrasonic Sensors
Software
⇒ Improved Security
The use of biometric authentication systems involving passwords is expanding. One of these is a fingerprint authentication system with an
ultrasonic sensor using MEMS technology. With excellent water resistance, it can read fingerprint and blood vessel patterns deep in the skin,
eliminating the errors common with conventional methods. This makes high-performance fingerprint authentication systems possible, and
contributes significantly to improved security. Depending on the software, ultrasonic sensors can be combined with wearable devices and used
in near-field communications, offering a wide range of potential applications.
TMR Sensors
Hall Sensors
⇒ Improved Redundancy
Ultra-high-sensitivity TMR sensors, adapted from HDD head technology, and Hall sensors, a kind of sensor flexible enough to adapt to a
diverse range of applications, are the two leading types of magnetic sensing technologies, and one of TDK’s strengths is its lineup of magnetic
sensor products. Angle sensors, rotation sensors, position sensors, and others each bring their distinctive characteristics to the automotive,
robotics, and other fields. In addition, use of TMR sensors and Hall sensors together as a set enhances the likelihood that one or the other will
maintain its sensor functions even in the harshest conditions, significantly improving redundancy.
Acceleration Sensors
Gyro Sensors
⇒ Improved Safety
Combining acceleration sensors with gyro sensors creates inertial sensors capable of detecting the attitude of a vehicle around three different
axes: front and back, left and right, and up and down. The angular velocities around each of these axes are known as the roll rate, the pitch
rate, and the yaw rate. During left and right turns, for example, the sensor detects angular velocity in terms of yaw rate, preventing drift, where
the vehicle cannot turn, and spin, where the vehicle turns too far. This technology is also critical to ensuring the safety of autonomous-driving
vehicles. Applications can also be expected for mobile robots.
Acceleration Sensors
Gyro Sensors
Barometric Pressure Sensors
Software
⇒ Improved Navigation Accuracy
Inertial sensors made up of acceleration sensors and gyro sensors can be combined with barometric pressure sensors to achieve highly
accurate car navigation even on roads with height differences. Going forward, we will also see the development of software and systems that
use AI to analyze and manage the information gathered by various automotive sensors, using it to inform the driver in the event of possible
breakdowns or accidents. Automobile sensor networks, connected by the vehicle’s engine control unit (ECU), will also connect to sensor
networks in the IoT society to come.
Future Potential
Efforts are underway worldwide to utilize sensor networks as a means of improving the
safety and economic efficiency of public infrastructure. The number of potential targets
for sensing devices is innumerable, from railways and roads, to rivers, harbors, bridges,
and steel towers. Because many of these involve dangerous working environments,
sensor units equipped with internal batteries need to remain usable for long periods of
time following installation. This is why the ability to offer highly durable, highly reliable
sensor units will greatly enhance competitive advantage in the IoT market to come.
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TDK CorporationAnnual Report 2017 Special Feature The Start of a New “Nonlinear Progress”
What TDK Can Do
Power Solutions
Complex Solutions That Leverage Competitive Advantage
Building on its strengths in high performance and reliability based on technology accumulated over many years, TDK is
working to enhance its position as the leading manufacturer of batteries for consumer use, while also further expanding
its range of energy-related products, including its rich lineup of power supply equipment. Leveraging our competitive
advantage in developing products from the material and component stage, TDK will offer complex power solutions with
high added value.
Expanding Power Solutions Unique to TDK
Today, TDK is focusing on power solutions in addition to sensors and actuators and next-generation electronic components.
Energy devices such as lithium-ion polymer batteries, as well as power supply equipment, generally relied primarily
on conventional stand-alone sales. By pivoting to offer high-value-added units that combine these products with hardware
and software, TDK’s policy going forward will be to push aggressively ahead with proposals for unique power solutions in
the three priority markets of automotive, industrial and energy, and ICT.
Control
Convert
Utilizing technology
that allows
free manipulation
of energy
Energy
Shift from
stand-alone to
power solution
sales
Store
From its origins in the development of ferrite, an innovative magnetic material, TDK has continued to refine its core
competence in magnetics technology, and today offers a diverse range of products related to core power electronics
functions, including energy conversion, storage, and control. Utilizing our technology and expertise that allow for free
manipulation of energy, we will develop highly-value-added power solutions.
Energy conversion-related
products
Energy storage-related
products
Energy control-related
products
• AC-DC/DC-DC converters
• Automotive inverters
• Programmable DC power supplies
• Bidirectional converters
• Wireless power transfer coils
• Drive power and power generation magnets
• Lithium polymer batteries for industrial
• Battery management system (BMS)
equipment
transformers
• Electric double-layer capacitors (EDLC)
• Battery management units (BMUs)
• IGBT transformers
• Sensors (current sensors, temperature
sensors, etc.)
Examples of the Integration of TDK Elemental Technology
for High-Value-Added Power Solutions
Power Transfer Coil Technology
Capacitor Technology
High Reliability Design Technology
⇒ Wireless Power Transfer System for Industrial Equipment
Expectations are high for the introduction of wireless power transfer systems in the industrial equipment sector as well, including for automated
guided vehicles (AGVs) and robots, in terms of their ability to improve convenience, safety, and reliability, while reducing manpower and costs
through automated charging. Envisioning a wide variety of applications, TDK has developed three platforms (1kW, 200W, 50W for rotating
bodies) that allow for the building of wireless power transfer systems that employ advanced magnetic field resonance methods.
Ferrite Technology
Coil and Transformer Technology
Cooling and Heating Design Technology
⇒ On-board Chargers for EV and PHEVs
EVs and PHEVs are installed with on-board chargers used to charge the main battery. The chargers are comprised of a rectifying and
smoothing block that converts commercial AC power to DC, a power factor correction (PFC) block, a DC-DC converter, and other components.
One of TDK’s strengths lies in the fact that it has commercialized a diverse range of electronic components that comprise on-board chargers,
and can offer compact, lightweight, high efficiency on-board chargers that represent a concentration of power electronics technology.
Ferrite Technology
Power Conversion Technology
Circuit Design Technology
Coil and Transformer Technology
⇒ Regenerative Energy Bidirectional DC-DC Converters
In industrial equipment such as elevators and cranes that run on motors, braking of the motor releases wasted energy in the form of heat.
Bidirectional DC-DC converters function to store that regenerative energy in a battery, providing a boost for stored power when the motor is
started and requires a high level of power. TDK can offer comprehensive systems that integrate power conversion, storage, and control.
Ferrite Technology
Coil and Transformer Technology
Circuit Design Technology
⇒ AC-DC Power Supply Units for Storage Battery Charging
Power storage systems using lithium-ion batteries are widely used in peak cut and peak shift power demand systems as well as emergency
power sources during disasters. TDK’s AC-DC power supply units for storage battery charging utilize advanced power electronics technology to
provide a constant-voltage, constant-current (CVCC) power supply optimized for charging storage batteries. The units offer particularly
outstanding charging performance when used in commercial high-capacity power storage systems.
SESUB Technology
Circuit Design Technology
Assessment and Simulation Technology
⇒ Power Management Unit (PMU)
TDK’s semiconductor embedded substrate (SESUB) is a proprietary substrate technology for embedding thin IC chips in a resin substrate,
allowing for three-dimensional mounting of other components. Power management units installed in smartphones and tablet devices were
developed using this technology. Power supply management functions, including DC-DC converter circuits, battery charging circuits,
and LCD backlight power supply circuits are packaged in a single module, not only saving space, but enhancing heat discharge and
noise characteristics.
TDK’s Wireless Power Transfer System
Development Portfolio
TDK’s wireless power transfer systems, which target the three priority markets
of automotive, industrial and energy, and ICT, feature a broad development
portfolio that includes high-power systems for EV and PHEV use, medium-
power systems for industrial equipment, and low-power systems for wearable
and mobile devices. Our greatest competitive advantage is that we have the wide
range of core technologies needed for system development, as well as many of
the electronic components and devices that comprise those systems.
Transmission distance
For EV/PHEV
For industrial
equipment use
For wearable and
mobile devices
Transmitted power
38
39
TDK CorporationAnnual Report 2017 Special Feature The Start of a New “Nonlinear Progress”
Strengths of Materials and Components
Technologies for Enhancing Competitive
Advantage
To enhance the competitiveness and sustainability of its new business model, TDK is working to build up the
strengths of its components business, based on a foundation of materials and process technologies and
integrated production, and the passive components they generate.
Strengthening Monozukuri (Manufacturing Excellence) Power
TDK is moving forward to expand its business in fields that require not only high
efficiency, but also high reliability, including the automotive market, the industrial and
energy market, and the healthcare market. Under our policy of pursuing “zero defect”
quality in addition to the “Industry 4.0” concept, we are pushing ahead with
Monozukuri reforms (
P.60 Manufacturing).
Strategic
Background
Because their use is expanding in the automotive market and other fields involving human life,
component quality is a critical issue both in terms of differentiation and reducing risk.
The Endless Pursuit of Compact, Low-Profile Technology
Going forward, requirements that IoT devices be compact, slim, and highly integrated
are expected to increase even further. TDK continues to pursue highly competitive,
compact, low-profile technologies, as typified by semiconductor embedded substrate
(SESUB), and will promote the development of high-value-added next-generation
electronic components and modules.
SESUB
This proprietary technology embeds integrated circuits thinner than 100μm three-dimensionally in
the substrate, rather than mounting them on the substrate. Used in ultra-compact power supply
modules and Bluetooth modules, this technology contributes to the development of thinner, more
compact mobile devices. We are also working to develop more highly integrated modules and
a wide range of other IoT device applications.
SESUB
Bluetooth module
Power management unit
MEMS technology
MEMS microphone
MEMS pressure sensor
Strategic
Background
Responding to increasingly compact, lightweight, highly functional smart devices and IoT devices will
require a new dimension in highly integrated design.
Fundamental Restructuring of the Magnet Business
In fiscal 2017, the magnet business recorded an impairment loss, due in part to a large
number of production sites, process segmentation, and other structural issues. While
working to incorporate demand for use in automobiles and wind power generation,
which is expected to grow, we will undertake a fundamental restructuring of
the business.
Strategic
Background
We must ensure that demand for use in automobiles and wind power generation, which is expected to
expand, leads to profitable growth.
Linking Strategy to the Front Lines
To ensure the solid execution of our growth strategy leads to improvements in profitability and corporate value,
TDK is working to instill that growth strategy on the front lines. The performance management framework we
are working to deploy calls for KPIs to be established by individual business division and site, and for an accel-
eration in the speed of business, which is key to our new business model. The goal of these efforts is to improve
profitability Companywide. Investment effectiveness, including assessment of the efficiency of business assets
and capital expenditures based on TDK Value Added (TVA, a proprietary index for evaluating performance), will
come under even stricter monitoring, which will lead to an improvement in capital efficiency for the Company
as a whole.
Build a framework by which front line policies lead to improvements in capital efficiency
Business
ROA
Individual
business targets
TVA
After-tax
profit
Business
assets
Corporate
management
targets
ROE
Cost of
invested
capital
Capital cost
ratio
Financial
leverage
Business
assets
Related accounts
Policies
Cost of sales
Cost
reductions
Sales and market-
ing expenses
Marketing
Selling, general
and administrative
expenses
Business
efficiency
improvements
Accounts
receivable
Encouraging
debt collection
Inventory
Inventory
reduction
Accounts payable
Shortened
payment terms
P/L aspect
Profitability
assessment
B/S aspect
Assessment of
business asset
efficiency
C/F aspect
Assessment
of ability to
capture cash
Accelerating the Speed of Business
by Reducing Non-Value-Added Time
At TDK, we are working to reduce lead times based on three strategies:
(1) getting an early start; (2) reducing non-value-added time (on the
front lines of manufacturing, equivalent to time not spent in produc-
tion); and (3) shortening of work cycles. A variety of projects are
underway, led by the front lines, with one factory working to reduce
lead times by half from the planning and coordination stage through
material procurement and manufacturing. By sharing success stories,
we are working to accelerate the speed of business with the participa-
tion of all our employees.
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41
TDK CorporationAnnual Report 2017 Special Feature The Start of a New “Nonlinear Progress”
Assessment by the Chairman
of the Board (Outside Director)
Makoto Sumita
Outside Director
Chairman of the Board of Directors
Chairman of the Nomination
Advisory Committee
Chairman & CEO of
INNOTECH CORPORATION
this series of acquisitions, we continued to review the suitability
and growth potential of businesses brought before the Board by
the management meeting, while the Board conducted a multi-
faceted review of the investment effects and risks and contin-
ued to provide feedback. With regards to InvenSense, a fabless
firm, I give high marks to the execution side for their speedy
response to employee and customer retention risks.
Because TDK is pursuing an offensive investment strategy,
we try, to some extent, to keep positive scenarios in mind as
we conduct feasibility studies. In the case of InvenSense, for
example, while the deal presented significant potential for
synergies in terms of software and algorithms, my assessment
of areas that are not making
much of a contribution to
profit is quite conservative.
I also believe that TDK’s true
capabilities will be tested as
it attempts to enhance cor-
porate value for both parties
to these acquisitions, extract-
We hope this dispels
any concerns remaining
in the market.
About three years ago, it became clear that under the status quo,
ing value from technologies dependent on individuals that may
profit growth would slow not only in HDD magnetic heads,
not even appear as intangible fixed assets on the balance sheet,
which had led TDK’s growth, but also in the core electronic
or value of which the acquired party may not even be aware.
components business. That was when TDK began discussions
around what its future strengths would be and the direction the
Company should take going forward.
In terms of corporate governance, I think TDK has made
progress in splitting the business execution function from the
supervisory function. On the Board of Directors, of which I am
As discussions progressed regarding which technologies
chairman, the three outside directors share an understanding
should be nurtured internally and which should be acquired by
of the importance of balancing accelerated decision-making
borrowing outside capabilities, the conclusion was reached that
with the need for vigorous discussion as part of fulfilling our
a partnership between Qualcomm, which has software and
obligation to be accountable to the Company’s shareholders
algorithm technology, and TDK, which is capable of embodying
and investors. Based on his past experience, Mr. Yoshida is well
those technologies in its own products, would be ideal. The
acquainted with the investment risks associated with venture
business tie-up with Qualcomm that emerged from those dis-
companies, and Mr. Ishimura has extensive experience in corpo-
Column
Joachim Zichlarz
Executive Vice President
Electronic Components Business Company CFO
The Strength of Diversity
Fully Leveraging the Strengths
of Acquired Companies through
TDK-Style Post-Merger Integration
I currently serve as the CEO of the EPCOS Group, which became part
of the TDK Group in 2008. This merger was a very attractive deal for
both companies, as it helped in complementing our respective prod-
uct portfolios. In addition, the merger process was carried out very
smoothly thanks to the fact that TDK treated EPCOS not simply as a
company it acquired but rather as a business partner of equal status
that it newly incorporated as an important member of the Group.
I believe that the trust-based relationships that were subsequently
established between the two companies have acted as the foundation
for the synergies we are creating in various areas of operation today.
TDK has adopted a Group-wide approach that respects the culture
and values of the companies it acquires, without forcing its approach
on them, in an effort to realize mutual growth. TDK is today a truly
global company, with over 90% of its employees on a consolidated
basis being from countries other than Japan. Management meetings
are conducted mainly in English, allowing participating members of
various nationalities to voice their opinions without hesitation. This,
in turn, encourages the active exchange of opinions. All members
participating in these meetings, including myself, find these meetings
to be very engaging as we are able to experience TDK’s global spirit
and business approach. Moreover, TDK has fostered a corporate cul-
ture that allows anyone, regardless of age or position, to voice their
opinions to the Company’s management. I believe that such a culture
represents a strength that will support TDK’s growth going forward.
By fully leveraging the strength of diversity in these ways, TDK
will be able to move forward with Group-wide initiatives to realize
further growth.
cussions eventually determined the direction of a major strat-
The business tie-up with
Qualcomm determined
our strategic direction.
egy that included expansion
of TDK’s sensor business.
Once that larger direction was
decided, it was not long before
rate acquisitions overseas. I think that kind of background has
proven useful in discussions about the assessment of M&A
deals and management of post-acquisition risks.
To encourage deeper discussions by the Board of Directors,
about three years ago we instructed the management meeting
companies such as Micronas
to present the Board only with the most important agenda
and InvenSense came to the
items, and only after they had been discussed thoroughly at the
fore as potential acquisitions.
management meeting level. Beginning in 2017, we narrowed
In selecting those deals, we
down the number of members participating in the management
analyzed demand trends in the sensor market and the status of
competitors from a variety of angles, looking for the companies
that would best fit with TDK’s growth strategy.
The cycle of technological change in the high tech sector has
sped up and the cost of corporate acquisitions has risen; the
meeting, which has led to progress on this issue.
With the “shape” of the business in place, now comes the
time to deliver results. I plan to keep a close eye on whether
plans are being executed with a sense of speed, and whether
strategies and investment targets are undergoing proper
risks involved have grown compared with five years ago. At the
review. As one of TDK’s outside directors, I look forward to
same time, it is impossible to predict whether those acquisition
seeing the Company quickly integrate its acquisitions, dispel
costs will drop going forward. To ensure that the execution side
any concerns in the market, and demonstrate growth that
could take risks within an appropriate range when carrying out
exceeds investor forecasts.
The EPCOS OHG Deutschlandsberg factory (Austria)
42
43
TDK CorporationAnnual Report 2017
Segments at a Glance (Fiscal 2017)
Passive Components
Segment
44.8%
Main Products
Fiscal 2017 net sales
¥528.3 billion
For Automotive
Multilayer ceramic chip
capacitors with soft conduc-
tive resin terminal electrodes,
Aluminum electrolytic
capacitors
For Automotive
SMD inductors with guaran-
teed high-temperature
ratings,
Common mode filters for
automotive-use LAN
For ICT
3-terminal feed-through
capacitors
For Industrial and Energy
Film capacitors
Aluminum electrolytic
capacitors
For ICT
SMD inductors,
Thin-film common mode
filters
For Industrial and Energy
Transformers
EMC filters
For Automotive
Piezo actuators
For ICT
Ceramic high-frequency
components,
VCMs/OISs,
Multilayer chip varistors
For Industrial and Energy
Varistors
Arresters
Competitors
Murata Manufacturing,
TAIYO YUDEN,
SEMCO (Korea),
Yageo (Taiwan), etc.
Murata Manufacturing,
TAIYO YUDEN,
SEMCO (Korea),
Cyntec (Taiwan), etc.
Murata Manufacturing,
ALPS ELECTRIC,
Panasonic,
AMOTEC (Korea), etc.
Ceramic capacitors for
automobiles 40%–45%
Inductors 20%–25%
Ceramic high-frequency
components 30%–35%
Varistors 30%–35%
Gas arresters 75%–80%
World Market
Share of
Representative
Products
(TDK Data)
Capacitors
Inductive Devices
Other Passive Components
Recording Devices
Other Magnetic Application Products
Magnetic Application
Products Segment
For ICT
HDD magnetic heads
HDD suspensions, etc.
For Automotive
DC-DC converters, Battery chargers,
Magnets for motors (Cooling fan, Door lock),
Batteries for xEV
For ICT
High current digital POL converters,
HDD magnets
For Industrial and Energy
Bidirectional DC-DC converters,
High-efficiency AC-DC power supplies,
Magnets for industrial equipment
HDD magnetic heads: Seagate Technology
(USA), Western Digital Technologies (USA)
HDD suspensions: NHK SPRING, etc.
Power supplies: XP-Power (Singapore),
MEAN WELL (Taiwan), Cosel, etc.
Magnets: Shin-Etsu Chemical, Hitachi
Metals, ZHONG KE SAN HUAN (China),
etc.
HDD magnetic heads: 20%–25%
HDD suspensions: 55%–60%
Power supplies for industrial equipment:
15%–20%
Ferrite magnets: 20%–25%
Fiscal 2017 net sales
¥329.9 billion
28.0%
Main Products
Competitors
World Market
Share of
Representative
Products
(TDK Data)
Sensor Application
Products Segment
Sensors
For ICT
Sensors (Barometric pressure, Gyro, Acceleration, MEMS microphone, etc.)
For Automotive
Sensors (Gear tooth, Pressure, Angle, Current, Temperature, etc.)
For Industrial Equipment
Sensors (Pressure, Gyro, Acceleration, Current, etc.)
Main Products
Fiscal 2017 net sales
¥42.9 billion*
Murata Manufacturing, ALPS ELECTRIC, TAIYO YUDEN, Bosch (Germany),
STMicroelectronics (Switzerland), Infineon (Germany), Asahi Kasei Microdevices, Allegro
(USA), Shibaura Electronics, etc.
Competitors
3.6%
* Fiscal 2018 net sales are expected to increase 1.7–2.0 times
year on year in conjunction with completion of the
acquisition of InvenSense and other factors.
World Market
Share of
Representative
Products
(TDK Data)
Temperature sensors (NTC thermistors) 30%–35%
Other sensors: Currently undisclosed
About Segment Changes
On April 1, 2017, TDK established Sensor Systems Business
Company to target the sensor business, a market where significant
expansion is expected. Businesses comprising the sensor applica-
tion products segment have been rearranged from their previous
segments. The businesses targeted by this reorganization include,
from formerly reported segments, temperature and pressure sensors
from the Passive Components segment; magnetic sensors from the
Magnetic Application Products segment; and the MEMS micro-
phone business from the Other segment.
Formerly
reported
segments
Newly
reported
segments
Passive
Components
Magnetic
Application
Products
Film
Application
Products
Other
Passive
Components
Sensor
Application
Products
Magnetic
Application
Products
Film
Application
Products
Other
Note: TDK is the only manufacturer in the world specializing in HDD magnetic heads. Currently, the production of such heads is concentrated in three companies: TDK, Seagate Technology,
and Western Digital Technologies.
Film Application
Products Segment
21.0%
Main Products
Energy Devices
For ICT
Lithium polymer batteries for smartphones
Lithium polymer batteries for tablet devices and notebook computers
Lithium polymer batteries for wearable devices
For Industrial Equipment and Others
Lithium polymer batteries for drones
Lithium polymer batteries for game consoles
Fiscal 2017 net sales
¥247.7 billion
Samsung SDI (Korea), LG Chemical (Korea),
Murata Manufacturing, Panasonic, Maxell, etc.
Lithium polymer batteries 25%–30%
Competitors
World Market
Share of
Representative
Products
(TDK Data)
Business Environment Surrounding TDK
Market environment and opportunities
Factors affecting the market
For Automotive
• Trend toward lighter weight and electrification of automotive equipment, driven by custom-
• New environment-related legislation in various
countries
ers’ increased fuel economy awareness
• Intensified measures by various governments aimed
• Development of new technologies such as ADAS and autonomous driving
at saving energy and costs
For ICT
• Increased demand in the Chinese and Indian markets and other emerging economies
• Market entry of new terminals
• Mobile terminals with lower profile, more functions, higher performance
For Industrial and Energy
• Emergence of smart cities in various locations with smart grid (next-generation power
distribution network) as energy infrastructure
• Increased demand for renewable energy systems such as wind power and solar power
installations
• Strong pressure on prices due to commoditization
of existing products leading to price wars
• Development of new technologies and products by
competitors
• Higher prices for raw materials due to increased
demand
• Fluctuations in sales figures and raw material pro-
curement costs due to exchange rate fluctuations
• General consumer trends in electronics products
44
45
TDK CorporationAnnual Report 2017 Business Segment Strategies
Passive Components Segment
The Passive Components segment is TDK’s mainstay, generating about half of total net sales. It comprises
the capacitor business, which includes ceramic capacitors, aluminum electrolytic capacitors, and film
capacitors; the inductive device business, including coils; as well as other passive components, including
high-frequency components, piezoelectric material components, and circuit protection components. As
mobile devices become more powerful and incorporate a variety of functions, and as automobiles rely
ever more heavily on electric and electronic equipment, the demand for passive components will continue
to expand, and growth is expected to remain strong going forward.
A Brief Guide to Passive Components
Passive Components Support
Electronics Society
Electronic components include IC, LSI, and other active
components, and capacitors, inductors, resistors, and
Business Strategy
• Strengthen Monozukuri (manufacturing excellence) power
P.59 Manufacturing)
and enhance QDC competitiveness (
• Maximize cooperation with Qualcomm and achieve
high-value-added products through a “First-to-Market”
approach
• Continue endless pursuit of compact, low-profile design
other passive components that store, discharge, and
(thin-film and SESUB technology)
consume electric power. Active components only
function with help from passive components.
Installed on the circuit boards of mobile devices,
electrical home appliances, office equipment, automo-
biles, robots, industrial equipment, and other devices
are memory and CPUs—consisting of an aggregation of
many semiconductor devices—as well as a wide variety
of passive components. To sustain the ceaseless evolu-
tion of electronic equipment and automobiles, TDK is
working to make these passive components smaller,
lighter, lower in profile, and more modular.
Market Data
Spread of Electric Vehicles (HV, PHEV, EV)
Units
600,000
500,000
400,000
300,000
200,000
100,000
0
Year
14
15
16
17
18
19
20
25
30
HV
PHEV
EV
Source: Sogo Planning 2017 Latest Trends in and Forecasts for
Electric Vehicle-related Markets.
46
Topics
01
Developments in Next-Generation
Electronic Components
Social and Market Needs
• Demand for more compact, lower-profile (thinner) components as electronic
devices grow more compact and more powerful
• Demand for modularization compatible with the shift to lower-priced, more
powerful end products
As mobile devices grow more powerful and incorporate a wider variety of functions, there will be even further advances in the shift to
high-density mounting of electronic components. 5G (fifth-generation mobile communications systems) service, scheduled to begin in
2020, will require a degree of high-density mounting on a completely different level from before. To respond to the need for modulariza-
tion—one solution for achieving this—TDK is pushing to develop compact, high-performance modules using advanced semiconductor
embedded substrate (SESUB) technology, which merges our materials, thin-film, and other technologies. We will also work to strengthen
customization and enhance module characteristics by leveraging IC reference designs based on our collaboration with Qualcomm.
We are also engaged in the development and deployment of innovative engineering methods intended to strengthen the competitive-
ness of individual passive components.
Market Needs
Next-Generation Electronic Components
Modules
Custom-designed components
Response to
modularization
SESUB
• Layout flexibility
• Miniaturization
• Integrated package
• High performance
Passive module
SESUB module
Inductors (Power/high-frequency)
Capacitors (MLCC/thin-film)
High-frequency components
Enhance module performance with customized passive components
Response to needs
for high-quality,
high-performance
components
Products using new engineering methods and materials
Products optimized for specific applications
Products based on thin-film method
• Modular compatibility
• Thin-film capacitors
Products based on plating method
• Power inductors for automotive
Products based on roll-to-roll method
• Wireless power supply
Products based on applied method
• High-current power inductors
• High-inductance power inductors
Thin-film capacitors (TFCP)
Collaboration with Qualcomm
02
A Full Line of Passive Components to Support
Automotive Evolution
Social and Market Needs
• Enhancing reliability and offering comprehensive solutions in response to automotive electronic equipment needs
Automobiles today are equipped with a wide variety of electronic components, to the point they
have become known as “electronic devices on wheels.” The xEV (HEV, PHEV, EV, etc.) market is
expanding rapidly worldwide, and the use of advanced driver-assistance systems (ADASs) is
spreading, with the commercialization of autonomous-driving technology also in sight.
To strengthen our lineup of passive components that offer comprehensive support for these
evolving technologies, TDK is focused on developing and commercializing electronic components
that meet the needs and performance requirements of automotive electronic equipment. These
include highly vibration- and heat impact-resistant resin electrode terminal multilayer ceramic
chip capacitors, high temperature-resistant surface-mount device (SMD) inductors, and others.
Resin electrode terminal multilayer ceramic
capacitors for automotive use
47
TDK CorporationAnnual Report 2017
Business Segment Strategies
Sensor Application Products Segment
By positioning sensors as its primary strategic growth products, and by deploying an aggressive program
of acquisitions, TDK has added a wide variety of sensors to its existing line of magnetic, temperature, and
other sensor products, while also building a world-class lineup of non-optical sensor products in a very
short time.
Under our newly established Sensor Systems Business Company, which has merged the TDK Group’s
various sensor businesses, we are also working with IC manufacturers to push forward with development
of multi-functional, modularized sensors and even more advanced sensor fusion, as we aim to become
the world’s No. 1 provider of sensor solutions.
A Brief Guide to Sensors
Closing in on One-Trillion-
Sensor Age
Sensors detect information concerning our five senses,
including sight, hearing, and touch, as well as physical
sensations such as temperature, humidity, barometric
pressure, acceleration, and inertia, and even properties
such as magnetism and ultrasound that cannot be
detected by human senses, and convert that information
into electric signals. They are installed in a wide array of
electric and electronic devices all around us, including
mobile devices such as smartphones as well as automo-
biles and others, providing unseen support for everyday
life, business, and industry.
With the explosive growth of a variety of IoT devices,
annual production of sensors is expected to exceed one
trillion units by the 2020s. With non-optical sensor
technology accumulated through M&A and an over-
whelmingly strong product lineup, TDK aims to lead the
world in the age of IoT.
Business Strategy
• Integrate a previously dispersed organization, and
achieve a borderless marketing and R&D structure
• Merge core sensing and materials technologies with
IC and packaging technologies to offer highly
functional, high-value-added sensor solutions
(
P.36–37 Special Feature)
• Expand customer base for existing sensor products
Market Data
Outlook for Global Sensor Demand (Non-Optical)
By market
U.S.$ millions
15,000
8 %
r a t e o f
g r o w t h
A v e r a g e a n n u a l
17
18
19
20
21
12,000
9,000
6,000
3,000
0
FY
Automotive
(TDK estimates)
IoT/Industrial equipment
Mobile
Topics
01
Expanding the Customer Base
for Existing Sensor Products
Utilizing our global No. 1 lineup of non-optical sensors, TDK is working to develop its customer
base, expanded through acquisitions. This we will achieve by offering solutions that add compound
functionality and software, targeting customer bases that either had no previous need for individual
products or which we were unable to break into before.
02
Achieving Outstanding
Operations
Alongside our business expansion, we are also working
to generate synergies with the companies we have
acquired in terms of streamlining operations. Aside
from certain processes, InvenSense runs an entirely
fabless operation. Our goal is to maximize operational
efficiency by utilizing TDK factories to produce special-
ized MEMS products and wafers, while continuing to
outsource production of application-specific integrated
circuits (ASICs) and other products where there is little
room for differentiation. By utilizing our ceramics-
based packaging technology, as well as our semicon-
ductor embedded substrate (SESUB) technology and
others, we will work to strengthen the competitiveness
of TDK sensor elements and compound sensors.
InvenSense MEMS sensor
03
Generating a Stream
of Synergies with
Acquired Companies
Compound sensors that combine TDK’s tunnel magneto resistance
(TMR) sensor technology and expertise with Hall sensor technology
from Micronas allow detection of both dynamic and static magnetic
fields, enabling ideal measurement of position and angle. Combining
sensors of differing principles and structures also enhances sensor
functional stability and redundancy, important in autopilot and
other systems.
TDK’s newly developed digital output TMR sensors are war-
ranted for accuracy within an angle tolerance of ±0.2 degrees, and
in room temperature environments, have achieved an angle toler-
ance of ±0.05 degrees, top class in the industry* for the automotive
market. ASIC is a new product that embodies the synergies being
achieved in the TDK Group’s sensor business through the adoption
of design technology from ICsense.
*As of June 2017; based on TDK research.
TMR sensors
Micronas Hall sensors
48
49
TDK CorporationAnnual Report 2017 Business Segment Strategies
Magnetic Application Products Segment
TDK’s Magnetic Application Products segment is divided into the recording devices business, comprising HDD
magnetic heads and HDD suspensions, and the other magnetic application products business, including power
supplies and magnets.
The segment mainly comprises HDD magnetic heads, a field where we hold high worldwide market share.
HDD magnetic heads handle the task of writing information to the magnetic media and reading the recorded
information. Our mastery of thin-film process technology at the nanometer level has brought about an amaz-
ing increase in storage capacity. High-efficiency power supplies incorporating outstanding low-loss ferrite
and transformer technology, and high-performance magnets utilizing our materials technology, also contrib-
ute significantly to the conservation of power and resources.
Topics
01
Leading Change and Technological Innovation
in the HDD Industry
Forecast Demand for HDD
Magnetic Recording Heads
While demand for HDDs for consumer products is expected
to decline, the explosive growth in the amount of data gen-
Million units
328
erated, backed by the development of cloud computing and
2,000
IoT, means that the number of magnetic heads installed on
each HDD for nearline applications used in data center
servers is expected to increase.
TDK is working to contribute to the right-sizing of the
industry through vertical collaboration in development and
manufacturing, and by promoting a horizontal division of
labor to avoid overlapping investments. At the same time,
by leading in technological innovation, we will achieve an
ongoing increase in HDD memory capacity for nearline
applications, thus contributing to market growth.
1,500
1,000
500
0
FY
17
18
19
20
21
Enterprise
3.5˝
(TDK estimates)
Nearline
2.5˝
A Brief Guide to Magnets
Modern People Would Be
Helpless without Them
Magnets, which retain their magnetic force without
a supply of energy, are fundamental to sustaining
modern society. For example, automobiles are
equipped with about 100 compact motors that use
ferrite magnets. Powerful neodymium magnets are
also used in xEV drive motors.
Going forward, demand for high-performance
magnets is expected to grow even further, including
magnets for industrial equipment and robot motors,
and for power generators used in wind power gener-
ating systems. Since its founding, TDK has spent more
than 80 years refining the magnetic materials tech-
nology that is part of its DNA, and will contribute to
society by continuing to refine that technology.
Business Strategy
• Completely rebuild the magnetics business, the
starting point of the materials business
• Lead change and technological innovation in the
HDD industry
Market Data
02
Improving Fuel Economy in Next-Generation Eco-Cars and
Contributing to Reducing a Variety of Environmental Burdens
In recent years, Europe, China, and other regions have announced policies promoting a shift to
electric vehicles, and it is expected to accelerate the spread of electric vehicles worldwide. In
anticipation of the growing popularity of next-generation eco-cars, which are effective in reducing
hazardous substances in exhaust emissions and CO2 emissions levels, TDK is working to further the
evolution of automotive DC-DC converters and on-board chargers, utilizing the circuit and design
Global Market Forecast for In-Vehicle Motors by System Area
technologies gained through development of switching power supplies for consumer product and
industrial equipment use.
Automotive DC-DC converter
Automotive DC-DC Converter (Generation 5) and On-Board Charger (Generation 2)
• Merges TDK proprietary materials technology (ferrite core), circuit technology (high efficiency),
and simulation technology (magnetic field and heat analysis) to achieve even more compact,
lightweight, high-efficiency design with greater reliability
• Enhanced efficiency improves vehicle fuel economy
• Significantly enhances output power per unit volume
On-board charger
Million units
5,000
4,000
3,000
2,000
1,000
0
Year
15
16
(Forecast)
17
(Forecast)
18
(Forecast)
19
(Forecast)
20
(Forecast)
25
(Forecast)
Power train
Chassis
Body
Next-generation automotive systems
Note 1: Based on number of vehicles produced.
Note 2: Forecast figures for 2016 and beyond (as of August 2016).
Source: Yano Research Institute Ltd. In-Vehicle Motors Market 2016
Global In-Vehicle Motors Market Size
Approx.4.46 billion units
Approx.2.859 billion units
Increase of approx.54%
2025
(Forecast)
2015
Note 1: Based on number of vehicles produced.
Note 2: Forecast figures for 2025 and beyond (as of August 2016).
Source: Yano Research Institute Ltd. In-Vehicle Motors Market 2016
50
51
TDK CorporationAnnual Report 2017 Business Segment Strategies
Film Application Products Segment
The Film Application Products segment covers a variety of energy devices, primarily rechargeable
batteries for ICT devices such as smartphones, tablets, and notebook PCs, as well as for automotive
use and use in industrial equipment.
ATL, which develops and produces lithium polymer batteries, has established a position as the
leading company in the lithium polymer battery field. Drones and other new areas of application
are also beginning to expand.
A Brief Guide to Batteries
Significant Potential Lies
in Rechargeable Lithium
Polymer Batteries
Rechargeable lithium polymer batteries are a type of
lithium-ion rechargeable battery, use of which has
Business Strategy
• Provide the highest level of performance and
reliability as the leading manufacturer of batteries
for consumer products
• Use vertical integration strengths in materials and
components to expand energy-related product line
(
P.38–39 Special Feature)
expanded in mobile devices, but which use a polymer
• Begin putting in place structures aimed at future
electrolyte in gel form.
business expansion
In addition to making compact, lightweight design
easier, high freedom of form factor, further boosted by
increasingly thinner smart devices, has increased demand
for lithium polymer batteries dramatically over the past 10
years. Going forward, demand is expected to increase as
an alternative to square cell batteries in notebook PCs and
smartphones, and increase in IoT devices requiring com-
pact, high-capacity batteries. Adoption is also progressing
in drones and virtual reality devices, as well as in robots,
automated guided vehicles (AGVs), and other applications
in the industrial equipment and energy sector.
Market Data
Forecast Worldwide Demand for Rechargeable Batteries
(Non-ICT Market)
MWh
30,000
25,000
20,000
15,000
10,000
5,000
0
FY
18
19
20
21
22
23
Power tools/Gardening tools
Cleaners
Jump starters
(TDK estimates)
UPS/ESS (compact)
Others
Drones
Topic
01
Providing the Highest Level of Performance
and Reliability as a Leading Manufacturer
Building around its acquisition of ATL in 2005, TDK has established a position as a leading company
in the market for lithium polymer batteries for consumer product use, which carries enormous
potential.
Under the current Medium-Term Plan, TDK is taking a more aggressive approach to
investments needed to respond to growing demand. In China, where particular growth in demand
is foreseen, we are building a new R&D center in addition to boosting production capacity.
Going forward, in addition to further enhancing our strengths—including the business speed
that has been a driver of growth to date, the flexible responsiveness that exemplifies our
outstanding customer service, our leading-edge technology, and our excellent operational
functionality—we will continue to invest in technology aimed at ensuring high reliability and safety.
As we capture demand for an alternative to square cell batteries for smartphones and notebook
PCs, we will also seize on growing demand outside of the ICT market, in robots, drones, AGVs, and
energy storage systems (ESS) for solar and wind power generation.
Investments Aimed at Business Expansion
• Expansion of ATL production capacity
• Construction of a new R&D center in China
• Begin preparation for construction of new domestic production site with an eye toward
start of mass production in fiscal 2020 for domestic growth sectors including robots and
medical devices, etc.
Other Segment
Main Product Portfolio
Mechatronics
(production equipment)
TDK is supplying the market with the most
advanced factory automation equipment, includ-
ing flip-chip bonders that make use of mecha-
tronics technology.
Radio wave anechoic chamber
High-performance antennas and automated
measurement systems with dedicated software
improve the efficiency of EMC measurements.
TDK offers EMC solutions comprising highly
accurate EMC measurement services to
support effective noise countermeasures in
electronic devices.
Flash memory application devices
TDK supplies solid state drives (SSDs) with
proprietary memory control chips and
CompactFlash cards for industrial use.
52
53
TDK CorporationAnnual Report 2017
Business Model Continuity as Seen through the Value Chain
Across the entire value chain, from raw material procurement
to development, design, manufacturing, logistics, and sales,
TDK has established what it considers important themes,
in terms of both strategy and ESG, and is engaged in efforts
to achieve them.
1VALUE
CHAIN
2
Procurement
P56
Development
and Design
P57
3
4
Manufacturing
Logistics
P59
P61
5
Sales
P61
Reliably secure magnetic
materials
Ensure raw material quality
Procure alternatives to
rare metals
Speed up development cycle
Develop areas of demand
through our global 4-pole
network
Consolidate development
resources in strategic sectors
Develop new products based
on long-term road map
Integrate intellectual property
within the Group
Collaborate with IC
manufacturers
Manage and use intellectual
property
Develop products that do not
use rare metals
Ensure logistics quality (contri-
bution to JIT)
Strengthen relationships with
customers
Improve cash flows
Effectively use information
systems
Pursue location independent
production to achieve same
quality worldwide
Pursue “zero defect” through
upstream management
Pursue production efficiency
through the use of IoT
Reduce inventory by
shortening lead times
Input
Strategic Fit
(Optimization of value chain
to promote strategy)
Overall value chain
• Pursuit of integrated produc-
tion, from materials to finished
product
• Creating “black boxes” in core
domains to ensure firm control
of technological advantage
• Backflow of customer needs
upstream
• Enhancement of profitability
by speeding up the business
cycle across all processes
ESG
Ensure quality of purchased
goods
Reduce environmental load
from a life cycle perspective
Reduce environmental load
of plants
Reduce environmental load
of logistics
Strengthen quality assurance
structure
Develop products that contrib-
ute to the environment
Overall value chain
• Development of human
resources to promote
Monozukuri Innovation
• Development of global human
resources
• Cultivation of a corporate
culture that respects diversity
• Workstyle innovation
• Technology transmission
• Establishment and implemen-
tation of environmentally
friendly policies
CSR check sheets/audits
Green procurement
Conflict minerals survey
Consider supplier work
environments
KPI
Fiscal 2018 Goal
CSR-compliant supplier ratio
Over 95%
Improve energy efficiency
Consider production site labor
environment
Strengthen regional
relationships
KPI
Fiscal 2018 Goal
Product-based CO2 reduction
contribution basic unit compared
with previous year
Improved
by
2.7%
Promote sales of environmen-
tally friendly products
KPI
Fiscal 2018 Goal
Number of serious claims
0
Economy
Cost of sales
¥855.9 billion
Selling, general and
administrative expenses
¥239.4 billion
Capital expenditures
¥167.6 billion
R&D expenses
¥91.3 billion
Society
Consolidated number
of employees
99,693 people
Average number of years worked
(TDK Corporation)
20.8 years
Education / seminar training costs
(TDK Corporation)
¥242 million
Environment
Resources
210,945 t
Electric power
2,230,914 MWh
Fuel
1,137,091 GJ
Water utilization
13,701 km3
54
Overall Strategy
Monozukuri (manufacturing
excellence) Innovation
Societal Factors
Environmental Factors
Outcome
Economy
Net sales
¥1,178.3 billion
Operating income
¥208.7 billion
Free cash flows
¥89.0 billion
Society
Cumulative total of participants
in IMD training
328 people
Cumulative total of participants
in overseas trainee program
28 people
Number of companies given CSR
check sheet improvement guidance*
7 companies
DRC conflict-free item ratio*
91%
Environment
CO2
1,463,396 t-CO2
Total emissions volume
77,915 t
Waste water
2,148 km3
*Targeting suppliers of TDK Corporation
55
TDK CorporationAnnual Report 2017
Business Model Continuity as Seen through the Value Chain
VALUE CHAIN
1
2
3
4
5
VALUE CHAIN
1
2
3
4
5
VALUE
CHAIN
1
Procurement
VALUE
CHAIN
2
Development and Design
Strategic Fit
ESG
Strategic Fit
ESG
Reliably secure magnetic materials
Ensure quality of purchased goods
Ensure raw material quality
Procure alternatives to rare metals
CSR check sheets/audits
Green procurement
Conflict minerals survey
Consider supplier work environments
Reduce environmental load from a life cycle
perspective
Develop products that contribute to the environment
Speed up development cycle
Develop areas of demand through
our global 4-pole network
Consolidate development resources
in strategic sectors
Develop new products based on long-term road map
Integrate intellectual property within the Group
Collaborate with IC manufacturers
Manage and use intellectual property
Develop products that do not use rare metals
Specific Initiatives
Strategic Fit
Specific Initiatives
Strategic Fit
Global Partnership Purchasing to Rapidly Provide High Quality Products
Acceleration of Development Speed through M&As and Business Tie-Ups
TDK seeks to build solid partnerships with its suppliers and maintain a relationship that benefits both, guided by our “global part-
nership purchasing principles.” Global partnership purchasing refers to the practice of local procurement of materials consumed
overseas to ensure rapid product development, essential to a company such as TDK with manufacturing bases in Japan, Asia,
North America, and Europe. Global partnership purchasing also emphasizes the crucial importance of close collaboration with
our suppliers to TDK product quality and to raising customer satisfaction. TDK has established the TDK purchasing policies to put
this principle into practice.
In the rapidly changing electronics industry, speed has become an increasingly important factor in anticipating needs and quickly
delivering products, and recently TDK has been actively accelerating the speed of its business through M&As and business
tie-ups.
We expect that the ability of fabless developer InvenSense to provide solutions, and the total value chain we have built through
our collaboration with Qualcomm and our acquisition of ICsense, will contribute significantly to reducing prototype development
lead times, and the Group as a whole is pushing strongly ahead toward the realization of a “First-to-Market” approach.
Strategic Fit
Assurance of Stable Supply
In unforeseen circumstances, such as the outbreak of a large-scale natu-
ral disaster, TDK, as a member of the supply chain, has a duty to share
social responsibility with suppliers in meeting demand so as to ensure the
stable supply of products required by customers. Recognizing that the se-
curing of stable supplies is an important responsibility, TDK addresses this
issue in three main ways: BCP/BCM surveys of suppliers; advance collec-
tion and organization of information for use in an emergency; and timely
communication using the Supplier Partnership System.
With regard to rare minerals and other raw materials for which stable
procurement carries risks associated with restrictions set by the producing
countries, TDK also works to develop new production methods that reduce
the use of such materials.
ESG
Promotion of CSR Procurement
Development of neodymium magnet
without dysprosium, a rare earth metal
Conventional neodymium magnet
Dysprosium-free neodymium
magnet
TDK treats CSR as a key component of its purchasing policy while striving to earn understanding from suppliers of the impor-
tance of CSR and encouraging increased awareness in that area. We incorporate provisions into contractual agreements keyed to
specific conditions at each of our Group companies while continuously engaging in evaluations based on CSR check sheets, CSR
audits, and other efforts. When problems are found in the details, individual requests for improvements are issued.
TDK also implements CSR audits with the aim of gaining an objective understanding of the situation, selecting targeted suppli-
ers in consideration of such factors as their degree of importance and our dependence on them in delivering to our customers.
Strategic Fit
Provision of Rapid Response to Diverse Needs via Global 4-Pole Network
With an overseas sales ratio in excess of 90%, the TDK Group is expanding its R&D
activities globally, with a network centered in Japan and connected to sites in Asia,
the U.S., and Europe. By moving to transfer authority locally, and by conducting
R&D close to areas of demand, we are able to quickly provide products in accor-
dance with customer needs. At the same time, leveraging the significance each
field of business has in those respective regions, we acquire the knowledge and
technology to respond to the leading-edge needs of the times.
In addition, R&D and sales and marketing move as one to allow us to quickly
catch up on the needs of our customers.
ESG
Development of Products Contributing to the Environment
In 1997, TDK introduced product assessment to evaluate the environmental impact of products throughout their entire life cycle.
Only products approved through this screening are commercialized and distributed in the market. In addition, TDK focuses on
the contribution of products and expertise to the reduction of CO2 emissions. TDK began working to establish computing criteria
for quantifying this environmental contribution in fiscal 2012, and in fiscal 2016, we formulated a set of guidelines for calculating
of product contributions that reflect those results. By means of continued product assessment activities, we aim to promote the
reduction of CO2 emissions through products.
56
57
TDK CorporationAnnual Report 2017
Business Model Continuity as Seen through the Value Chain
VALUE CHAIN
1
2
3
4
5
VALUE CHAIN
1
2
3
4
5
2VALUE
CHAIN
Development and Design
The Akita Future Project
Column
Strategic Fit
ESG
3VALUE
CHAIN
Manufacturing
Pursue location independent production to achieve
same quality worldwide
Pursue “zero defect” through upstream management
Pursue production efficiency through the use of IoT
Reduce inventory by shortening lead times
Reduce environmental load of plants
Improve energy efficiency
Consider production site labor environment
Strengthen regional relationships
The Akita region is the birthplace of TDK. Beyond being where the passive components business is deeply
rooted, the region also continues to be at the leading edge of Monozukuri. The Akita Future project, currently
underway, was conceived with the goal of achieving sustainable growth based on the vision of our Medium-
Term Plan. Under the project, TDK will create world-leading technologies and products, expanding
a new Monozukuri worldwide.
Creation of New Products around Elemental Technologies
TDK will surmount the business division structure previously organized vertically around products, create a structure
centered on elemental technologies, and swiftly respond to market changes. New product development will also
be accelerated.
Specific Initiatives
Before
Market and Customers
After
Market and Customers
Strategic Fit
Sales and Marketing
Sales and Marketing
Business divisions
Business divisions
Business divisions
Business divisions
Business divisions
Business divisions
Business divisions
Business divisions
Business divisions
Product technology
Product technology
Product technology
Product technology
Product technology
Multilayer
Plating
Materials
Multilayer
Winding
Thin-film
Assembly
Plating
Materials
Multilayer
Multilayer
Assembly
Plating
Assembly
Plating
Production bases (satellites)
Multilayer
Plating
Thin-film
Winding
Assembly
Ferrite materials
Ceramic materials
Metal materials
Mother factories
E
q
u
i
p
m
e
n
t
d
e
v
e
l
o
p
m
e
n
t
Production Base Reorganization
Reorganization of production bases around individual elemental technologies for passive components will lead to
strengthened Monozukuri capabilities. TDK will be responsible for materials and assembly, TDK Akita for multilayering,
and TDK Shonai primarily for thin-film and winding.
Before
Yurihonjo
Akita
Chokai
Konoura
Kisakata
Ujo
Iwaki
Ouchi
Honjo
Yashima
Akita (MCC)
Inakura
2008
Kitakami
Kisakata
(MCC)
Yuza
Sakata
Yuzawa
Akita
Iwate
Tsuruoka
Iida
(Nagano)
Yamagata
After
Materials
Winding
Tsuruoka
Iwaki
Ouchi
Honjo
Nikaho
Inakura
Assembly
Mid-Term
Vision
Kitakami
Multilayer
Akita
Iwate
Thin-film
Sakata
Tsuruoka East
Yamagata
Iida
(Nagano)
TDK Museum
The museum introduces how TDK’s products and technologies,
centered on our strengths in ferrite and magnetism, have played a
role in the evolution of society, and how TDK will be involved in the
society of the future, all in an easy-to-understand, enjoyable, and
hands-on manner. The goal of the museum is to introduce the his-
tory of TDK and electronics, and a vision for the future, while also
contributing to making the Akita region a more attractive destination.
Acceleration of Cycle Times across All Divisions
TDK is engaged in a variety of measures intended to reduce cycle times in the manufacturing process. These include changes
in manufacturing processes; a shift to location independent production and automation through the use of robots; reduction of
inventory in downstream processes; and setup improvements utilizing IoT and big data.
In addition to pursuing greater efficiency on the front lines of production, TDK is actively engaged in measures designed to
speed up the entire business cycle. This includes, for example, considering “business lead time” not as the time between the
factory receiving orders and shipping products, the conventional approach, but as the time between sales receiving orders from
customers and products actually being delivered. This will encourage a broader range of divisions to reduce “non-value-added
time” and accelerate cycle times.
Integrated Production and Location Independent
Conventional
100
New
25
45
ESG
Transportation
from plant to plant
100
Line length
Area
Lead time
Personnel/Line
Reduction rate
–60%
–80%
–70%
–80%
Factories Designed to Improve Energy Efficiency
TDK’s new factories in Akita Prefecture are designed with the goal of improving
energy efficiency, including taking advantage of the winter weather to store accu-
mulated snowfall, which is then used to assist in cold energy recovery. Solar
panels installed on the roof of the Honjo Factory East Site have the capacity to
supply up to 70% of the total lighting power consumed across the entire factory.
Workplace environments are designed to be employee-friendly; parking lots, for
instance, are installed with snow-melting equipment and in-factory arcades. The
new factories are expected to serve as next-generation models for environmen-
tally adaptive factory design.
Honjo Factory East Site
58
59
SinteringBarrelWindingInspectionMeasure- ment TPAssemblyJointingPeelingMoldingDSS LineWindingPeelingJointingAssemblyMeasure - ment TPTDK CorporationAnnual Report 2017
Business Model Continuity as Seen through the Value Chain
VALUE CHAIN
1
2
3
4
5
VALUE CHAIN
1
2
3
4
5
3VALUE
CHAIN
Manufacturing
VALUE
CHAIN
4
Logistics Sales
VALUE
CHAIN 5
Column
Strategic Fit
ESG
Pursuing “Zero Defect” through Upstream Management
and Building an Innovative Monozukuri Framework
The pursuit of “zero defect” quality is the basic philosophy behind Monozukuri at TDK.
TDK is working to firmly establish a quality-oriented process to ensure product quality by creating 100%
conforming products. This means ensuring product quality not by removing defective products during the
final inspection process, but by working to improve quality across every process, from product design, to
process design, to facility development.
In addition, TDK is working to build an innovative Monozukuri framework to support its new business
model with a framework centered on four pillars: location independent production that ensures the same
quality regardless of where production takes place worldwide; construction of a robot platform in pursuit of
optimal cooperation between people and robots; validation of a model production line aimed at “zero defect”;
and bottom-up Arubeki-Sugata (ideal process) quality control activities.
Pursuit of Industry 4.0 + “Zero Defect”
Monozukuri Innovation Based on the Arubeki-Sugata Concept
Location Independent
Production
Building a
Robot Platform
Model Line
Activities Based on
Arubeki-Sugata
• Monozukuri not depen-
dent on production
location
• Material production line
Product production line
Integrated production
line
• Optimization of processes
using robots
· Handling
· Cell production lines with
cooperation between
people and robots
· Robot location inde-
pendent process
• Validation of Monozukuri
aimed at “zero defect” in
each process
• Shift to “zero defect” in
quality management
• Optimization of equipment
and people
• Bottom-up quality control
activities
Validation Using a Model Line
Design
Materials
“Zero Defect”
Process
Management
Pursuit of Arubeki-Sugata
Ensure logistics quality (contribution to JIT)
Reduce environmental load of logistics
Strengthen relationships with customers
Strengthen quality assurance structure
Improve cash flows
Effectively use information systems
Promote sales of environmentally friendly products
Specific Initiatives
ESG
Reduction of the Environmental Load of Logistics
Trend of CO2 Emissions
from Logistics (Japan)
TDK is tackling the reduction of CO2 emissions from logistics with the aims of contributing to
the control of global warming, improving transportation efficiency, and reducing transportation
costs.
In Japan, TDK set up a committee to improve energy conservation in distribution in fiscal
2007, when the revised Energy Conservation Act went into effect, and is making efforts to
reduce logistics-related energy. TDK will expand its survey of CO2 emissions from logistics to
overseas sites and endeavor to promote their reduction in the TDK Group as a whole.
Concrete Activities
• Modal shift
• Improved loading efficiency through reduced delivery frequency
• Better efficiency of inter-plant transportation through the concentration of production sites
• Shortening of domestic land transport distances through the effective use of local ports
• Switch of means of transporting imported cargo from subsidiaries from air to boat
t-CO2
6,000
4,000
2,000
0
FY
5,093
13
14
15
16
17
ESG
Activities for Improving Customer Satisfaction
For customers who purchase its mainstay electronic components, TDK assesses customer satisfaction levels using the following
three methods. By offering comprehensive customer satisfaction from the perspectives of quality, delivery, cost, technologies, and
services, TDK aims to become a highly trusted company.
• Supplier evaluation information, whereby our business customers evaluate TDK products
• Product-related complaint information from our customers
• Customer satisfaction evaluation, whereby sales staff members evaluate TDK products from a cus-
tomer’s point of view
Also, at the Huawei Technologies Co., Ltd.’s Suppliers Conference held in Shenzhen, China, in
September 2017, TDK received the Excellent Supplier 2017 H1 Award in the Storage Cards Division.
This award recognizes suppliers with outstanding quality, supply, technological capacities, and prices,
and that have met standards determined by Huawei Technologies.
60
61
TDK CorporationAnnual Report 2017
Human Resource Strategy
I have interacted with a great many employees to date, and it is never easy
for people of diverse corporate cultures and cultural backgrounds to convey
their thoughts to one another constructively. To create a sense of group
solidarity, we are focusing on improving communication, and the most
important elements in doing that are transparency and trust.
At TDK, we have established a Global Human Resources & General Affairs
Department within the Human Resources & Administration HQ, and with the
goal of improving transparency and trust, we are working to put in place a
common Group global human resource management system, develop suc-
cessors to important positions, and establish global systems for positions,
evaluations, incentives, and communication training in English. Further, by
making human resource information more visible and promoting the shar-
ing of good practices within the Group, we will make more effective use of
the capabilities of outstanding human resources worldwide, which in turn
will strengthen the competitive power of the TDK Group.
Andreas Keller
General Manager, Human Resources
& Administration HQ
International Management Development (IMD) Training to Foster Global Leaders
IMD training seminars, which have been held since 1997, are held to help our internal leaders acquire truly global skills and
develop strong, borderless solidarity within the Group. The training is for candidates for managerial positions at the TDK
Group affiliates overseas. The seminars take the form of a week-long residential training course with lectures and workshops.
The participants gain a deeper understanding of TDK’s corporate philosophy, acquire a broader, more managerial perspective,
and establish bonds that help build global personal networks. Some participants who have completed the IMD training have
gone on to become presidents of overseas affiliates, playing a vital role in human resource development within the TDK Group.
Cumulative Total of Participants
in IMD Training
People
400
300
200
100
0
FY
328
13
14
15
16
17
Human Resources &
Administration HQ Organization
Human Resources &
Administration HQ
Global Human Resources &
Administration Division
Japan Human Resources
Development Division
Japan Administration Division
IMD training
Global Human Resources &
General Affairs Department
Insurance Department
Note: As of April 2017
Securing and Fostering Human Resources with Strong Potential and Expertise
A Global-Scale Human Resource Base to Support Sustainable Growth
Approximately 90% of the TDK Group’s employees on a consolidated basis are non-Japanese, and our human resource policy
calls for HR systems that are rational and which have a sense of fairness, with an emphasis on a merit-based approach and
equal opportunity. We strive to increase corporate value by placing and working to develop outstanding human resources in
optimal positions regardless of nationality, race, gender, or other attributes.
Consolidated Number
of Employees
99,693
7,674
4,216
9,308
78,495
People
100,000
80,000
60,000
40,000
20,000
0
FY
13
14
15
16
17
Europe
Japan
Americas
Asia and Others
In the electronics industry, which is experiencing rapid changes in the business environment, it is necessary to have a high
degree of specialization and to develop and provide products that society and customers want in a timely manner. TDK hires
recent graduates with high potential and drive and actively recruits mid-career personnel with high levels of specialization.
TDK believes that the ideal is to enable each employee who makes up an organization to work autonomously. Our human
resource development target is to produce numerous autonomous personnel with the ability to think things through on their
own, undertake new challenges with courage, persevere to optimize change, and see things through to the finish.
To achieve this target, TDK’s skills development and educational programs, which are designed to progressively teach
employees how to work autonomously from the earliest stages of their careers, comprise four categories: “training programs
on different levels,” “selective training programs,” “specialized education programs,” and “skill development support programs,”
the latter two of which are offered for those who need a higher level of professional training.
Education /
Seminar Training Costs
(TDK Corporation)
Yen millions
250
200
150
100
50
0
FY
242
13
14
15
16
17
Recruitment of New Graduates /
Recruitment of Mid-Career
Personnel (TDK Corporation)
People
250
200
150
100
50
0
FY
81
158
13
14
15
16
17
Job Leavers /
Average Number of Years
Worked (TDK Corporation)
People
80
60
40
20
0
FY
20.8
14
49
13
14
15
16
17
Year
24
18
12
6
0
Recruitment of new graduates
Recruitment of mid-career personnel
Male
Female
Average number of years worked (right)
62
63
TDK CorporationAnnual Report 2017 Corporate Governance
Message from the Chairman
I am exerting myself
to achieve “zero defect,”
our lifeline going forward,
with our front lines
and suppliers.
Takehiro Kamigama
Chairman
TDK is moving forward steadily, and dynamically, along the
path it should take. As we aim to become the world’s largest
sensor manufacturer, we are first striving to double sales in
our sensor business—the kind of leap we need to make to
keep things interesting. We also have major expectations for
rechargeable batteries and power solutions as a whole. Still,
there are several important issues to address if we are to
ensure the success of that growth strategy.
The most important of these issues is quality. Having
dealt with an accident in which a fire caused by a TDK
humidifier resulted in the loss of precious human life, TDK
and all of its employees are deeply cognizant of the weight
of our responsibility to society with regard to quality. As the
use of electronics in automobiles continues to progress,
poor quality could lead to major accidents involving human
life, making quality improvement and quality control more
important than ever. This is why TDK is engaged in
an across-the-board pursuit of Monozukuri (manufacturing
excellence) that eliminates defects, and as part of strength-
ening compliance, I personally visit the front lines to spear-
head our quality audits. Given our plans to bolster our
expansion in modules and units, I am also meeting directly
with the presidents of our component suppliers and asking
for their cooperation in ensuring thorough quality control.
We also continue to strengthen our corporate gover-
nance. TDK’s Board of Directors has made progress in
splitting its audit and executive functions, and our three
outside directors are making use of their respective, exten-
sive experience to provide shrewd advice to our executive
team. Going forward, we will not only focus on a complete
split of audit and executive functions in the formal sense,
but will work to create a structure that is both effective and
balanced. Governance with regard to the companies we
have acquired in recent years is another important subject.
Particularly crucial to ensuring the success of these acqui-
sitions is the management of people. It is essential that we
continue to engage in technology exchange and dialogue,
and increase the motivation of the employees.
As we have done for the past more than 80 years, we
must diligently invest in technology while continuing to
think about and create the things required by society in the
near future. This approach we must not fail to maintain. To
continue tailoring the evolution of our products to society’s
requirements will require that we preserve and continue to
refine a consistent Monozukuri, from the materials that are
the foundation of our products to the products themselves,
and further, that we constantly lead in the development of
methods that are different from other companies.
As we continue to aim for TDK’s name to become syn-
onymous with magnetism, we will also work to achieve
long-term, sustainable improvement in corporate value.
TDK Governance Snapshot
Promoting Diversity
Actively Inviting Outside Officers
Non-Japanese
Corporate Officers
6 people
2017
Japanese
Corporate Officers
12 people
(As of the end of
June 2017)
Outside Officers
6 people
Directors and
Audit & Supervisory
Board Members
Inside Officers
6 people
(As of the end of June 2017)
Non-Japanese
Corporate Officers
4 people
2012
Japanese
Corporate Officers
14 people
Non-Japanese
Corporate Officers
1 person
2004
Japanese
Corporate Officers
19 people
Outside Directors with Rich
Management Experience
Makoto Sumita
Chairman and CEO of INNOTECH CORPORATION
(present post)
Kazumasa Yoshida
Former Representative Director and President of
Intel K.K.
Kazuhiko Ishimura
Chairman and Representative Director of
Asahi Glass Co., Ltd. (present post)
Outside Directors fill the posts
of chairman of the Nomination
Advisory Committee and the Compensation
Advisory Committee.
Director compensation is designed to link to short-term and medium- to long-term corporate value.
Standard Allowance
Medium- to long-term incentive
(Stock-linked compensation stock options)
Linked indicators: Operating income, ROE
0.7
Short-term incentive
(Results-linked bonuses)
Linked indicators: Operating income, ROE,
Target of each division
0.6
Basic remuneration
1
64
65
TDK CorporationAnnual Report 2017 Corporate Governance
Everything Is Aimed at Long-Term,
Sustainable Improvement in Corporate Value
Standards of Business Conduct” prescribed by the “TDK
Code of Conduct.”
(4) TDK aims to achieve its management targets and further
improve corporate value through the creation of prod-
ucts by adhering to the corporate motto. At the same
time, TDK strives to foster a sound corporate culture
and sincerely conducts business activities, always aware
of its place as a member of society.
(5) TDK will be accountable to stakeholders through com-
prehensive, accurate, timely, and impartial disclosure
of information.
In addition, TDK enacted the “TDK Basic Policy on
Corporate Governance,” setting forth the basic views and
policy on corporate governance of TDK for the purpose
of enhancing sustainable corporate growth and increas-
ing corporate value over the medium to long term of the
TDK Group.
TDK Basic Policy on Corporate Governance
The basic views to achieve sustainable corporate growth
and increases in corporate value over the medium to long
term of the TDK Group are as follows:
(1) Based on the founding spirit “Contribute to culture and
industry through creativity” as the corporate motto of
TDK, which was established in 1935 as the world’s first
company to industrialize a magnetic material called
“ferrite,” TDK unremittingly pursues originality and
increases corporate value through the provision of prod-
ucts and services that have created new value.
(2) TDK builds satisfaction, trust, and support among all stake-
holders (shareholders, customers, suppliers, employees
and communities, among others), continues to be helpful
by resolving social issues, and contributes to the develop-
ment of a more sustainable society.
(3) TDK clearly declares as the “TDK Charter of Corporate
Behavior” that TDK will continue to respect human rights;
comply with relevant laws, regulations, and international
rules and the spirit thereof; and carry out its social
responsibility with a strong sense of ethics, domestically
and overseas. All members of the TDK Group seek to
behave in strict compliance with the “Corporate
Oversight
P O I N T
• TDK has established its own items to be verified regarding independence to ensure the independence of outside
Directors and outside Audit & Supervisory Board Members.
• All outside Directors have a deep understanding of technology and knowledge of global management.
• Outside Audit & Supervisory Board Members comprise professionals from important and diverse fields of
expertise, including finance, legal affairs, internal controls, risk management, and others.
Items to Be Verified Regarding Independence
1 In cases where the relevant outside Director/Audit & Supervisory
Board Member has a business relationship with TDK
An outside Director/Audit & Supervisory Board Member
shall be judged not to be independent if they are at present,
or have been during the past five years, a party with a busi-
ness relationship with TDK as described in (i) below, or a
person who executes business for such party, or if (ii) below
applies to them.
(i)
When it is recognized, objectively and reasonably, that
said business relationship is necessary for, or has a
substantial influence on, the continued growth of the
TDK Group or the other party to such business relation-
ship (when there is a high degree of dependence in the
relationship, where the relationship is the source of 2%
or more of consolidated sales, or where the other party
to the relationship receives money or other assets from
the TDK Group other than remuneration for Directors/
Audit & Supervisory Board Members)
(ii) When it is recognized within TDK that the relevant
outside Director/Audit & Supervisory Board Member
is involved in the business relationship with the other
party to such relationship
2 In cases where the relevant outside Director/Audit & Supervisory
Board Member is a consultant, an accounting professional,
or a law professional
An outside Director/Audit & Supervisory Board Member
shall be judged not to be independent if any of the following
cases apply to such person at present or have applied to
such person during the past five years.
(i)
When it is recognized, objectively and reasonably, that
the relevant outside Director/Audit & Supervisory
Board Member (including candidates for such positions;
the same shall apply hereinafter) cannot perform duties
as an independent Director/Audit & Supervisory Board
Member because they receive money or other assets
from the TDK Group other than remuneration for
Directors/Audit & Supervisory Board Members (where
there is a high degree of dependence)
(ii) Where it is recognized, objectively and reasonably, that
the relevant outside Director/Audit & Supervisory
Board Member cannot perform duties as an indepen-
dent Director/Audit & Supervisory Board Member
because an organization to which such person belongs
(hereinafter referred to as the “Relevant Organization”)
receives money or other assets from the TDK Group
other than remuneration for Directors/Audit &
Supervisory Board Members (when this income is
equivalent to 2% or more of total annual remuneration)
(iii) When the TDK Group has a high degree of dependence
on a professional or a Relevant Organization, such as a
case where services, etc., rendered by such party are
essential to the corporate management of the TDK
Group or it would be difficult to find an alternative
provider of the same services, etc.
(iv) Where it is recognized within the TDK Group that the
relevant outside Director/Audit & Supervisory Board
Member is involved with the services, etc., provided by
the Relevant Organization
3 In the case of a close relative of the relevant outside Director/
Audit & Supervisory Board Member
An outside Director/Audit & Supervisory Board Member
shall be judged not to be independent if either of the fol-
lowing cases apply to their close relatives at present or have
applied to them during the past five years.
(i) A person to whom 1 or 2 above applies (except persons
without material significance)
(ii) A person who executes business for TDK or a subsidiary
of TDK (except persons without material significance)
Outside Directors and Outside Audit & Supervisory Board Members
Outside directors
Reasons for nomination
Chairman of the
Board of Directors
Nomination
Advisory
Committee
Compensation
Advisory
Committee
Committee
Chairman
Kazumasa
Yoshida
Kazuhiko
Ishimura
Outside Audit &
Supervisory
Board Members
Kazunori Yagi
Toru Ishiguro
Kiyoshi
Fujimura
Mr. Yoshida has an abundance of experience and knowledge concerning the
management of companies related to the electronics industry, global busi-
ness, and consumer business as well as a broad perspective.
Mr. Ishimura has an abundance of experience and advanced, specialized
knowledge regarding business management as well as a broad perspective.
Reasons for nomination
Mr. Yagi has extensive knowledge related to finance and accounting, as well
as an abundance of experience and knowledge concerning corporate man-
agement in the electronics industry.
Mr. Ishiguro has specialized knowledge regarding the law as an attorney,
specialized knowledge regarding corporate governance and internal control,
and considerable insight in such areas.
Mr. Fujimura has extensive knowledge related to finance and accounting, as
well as an abundance of experience and knowledge concerning corporate
management of a general trading company.
Nomination
P O I N T
• TDK established the Nomination Advisory Committee, chaired by an outside Director and comprising a major-
ity of outside Directors.
• The committee contributes to ensuring the appropriateness of nominations for TDK’s Directors, Audit &
Supervisory Board Members, and Corporate Officers, and transparency in the decision-making process.
Nomination Policies and Procedures
TDK established the Nomination Advisory Committee as an
advisory body to the Board of Directors. The committee is
chaired by an outside Director, and a majority of its members
are also outside Directors. It contributes to the securement
of the transparency in the decision-making process and the
rea sonableness in the appointment of Directors, Audit &
The full text of said policy is posted on the following website:
http://www.global.tdk.com/corp/en/ir/tdk_management_policy/governance/basic/index.htm
Makoto Sumita
Mr. Sumita has an abundance of experience and knowledge in management
as a manager of operating companies as well as a broad perspective.
Committee
Chairman
66
67
TDK CorporationAnnual Report 2017
Corporate Governance
Supervisory Board Members, and Corporate Officers by
nominating candidates after deliberating on the expected
requirements regarding nomination of Directors, Audit
& Supervisory Board Members, and Corporate Officers.
The committee also deliberates on the independence of
outside Directors.
When nominating the CEO, the committee formed an
image of the ideal person suitable for the role of top execu-
tive and conducted repeated deliberations that also covered
such issues as systems and the term of office. An outside
expert organization was also utilized, and emphasis was
placed on ensuring objectivity.
Inside Directors
Inside directors
Remuneration for Directors and Audit & Supervisory Board Members
P O I N T
• Designed to emphasize linkage to short-term and medium- to long-term financial results.
• TDK constantly seeks to create competitive compensation programs in order to secure diverse, outstanding
human resources.
• TDK seeks to set compensation levels that maintain competitiveness compared with other companies in the
Reasons for nomination
same industry and with companies of the same size in other industries.
Takehiro
Kamigama
Shigenao
Ishiguro
Tetsuji
Yamanishi
Seiji Osaka
Mr. Kamigama served as president and representative director since 2006, and demonstrated leadership in strengthening overall
profitability and expanding business fields. As chairman and representative director since 2016, he oversees TDK’s management
as a whole. TDK has determined that he can be expected to continue fully performing his role in deciding key matters and over-
seeing the execution of business by the Board of Directors.
After working as head of the HDD magnetic head business, Mr. Ishiguro has served as president and representative director since
2016, and is promoting the creation of new business and management reforms. TDK has determined that, utilizing his extensive
global management experience and insight, he can be expected to continue fully performing his role in deciding key matters and
overseeing the execution of business by the Board of Directors.
Mr. Yamanishi has experience in accounting and finance in domestic and overseas business, and currently serves as head of the
Finance & Accounting HQ. He has demonstrated a high level of expertise and skill in the company’s global financial and manage-
rial administrative operations. TDK has determined that, utilizing his extensive experience and strong insights, he can be expected
to continue fully performing his role in deciding key matters and overseeing the execution of business by the Board of Directors.
Mr. Osaka has global management experience as head of the Sales & Marketing Group, and currently serves as head of the group
responsible for corporate planning, corporate communications and the Board of Directors Office, in which capacity he works to
draft and execute TDK’s business strategy. TDK has determined that, utilizing his experience and insights, he can be expected to
continue fully performing his role in deciding key matters and overseeing the execution of business by the Board of Directors.
Nomination Advisory
Committee
Chairman’s Comments
Makoto Sumita
Outside Director
Chairman of the Board of Directors
Chairman of the Nomination Advisory Committee
Chairman & CEO of INNOTECH CORPORATION
Although Mr. Ishiguro just assumed the post of presi-
dent in fiscal 2017, TDK has already begun to engage
in vigorous discussion regarding the image of next-
generation leadership corresponding to its strategic
direction, and the building of a system for developing
those leaders.
Through its M&As in recent years, TDK has pro-
gressed even further in its globalization, on both the
structural and strategic sides. This is why management,
led by Mr. Ishiguro, and we, the committee members,
share a common recognition of the need to put in
place a system that is highly transparent, even when
regarded from outside the Company, for developing
leaders and which goes beyond a system of automatic,
escalator-style promotions. We also agree that, in terms
of assessment measures, we need to evaluate whether
these individuals have a global sensibility, and whether
or not they are capable of executing long-term strat-
egy. Under the leadership of Andreas Keller, general
manager of Human Resources & Administration HQ
and knowledgeable in global human resources, we are
now considering specific systems for selecting candi-
dates worldwide, not limited to Japanese individuals,
and for establishing career paths. By 2018, we believe
we will be able to announce a succession plan worthy
of TDK as it takes on the challenge of transformation.
Compensation Determination Process
TDK has established the Compensation Advisory Committee
to serve as an advisory body to the Board of Directors. The
committee is chaired by an outside Director and more than
half of the members comprise outside Directors. It contrib-
utes to the securement of transparency in the remuneration
decision-making process and the reasonableness of
Results Linkage System
individual remuneration in light of corporate business per-
formance, individual performance, and general industry
standards by deliberating and reporting to the Board of
Directors on the remuneration system and the level of remu-
neration pertaining to Directors and Corporate Officers.
Factor
Type of compensation
Strategic purpose of compensation
Method of calculation
Results-linked bonus
Stock-linked
compensation
stock options
Short-term
results
linkage
system
Medium- to
long-term
results
linkage
system
Intended to clarify the responsibility of
Directors and Corporate Officers to achieve
consolidated financial results in each fiscal
year and to increase motivation for raising
short-term financial results.
A system for raising corporate value from a
medium- to long-term perspective and for
Directors and Corporate Officers to share
with shareholders not only the benefits of
rising share prices but also the risks of
falling share prices. Intended to enhance
the performance of the relevant officers and
increase motivation and determination to
raise corporate value.
In addition to consolidated financial results (operating income, ROE) in
the relevant fiscal year, indicators are set for each division, and bonuses
vary from 0% to 200% of base salary depending on the degree of attain-
ment of targets.
The exercise of a portion of stock options (stock-linked compensation)
is conditioned on achieving certain financial results with the objective of
increasing the linkage of officer compensation to medium- to long-term
financial results and corporate value. For the conditions, consolidated
financial results (operating income, ROE) under the Medium-Term Plan are
set as indicators, and the number of options that can be exercised ranging
from 0% to 100% of the options granted depends on the degree of achieve-
ment of those indicators. TDK established the Corporate Stock Ownership
Guidelines and encourages officers to hold at least a certain number of
shares (including stock options) set according to the officer’s rank.
Standard Allowance
1
Basic remuneration
Compensation
structure
Linked indicators
Fluctuation range
:
+
0.6
Short-term incentive
(Results-linked bonuses)
Operating income, ROE,
target of each division
Depending on the degree of achievement
of operating income and ROE, depart-
ment objectives, vary from 0% to 200%
with respect to the standard allowance
:
+
0.7
Medium- to long-term incentive
(Stock-linked compensation
stock options)
Operating income, ROE
Depending on the degree of
achievement of operating income
and ROE, for the grant number,
an exercisable percentage fluctuates
within the range from 0% to 100%
Total Amount of Remuneration for Directors and Audit & Supervisory Board Members for the Business
Year under Review (Fiscal 2017)
Classification
Total number
of payees
Total amount of
remuneration
(Yen millions)
Remuneration breakdown
Basic remuneration
Results-linked bonuses
Number of
payees
Amount paid
(Yen millions)
Number of
payees
3
Amount paid
(Yen millions)
46
Stock-linked compensation
stock options
Number of
payees
4
Amount paid
(Yen millions)
140
Directors
(outside Directors)
Audit & Supervisory Board
Members (outside Audit &
Supervisory Board Members)
Total
9
(3)
5
(3)
14
422
(45)
85
(27)
506
9
(3)
5
(3)
14
236
(45)
85
(27)
321
Not eligible for the above remuneration
Not eligible for the above remuneration
3
46
4
140
*1. The number of Directors and Audit & Supervisory Board Members at the end of fiscal 2017 were seven and five, respectively. The total number of payees, the total amount of remunera-
tion, and the basic remuneration in the breakdown thereof regarding Directors and Audit & Supervisory Board Members as shown above include two Directors who retired at the close of
the 120th Ordinary General Meeting of Shareholders held on June 29, 2017, and the amount of remuneration paid to them.
*2. As for the amount of results-linked bonuses and stock-linked compensation stock options for Directors for fiscal 2017, it has been recorded as an expense.
68
69
TDK CorporationAnnual Report 2017
Corporate Governance
Compensation
Advisory Committee
Chairman’s Comments
Kazumasa Yoshida
Outside Director
Outside Director of Onkyo Corporation
Outside Director of CYBERDYNE, Inc.
Outside Director of Mamezou Holdings Co., Ltd.
Outside Director of FreeBit Co., Ltd.
As market conditions and customer needs drastically
change, TDK has introduced a director compensation
program centered on a strong linkage to financial
results and on stock-linked compensation stock options,
with the goals of further growth and a strengthening
of its technology leadership.
At the same time, between 2014 and 2015 TDK held
repeated, vigorous discussions centered on its
Compensation Advisory Committee, intended to spur
active engagement in two areas: 1) Recommendation of
compensation linked to medium- to long-term perfor-
mance in accordance with the Corporate Governance
Code; and 2) A management direction that will accel-
erate global business operations and achieve a higher
level of growth. In 2015, TDK introduced a new system
of stock-linked compensation stock options, with
performance benchmarks, built around achievement
of the Company’s Medium-Term Plan.
Further, TDK set out a clear direction for its busi-
ness operations in line with this Medium-Term Plan,
adding to its existing core businesses with the April
2017 launch of Sensor Systems Business Company,
which will serve as the engine for creating new value.
TDK intends to vigorously engage in its shift to a
business structure centered on these new initiatives,
and in making further progress in the corresponding
globalization of its management. To enable the
Company’s top management and officers to work
toward sustainable growth and even higher goals, the
Compensation Advisory Committee will continue active
discussions aimed at building the optimal director
compensation program and achieving further growth.
Execution
P O I N T
• 6 of 18 corporate officers are non-Japanese.
• 72% of overseas Group subsidiaries have a non-Japanese president.
Note 1: As of the end of June 2017
Note 2: Results of fiscal 2016
Promoting Diversity
Approximately 90% of the TDK Group’s sales are from
overseas, and non-Japanese employees account for
approximately 90% of the workforce, giving the Group a
considerable global character. In order to respond to
this global management environment, the Group is
actively hiring non-Japanese managers, and structures
that enable local human resources to exercise leadership
are taking root as they become more effective.
One initiative aimed at strengthening management
through the promotion of diversity is the Global
Management Meeting held once each month. Membership
includes corporate officers at the senior vice president
level and higher, business division heads, and regional
managers from Europe, the Americas, and China, who
gather together to discuss important issues including
business strategies and corporate management. Amidst
a rapidly changing business environment, discussions
are held from a broad range of perspectives, and are a
driving force in promoting further growth at TDK.
Future-Oriented Governance
TDK, which first embarked on globalization in the 1960s and has successfully grown since then, remains con-
stantly aware of global standards, and has worked to strengthen its corporate governance structure with an eye
to the future. Backed by changes in its business structure, today TDK continues to consider measures needed to
achieve long-term, sustainable improvement in corporate value.
Factors behind Strengthening of Corporate Governance
History of Corporate Governance Reforms
June 2002
• Number of Directors reduced from 12 to 7
• First outside Director invited to join
August 2008
• Nomination Advisory Committee launched
(chaired by an outside Director)
the Board
• Compensation Advisory Committee launched
(chaired by an outside Director)
• Funding of Directors’ retirement bonuses
suspended
June 2003
• Directors’ term of office shortened from
2 years to 1 year
• One outside Audit & Supervisory Board
Member added, for a total of 3
June 2004
• First non-Japanese Corporate Officer appointed
June 2007
• Funding of Audit & Supervisory Board
Member retirement bonuses suspended
• Compensation for outside Directors and
Audit & Supervisory Board Members
changed to basic remuneration alone
June 2005
• Introduction of stock-linked compensation
stock options for Directors and Corporate
Officers
June 2009
• 2 non-Japanese Corporate Officers
appointed; one outside Director added
for a total of 3
May 2015
• First analysis and evaluation conducted
of Board of Directors’ effectiveness, and
an outline of the results publicized
June 2016
• TDK Basic Policy on Corporate Governance
established
Results of Fiscal 2017 Board of Directors’ Evaluation
Issues revealed through the Board of
Directors’ evaluation
• Further advancement of management supervisory
function
• Ongoing validation of TDK’s further strategic growth
• Group company governance
• Greater transparency in executive discussions
(greater sharing of discussions at the management
meeting regarding proposals put before it)
Matters already addressed
• Changed the composition of inside Directors to exclude those in charge
of business divisions, and include only those with a big-picture perspec-
tive on the Group as a whole (the chairman, president, and those in
charge of corporate strategy and finance)
Matters to be addressed on a continuing basis
• Ongoing validation of TDK’s medium- to long-term growth strategy
• Management that balances the dynamism and governance of Group
companies
Important Medium- to Long-Term Issues
• Building of an effective hybrid governance structure that combines monitoring-type governance (separation of management execution and
supervisory functions) and management-type governance (Directors also serve as executive officers)
• Formulation and administration of a global human resource strategic plan from a broad perspective that encompasses the TDK Group as
a whole
70
71
• Particularly in consumer components in the ICT field, performance will be affected by short-term market fluctuations. At the same time, it can take from several years to as much as a decade to see the results of investment in R&D expenses, and management decisions need to be based on a medium- to long-term perspective.• As a global company, ensuring business moves forward smoothly requires a governance structure that is also compatible with the standards of countries in Europe and the Americas. • With non-Japanese employees representing in excess of 90% of the workforce on a consolidated basis, TDK needs to consider further globaliza-tion at the director level.TDK CorporationAnnual Report 2017
Corporate Governance
Directors, Audit & Supervisory Board Members, and Corporate Officers
(As of the end of June 2017)
Directors
Audit & Supervisory Board Members
Corporate Officers
Takehiro Kamigama
Shigenao Ishiguro
Tetsuji Yamanishi
Seiji Osaka
Representative Director
Chairman
Representative Director
President and CEO
General Manager of
Manufacturing HQ
General Manager of Humidifier
Countermeasures HQ
Director
General Manager of Finance
& Accounting HQ
Director
General Manager of
Corporate Strategy HQ
In charge of Human
Resources
Junji Yoneyama
Osamu Yotsui
Full-Time Audit &
Supervisory Board Member
Full-Time Audit &
Supervisory Board Member
Makoto Sumita
Kazumasa Yoshida
Kazuhiko Ishimura
Outside Director
Chairman of the Board
Chairman of Nomination
Advisory Committee
Member of Compensation
Advisory Committee
Summary of career
Born on Jan. 6, 1954
Apr. 1980 Entered Nomura Research
Institute, Ltd.
Jun. 1996 Director of INNOTECH
CORPORATION
Apr. 2005 Executive Vice President &
Representative Director of said company
Jun. 2005 Director of IT Access Co., Ltd.
Apr. 2007 President & CEO of INNOTECH
CORPORATION
Jun. 2011 Outside Audit & Supervisory
Board Member of the Company
Apr. 2013 Chairman & CEO of INNOTECH
CORPORATION (present post)
Jun. 2013 Resigned as Outside Audit &
Supervisory Board Member of the Company
Outside Director of the Company
(present post)
Feb. 2015 Chairman & CEO of INNOTECH
FRONTIER, Inc. (present post)
Outside Director
Chairman of Compensation
Advisory Committee
Member of Nomination
Advisory Committee
Outside Director
Member of Nomination
Advisory Committee
Member of Compensation
Advisory Committee
Summary of career
Born on Aug. 20, 1958
Summary of career
Born on Sep. 18, 1954
Oct. 1984 Entered Intel Corporation
Apr. 1979 Entered ASAHI GLASS CO., LTD.
Jan. 2006 Executive Officer of said
company
Jan. 2007 Senior Executive Officer & GM of
Electronics & Energy General Division of
said company
Mar. 2008 President & COO & Representative
Director of said company
Jan. 2010 President & CEO & Representative
Director of said company
Jan. 2015 Chairman & Representative
Director of said company (present post)
Jun. 2015 Outside Director of the Company
(present post)
Jun. 2017 Outside Director of IHI
Corporation (present post)
Oct. 1999 Manager of Technology/OEM
Alliance Business Strategy of Enterprise
Service Group of said company
Mar. 2000 General Manager of
Communication Product Group of Intel K.K.
May 2002 General Manager of Intel
Architecture Business of said company
Jun. 2003 Representative Director and
President of said company
Dec. 2004 Vice President of Sales and
Marketing Group of Intel Corporation
Jun. 2012 Outside Director of Onkyo
Corporation (present post)
Feb. 2013 Outside Director of Gibson
Brands, Inc.
Jun. 2013 Outside Director of CYBERDYNE
Inc. (present post)
Oct. 2013 Advisor of Intel K.K.
Jun. 2014 Outside Director of the Company
(present post)
Jun. 2015 Outside Director of Mamezou
Holdings Co., Ltd. (present post)
Jul. 2016 Outside Director of FreeBit Co.,
Ltd. (present post)
Kazunori Yagi
Toru Ishiguro
Kiyoshi Fujimura
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Summary of career
Born on Apr. 1, 1949
Summary of career
Born on Jun. 19, 1954
Summary of career
Born on Nov. 3, 1949
Apr. 1972 Entered Yokogawa Electric
Corporation
Oct. 1999 Vice President (Officer) and
General Manager of Finance & Business
Planning, in charge of Corporate Marketing
of said company
Apr. 2001 Senior Vice President and
General Manager of Finance & Business
Planning of said company
Jun. 2001 Director, Senior Vice President
and General Manager of Finance &
Business Planning of said company
Jul. 2002 Director, Executive Vice President
and General Manager of Finance &
Business Planning of said company
Jul. 2005 Director, Executive Vice President
and General Manager of Management
Administration Headquarters of
said company
Jun. 2011 Advisor to said company,
Outside Audit & Supervisory Board Member
of Yokogawa Bridge Holdings Corporation
(present post)
Jun. 2012 Outside Director of JSR
Corporation
Jun. 2013 Outside Audit & Supervisory
Board Member of the Company
(present post)
Mar. 2014 Outside Director of OYO
Corporation (present post)
Jun. 2017 Outside Audit & Supervisory
Board Member of Sojitz Corporation
(present post)
Apr. 1980 Registered as lawyer in Japan
Apr. 1972 Entered Mitsubishi Corporation
Joined Hamada & Matsumoto
Apr. 1984 Registered as lawyer in New
York, the United States of America
Jan. 1985 Partner of Hamada & Matsumoto
Sep. 1987 Resident Partner of the London
office of Hamada & Matsumoto
Jun. 2000 Outside Corporate Auditor of
Monex Securities Ltd.
Dec. 2002 Partner of Mori Hamada &
Matsumoto (present post)
Jun. 2015 Outside Audit & Supervisory
Board Member of the Company
(present post)
Jul. 2015 Outside Director of Daiwa Asset
Management Co. Ltd. (present post)
Jul. 2016 Director of Japan Investor
Protection Fund (present post)
Jun. 2017 Director of Japan Exchange
Regulation (present post)
Feb. 2002 Member of the Board, President
and CEO of Mitsubishi Corporation Financial
& Management Services (Japan) Ltd.
Jun. 2003 Senior Corporate Auditor of
Mitsubishi Corporation
Jun. 2007 Senior Vice President of said
company, CIO & CISO and Senior Assistant
to person in charge of Work Restructuring
& Internal Control System
Apr. 2008 Executive Vice President of said
company, CIO, Work Restructuring &
Internal Control System
Jun. 2008 Member of the Board, Executive
Vice President of said company, CIO, Work
Restructuring & Internal Control System
Apr. 2009 Member of the Board, Executive
Vice President of said company, Work
Restructuring & Internal Control System,
IT Service Business Development, CIO
Apr. 2010 Member of the Board, Executive
Vice President of said company, Audit &
Internal Control System
Jun. 2012 Adviser of said company,
Outside Corporate Auditor of AJINOMOTO
CO., INC.
Jun. 2015 Outside Audit & Supervisory
Board Member of the Company
(present post)
President and CEO
Shigenao Ishiguro
Senior Executive Vice President
Hiroyuki Uemura
Executive Vice Presidents
Atsuo Kobayashi
Seiji Osaka
Joachim Zichlarz
Senior Vice Presidents
Noboru Saito
Tetsuji Yamanishi
Corporate Officers
Takakazu Momozuka
Mitsuru Nagata
Joachim Thiele
Keiichi Imamoto
Satoru Sueki
Norbert Hess
Michael Pocsatko
Hong Tian
Albert Ong
Dai Matsuoka
Osamu Hikita
72
73
TDK CorporationAnnual Report 2017 Financial Information
Operating Results
Ten Years of Financial Trends
After demand for electronic devices slowed with the financial crisis that occurred in 2008, and supply chains were disrupted as a
result of the Great East Japan Earthquake and extensive flooding in Thailand in 2011, challenging business conditions continued
for a period. In fiscal 2012, TDK began a large-scale organizational restructuring to create a corporate structure less vulnerable
to changes in the external environment. An important part of this undertaking was reform of the profit structure, which placed
particular emphasis on the magnetic application products business centered on HDD magnetic heads. The focus was on increas-
ing the profitability of multilayer ceramic capacitors and other passive components. Aging domestic manufacturing sites were
closed and consolidated, and measures to optimally place human resources were implemented. Internationally, joint technology
development was undertaken to fully realize the effects from integration with Germany’s EPCOS Group, which TDK acquired in
fiscal 2009.
As a result, the high-frequency components business, which was able to utilize the strengths of the EPCOS Group, achieved
profitability, and passive components became a pillar of profits in conjunction with the widespread adoption of smartphones and
tablet computers. More recently, the multilayer ceramic capacitors business has leveraged strengths including materials and process
technologies to achieve strong results in distinctive electronic components for the automotive and industrial and energy markets.
The operating profit ratio has increased since fiscal 2013 as a result of a recovery in demand for electronic components, the
effects of structural reforms, and other factors. Net sales surpassed ¥1 trillion in fiscal 2015, and reached a record high of ¥1,178.3
billion in fiscal 2017.
Net Sales and Operating Income Ratio Trends
Yen billions
1,200
1,152.3
1,178.3
17.7
1,000
800
600
400
200
0
• Acquisition of the EPCOS Group
• Shrinking demand due to global
financial crisis
Supply chains severed by
Great East Japan Earthquake
and floods in Thailand
Structural Reforms
• Reevaluation of business portfolio
• Optimization of production base
8.1
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
• Results of structural reforms
• Recovery in demand for
electronic components
%
18
15
12
9
6
3
0
FY
/2008
Net sales (left)
Operating income ratio (right)
/2010
/2009
/2011
/2012
/2013
/2014
/2015
/2016
/2017
Average Exchange Rate during the Period
FY
Rate vs. U.S.$
Rate vs. euro
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
114.44
100.71
92.89
85.73
79.07
83.03
100.26
109.84
120.13
108.46
161.59
144.07
131.18
113.12
109.06
107.05
134.42
138.88
132.67
118.92
74
Fiscal 2017 Market Conditions and
Operating Results
In the electronics market, production levels differed by
finished product. Production of smartphones increased
from the previous fiscal year, driven by sustained growth in
demand in the Chinese market. Production in the automo-
bile market was slightly higher than the level of the previous
fiscal year, driven mainly by solid automobile sales in the
United States and Europe. Meanwhile, production of PCs
declined compared with the previous fiscal year. Production
of HDDs also declined compared with the previous fiscal
year due to the decreased demand for PCs and the contin-
ued replacement of HDDs inside PCs by SSDs.
While net sales were affected by continued appreciation
of the yen against the U.S. dollar and the euro, sales of HDD
magnetic heads were strong, as were sales of rechargeable
batteries for smartphones due to expansion of the customer
base. As a result, net sales set a new record, rising 2.3%, to
¥1,178,257 million. The cost of sales in fiscal 2017 increased
3.0% from fiscal 2016, to ¥855,948 million, due to an
increase in net sales. While efforts were made to reduce
costs through increased efficiency, improved yields, and
discounts on raw materials, the impact of price discounts
and a strong yen saw the cost of sales ratio rise by 0.5 per-
centage point year on year, to 72.6%. As a result, gross profit
increased ¥1,177 million (0.4%) year on year, bringing the
gross profit ratio to 27.4%.
Selling, general and administrative expenses in fiscal
2017 increased ¥12,261 million from fiscal 2016, to ¥239,446
million, while the ratio to net sales rose 0.6 percentage
point, to 20.3%. The main factor in the increase was an
increase of about ¥9.0 billion in expenses associated with
the consolidation of Micronas, which was acquired in March
of the previous year, and of Hutchinson, acquired in
October of fiscal 2017. R&D expenses as a percentage of
selling, general and administrative expenses in fiscal 2017
rose 7.5% year on year, to ¥91,254 million, due in part to
Monozukuri (manufacturing exellence) development in the
priority automotive, ICT, and industrial and energy mar-
kets, and to development of strategic growth products in
areas where growth is expected going forward.
Note that in other operating income reported in fiscal
2017, capital gains of ¥144.4 billion were recorded in con-
junction with the business tie-up with Qualcomm and the
agreement to establish a joint venture, in addition to ¥21.2
billion in structural reform expenses, primarily from
impairment losses.
Other income (deductions) improved by ¥4,632 million
year on year, to ¥3,057 million, due in part to a ¥2,762 mil-
lion improvement in foreign exchange gains compared with
the previous year.
TDK posted net income attributable to TDK of ¥145,099
million, resulting in diluted net income attributable to TDK
per common share of ¥1,147.57. Return on equity (ROE)
improved from 9.2% to 19.8%.
Effect of Foreign Exchange Fluctuations
Regarding average currency rates during fiscal 2017, the
yen’s value appreciated 9.7% versus the U.S. dollar and
10.4% versus the euro year on year. Exchange rate fluctua-
tions had the effect of decreasing net sales by approximately
¥129.1 billion and operating income by approximately ¥26.7
billion in fiscal 2017. Additionally, TDK and certain overseas
subsidiaries have entered into agreements for the likes of
forward foreign exchange contracts and currency swaps in
order to mitigate foreign exchange fluctuation risk. The
Company’s policy regarding said risks is that, in principle,
it will hedge up to 50% of foreign currency-denominated
net trade receivables expected to be generated over the
course of the coming six months.
Net Sales by Segment: Comparing Fiscal 2017 and 2016
Breakdown of Operating Income Changes
Yen billions
1,152.3
33.6
219.9
315.3
583.5
Film application products +12.6%
• Expansion of sales for smartphones in China
• Expansion of sales for applications other
than smartphones
Magnetic application products
+10.9%
• Strong shipments of HDD magnetic heads
for a Japanese customer
• Increase in sales due to switch to full
turnkey sales of 3.5-inch HDDs
Passive components -6.0%
32.1
247.7
349.7
548.7
Yen billions
1,178.3
Sales price
reduction
Restructuring cost
Gain on transfer
–19.4
Changes in
sales
Benefits from
restructuring
+144.4
+64.2 –67.9
Rationalization,
cost reduction
+42.0
–26.7
93.4
Exchange rate fluctuation
(U.S.$1.00 = ¥108.46)
+2.4
– 23.7
SG&A expenses
increase*
208.7
FY2016
FY2017
FY2016
FY2017
Passive components
Film application products
Other
Magnetic application products
* Selling, general and administrative expenses shown on the graph include a
portion of business transfer-related expenses.
Annual Report 2017
75
2017TDK Corporation
Financial Information
Financial Condition
Analysis of Financial Position during Last 10 Fiscal Years
From the end of fiscal 2008 through the end of fiscal 2009, total assets increased due principally to the acquisition of the
EPCOS Group. Since the end of fiscal 2012, net trade receivables, inventories, property, plant and equipment, and other items
have each increased alongside higher net sales for certain products, and total assets are trending higher as a result.
In conjunction with the acquisition of the EPCOS Group, the company’s stockholders’ equity ratio fell significantly between
the end of fiscal 2008 and the end of fiscal 2009, but it has been on a gradual increase since fiscal 2010. The stockholders’
equity ratio fell 6.0 percentage points, to 46.6%, at the end of fiscal 2016 as a result of investment in new products and new
business, as well as of active M&As, but rose by 1.1 percentage points year on year in fiscal 2017, to 47.7%, due to a significant
increase in income with the transfer of business to Qualcomm.
Under its current Medium-Term Plan, TDK plans for ¥430-¥480 billion in new facility investments aimed at driving accel-
eration of strategic growth product expansion, strengthening of its overseas R&D base, acceleration of existing core business
expansion, and acceleration of Monozukuri Innovation. In fiscal 2017, ¥167,631 million in capital expenditures were under-
taken. While adhering closely to a policy of investing only upon consideration of the balance between market demand and
supply, TDK will continue to engage in ongoing, active capital investment.
Total Assets and Stockholders’ Equity Ratio
Yen billions
1,800
Acquisition of the EPCOS Group
1,500
1,200
900
600
300
0
Increase in cash and cash equiva-
lents, etc., associated with transfer
of business to Qualcomm
Increase in foreign cur-
rency translation adjust-
ments associated with
major yen depreciation
1,664.3
1,450.6
47.7
46.6
Structural Reforms
• Reevaluation of business portfolio
• Optimization of production base
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total assets (left)
Stockholders’ equity ratio (right)
%
90
75
60
45
30
15
0
FYE
Status of Capital Expenditures in Fiscal 2017
In the Passive Components segment, capital expenditures
totaled ¥68,605 million, primarily for the purpose of
strengthening the business base and increasing the pro-
duction capacity of inductive devices. Capital expenditures
in the Magnetic Application Products segment totaled
¥14,954 million, mainly for the development and production
of next-generation HDD magnetic heads with high record-
ing densities. Capital expenditures in the Film Application
Products segment totaled ¥55,834 million, mainly to boost
production of lithium polymer batteries. Capital expendi-
tures in Other totaled ¥7,246 million. Capital expenditures
for the R&D divisions at the headquarters totaled ¥20,992
million, primarily for investments in building new plants
and in internal IT infrastructure and fundamental
research and development.
Financial Position in Fiscal 2017
Assets
Total assets amounted to ¥1,664,333 million as of March 31,
2017, an increase of ¥213,769 million from March 31, 2016.
Liquidity (cash and cash equivalents, short-term invest-
ments) increased by ¥79,087 million and net trade receiv-
ables increased by ¥28,691 million, while property, plant
and equipment fell by ¥22,972 million.
Liabilities
Total liabilities amounted to ¥862,215 million, a ¥96,284
million increase from the end of the previous fiscal year.
While short-term debt fell by ¥81,003 million, long-term
debt increased by ¥73,109 million and trade payables
increased by ¥63,980 million.
Net Assets
Total TDK stockholders’ equity in net assets increased by
¥118,253 million, to ¥793,614 million. Other retained earnings
increased by ¥126,376 million due to a significant increase
in income due primarily to the recording of capital gains
with the transfer of business to Qualcomm.
Capital Expenditures by Segment: Comparing Fiscal 2017 and 2016
Yen billions
160.7
15.8
52.8
16.1
75.9
Other and headquarters, and
R&D divisions
+¥12.4 billion
Film application products +¥3.0 billion
Magnetic application products –¥1.1 billion
Passive components –¥7.3 billion
167.6
28.2
55.8
15.0
68.6
FY2016
FY2017
Passive components
Other and headquarters, and R&D divisions
Magnetic application products
Film application products
Total Assets: Comparing Fiscal 2017 and 2016
Yen billions
1,450.6
186.6
487.6
35.3
741.0
Net property, plant and equipment
–¥23.0 billion
Investment in securities +¥126.5 billion
Current assets +¥125.1 billion
• Increase in cash and cash equivalents
• Increase in trade receivables
1,664.3
171.7
464.7
161.8
866.1
FYE2016
FYE2017
Current assets
Net property, plant and equipment
Investments in securities
Other assets
Total Liabilities and Net Assets: Comparing Fiscal 2017 and 2016
Yen billions
1,450.6
684.6
314.7
451.2
Total equity +¥117.5 billion
• Increase in other retained earnings
Noncurrent liabilities +¥69.9 billion
• Increase in long-term debt
Current liabilities +¥26.4 billion
• Decrease in short-term debt
• Increase in trade payables
1,664.3
802.1
384.6
477.6
FYE2016
FYE2017
Current liabilities
Noncurrent liabilities
Total equity
76
Annual Report 2017
77
2017TDK Corporation
Financial Information
Cash Flow Status
Analysis of Cash Flows during Last 10 Fiscal Years
During fiscal 2009, TDK conducted a large-scale M&A (its acquisition of the EPCOS Group), and consequently its free cash
flows fell significantly into negative territory. Most recently, the company acquired several companies in the sensor business,
where market expansion is expected going forward, including Micronas of Switzerland, Tronics of France, ICsense of Belgium,
and InvenSense of the United States. The Company has nevertheless maintained free cash flows in positive territory by steadily
increasing cash flows through operating activities and by systematically conducting asset sales and business transfers.
TDK’s principle is to use cash and deposits (which includes cash, deposits, and short-term investments) as liquid capital,
while using funds generated from day-to-day business activities to cover operating capital and capital expenditure funds,
and endeavors to maintain liquidity at 2.0 months’ worth of monthly consolidated net sales or greater. Additionally, in order
to improve its capital efficiency, TDK has introduced a Cash Management System (CMS) in Japan, the United States, Europe,
and China. Through this system, the Company centrally manages funds using headquarters functions as much as possible.
However, for its subsidiaries that are unable to cover operating capital and capital expenditure funds with cash on hand, the
Company elects to use funds within the TDK Group to the fullest extent possible. In addition, the Company has been manag-
ing cash on hand with a focus on safety and liquidity.
Acquisition of the EPCOS Group
Cash Flows
Yen billions
300
150
0
–150
–300
47.7
160.1
89.0
–37.8
–71.1
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
FY
Net cash provided by operating activities
Net cash provided by (used in) financing activities
Net cash used in investing activities
Free cash flows
Free Cash Flows in Fiscal 2017
In order to accurately respond to rapid technological inno-
vation in the electronics market and intensifying sales com-
petition, and to push strongly ahead with expansion of its
main businesses, TDK undertook ¥167,631 million in capital
expenditures in fiscal 2017.
At the same time, free cash flows significantly improved
in the same period as a result of the transfer of business to
Qualcomm. Funds obtained as compensation for the busi-
ness transfer are being utilized in new M&A activity in
accordance with the Company’s growth strategy, as TDK
works to further bolster its financial and profit structure.
Breakdown of Free Cash Flows
Yen billions
Net cash provided by
operating activities
Proceeds from sales
of tangible and
intangible assets
Proceeds from sale
of business, net of
cash transferred
Other–net
160.1
–167.6
Proceeds from
sale and maturity
of short-term
investments
–16.8
Free
cash flows
–1.0
+38.7
+21.1
–73.6
+128.2
Acquisition of
subsidiaries, net
of cash acquired
89.0
Capital
expenditures
Payment for
purchase of short-term
investments
Major Business Risks and Risk Management System
The TDK Group is active in many markets and regions around the world; the overseas sales ratio of the Group has exceeded
90%. In addition, competition in the electronic components industry, to which the Group belongs, is severe due to increased
technological innovation. In view of this situation, we have developed the following risk management measures to address
major business risks that may significantly affect the TDK Group.
Details of Major Risks
Examples of Risk Management Measures
Changes in economic trends due to global problems
and economic fluctuations
• Collect information on global political and economic developments in a timely manner
Reduction of sales revenue or operating income due
to foreign exchange rate fluctuations
• Increase purchases of raw materials in foreign currencies and local procurement of materi-
als consumed overseas
• Procure foreign capital and foreign currency futures contracts
Impacts from various problems in conjunction with
conducting overseas business (international political
risks, economic risks, social risks, etc.)
• Analyze and implement countermeasures to address risks in each country with a focus on
global economic developments
Greater-than-expected decline in Group product
prices and prolonged low prices
• Continuously implement cost-cutting measures and efforts to raise profitability
• Identify unprofitable businesses and products and establish criteria for withdrawal
Failure of continuous technological reform and
new product development
• Review research and development systems based on analysis of market trends on an
ongoing basis
• Manage development to conduct selection and consolidation of development topics
Occurrence of quality-related problems, such as
recalls and product liability claims
• Use proprietary quality technology and previously accumulated quality data
• Create quality assurance systems to ensure quality, from upstream development stages
through to design reviews, internal quality inspections, supplier audits and guidance, and
process management at every product stage, including planning, design, prototyping, and
manufacturing
Occurrence of major disputes regarding
intellectual property
• Reinforce utilization of patent portfolio through management and acquisition of intellectual
property rights related to product functions, designs, etc.
Inability to recruit and develop human resources
as planned
• Actively recruit recent graduates and hire mid-career, experienced human resources
• Create programs intended to raise employee motivation, including enhancement of fair
evaluation and benefits programs based on a goal-oriented management system; expand
various educational programs intended to develop autonomous and global human
resources; and transmit TDK’s Monozukuri DNA
Suspension of supplies of raw materials, etc., or
extreme increases in raw material prices
• Purchase raw materials, among others, from multiple outside suppliers and create production
systems premised on securing appropriate quantities in a timely manner
• Appropriately review suppliers
Stricter regulatory restrictions by government agencies
• Continuously monitor related regulatory amendment trends, among others, and take
countermeasures
Impacts on the value of financial assets and finan-
cial liabilities from fluctuations in interest rates
• Use interest rate swaps to fix amounts of interest paid
• Maintain current assets at 2.0 months or more of consolidated monthly net sales
Substantial reduction or termination of business as
a result of deterioration of a customer’s financial
performance or acquisition of a customer by a
third party
Occurrence of a natural disaster, interruption of
power supplies, or epidemic
Application of stricter environmental regulations
• Conduct business with a variety of customers and set trading terms taking into consideration
customer credit risks
• Establish highly detailed business continuity plans
• Implement disaster preparedness measures and infectious disease control measures to
prepare for unexpected natural disasters or epidemics and install generating facilities to
prepare for electric power shortages
• Continuously monitor trends regarding revision of relevant regulatory systems and take
countermeasures in advance
• Develop products and manufacturing methods with minimal environmental impact
• Undertake a range of environmental preservation measures
Problems related to M&As, including inability to
recover invested funds and the occurrence of addi-
tional expenses
• Implement M&As taking into consideration market trends and customer needs; the business
results, financial status, technological superiority, and market competitiveness of target
companies; and the Group’s business portfolio
Data breaches concerning confidential information
of customers and business partners
• Create and thoroughly implement Groupwide management systems, reinforce IT security
and facility security, and conduct employee training
78
TDK Corporation
79
Annual Report 2017
Consolidated Balance Sheets
TDK Corporation and Consolidated Subsidiaries (U.S. GAAP)
As of March 31, 2017 and 2016
ASSETS
Current assets
Cash and cash equivalents
Short-term investments
Net trade receivables
Inventories
Other current assets
2016
%
51.1
Yen millions
740,994
285,468
21,964
226,218
157,129
50,215
Yen millions
%
U.S.$ thousands
Yen millions
2017
Change
52.0
866,136
330,388
56,131
254,909
154,499
70,209
7,733,357
2,949,893
501,170
2,275,973
1,379,455
626,866
125,142
44,920
34,167
28,691
(2,630)
19,994
Noncurrent assets
Investments in securities
Net property, plant and equipment
Other assets
709,570
48.9
35,335
487,639
186,596
798,197
161,825
464,667
171,705
48.0
7,126,759
1,444,866
4,148,813
1,533,080
88,627
126,490
(22,972)
(14,891)
Total
1,450,564
100.0
1,664,333
100.0
14,860,116
213,769
For convenience only, an exchange rate of U.S.$1 = ¥112 has been used.
LIABILITIES AND EQUITY
Current liabilities
Short-term debt
Current installments of
long-term debt
Trade payables
Accrued expenses
Other current liabilities
Noncurrent liabilities
Long-term debt, excluding
current installments
Retirement and severance benefits
Other noncurrent liabilities
Total liabilities
Common stock
Additional paid-in capital
Legal reserve
Retained earnings
Accumulated other
comprehensive income (loss)
Treasury stock
Total TDK stockholders' equity
Noncontrolling interests
Total equity
Total
2016
%
31.1
Yen millions
451,234
158,683
36,228
112,664
123,892
19,767
Yen millions
%
U.S.$ thousands
Yen millions
2017
Change
477,594
28.7
4,264,232
77,680
42,517
176,644
148,609
32,144
693,571
379,616
1,577,179
1,326,866
287,000
314,697
21.7
384,621
23.1
3,434,116
140,826
147,136
26,735
213,935
125,202
45,484
1,910,134
1,117,875
406,107
765,931
52.8
862,215
51.8
7,698,348
291,438
137,044
336,848
7,445,393
126,376
32,641
21,083
34,221
707,508
(102,285)
(17,807)
675,361
9,272
684,633
46.6
0.6
47.2
32,641
15,349
37,727
833,884
(108,575)
(17,412)
793,614
8,504
802,118
(969,420)
(155,464)
7,085,839
75,929
7,161,768
47.7
0.5
48.2
1,450,564
100.0
1,664,333
100.0
14,860,116
26,360
(81,003)
6,289
63,980
24,717
12,377
69,924
73,109
(21,934)
18,749
96,284
—
(5,734)
3,506
(6,290)
395
118,253
(768)
117,485
213,769
80
81
TDK CorporationAnnual Report 2017
Consolidated Statements of Income and
Statements of Comprehensive Income (Loss)
TDK Corporation and Consolidated Subsidiaries (U.S. GAAP)
For the years ended March 31, 2017 and 2016
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
2016
2017
Change
Yen millions
(%)
Yen millions
(%) U.S.$ thousands
Yen millions
1,152,255
100.0
1,178,257
100.0
10,520,152
831,123
321,132
72.1
27.9
855,948
322,309
72.6
27.4
7,642,393
2,877,759
26,002
24,825
1,177
227,185
19.7
239,446
20.3
2,137,911
12,261
(%)
2.3
3.0
0.4
5.4
—
Net sales
Cost of sales
Gross profit
Selling, general and
administrative expenses
Other operating expense (income)
Operating income
Other income (deductions):
Interest and dividend income
Interest expense
Foreign exchange gain (loss)
Other–net
Total other income (deductions)
Income before income taxes
Income taxes
Net income
Less: Net income attributable to
noncontrolling interests
Net income attributable to TDK
533
93,414
4,496
(3,116)
(2,394)
(561)
(1,575)
91,839
25,216
66,623
1,795
64,828
0.1
8.1
–0.1
8.0
2.2
5.8
0.2
5.6
For convenience only, an exchange rate of U.S.$1 = ¥112 has been used.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income
Other comprehensive income (loss), net of taxes:
Foreign currencies translation adjustments
Pension liability adjustments
Net unrealized gains (losses) on securities
Total other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to TDK
For convenience only, an exchange rate of U.S.$1 = ¥112 has been used.
(125,797)
–10.6
(1,123,188)
(126,330)
208,660
17.7
1,863,036
115,246
123.4
4,152
(3,428)
368
1,965
3,057
211,717
66,157
145,560
461
145,099
37,071
(30,607)
3,286
17,544
27,294
(344)
(312)
2,762
2,526
4,632
1,890,330
119,878
590,687
1,299,643
4,116
1,295,527
40,941
78,937
(1,334)
80,271
0.3
18.0
5.6
12.4
0.1
12.3
—
130.5
162.4
118.5
–74.3
123.8
2016
2017
Change
Yen millions
Yen millions
U.S.$ thousands
Yen millions
66,623
145,560
1,299,643
78,937
(61,172)
(31,555)
(6,994)
(99,721)
(33,098)
1,371
(34,469)
(18,866)
13,465
(274)
(5,675)
(168,447)
120,223
(2,446)
(50,670)
139,885
1,248,973
933
8,330
138,952
1,240,643
42,306
45,020
6,720
94,046
172,983
(438)
173,421
Consolidated Statements of Stockholders’ Equity
TDK Corporation and Consolidated Subsidiaries (U.S. GAAP)
For the years ended March 31, 2017 and 2016
2016
Common
stock
Additional
paid-in capital
Legal
reserve
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total TDK
stockholders’
equity
Noncontrolling
interests
Total
equity
Yen millions
Balance as of March 31, 2015
32,641
39,755
29,685
661,159
(5,882)
(18,497)
738,861
19,146
758,007
Equity transaction of consolidated
subsidiaries and other
Cash dividends
Transferred to legal reserve
Comprehensive income
Net income
Other comprehensive
income (loss)
Total comprehensive income
(loss)
Acquisition of treasury stock
Sale of treasury stock
(18,672)
(79)
2,894
702
( 15,155)
(11,068)
(26,223)
(13,864)
4,536
(4,536)
( 13,864)
(177)
(14,041)
—
—
64,828
64,828
1,795
66,623
(99,297)
( 99,297)
(424)
(99,721)
( 34,469)
1,371
(33,098)
(12)
( 12)
—
(12)
—
Balance as of March 31, 2016
32,641
21,083
34,221
707,508
(102,285)
(17,807)
675,361
9,272
684,633
2017
Common
stock
Additional
paid-in capital
Legal
reserve
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total TDK
stockholders’
equity
Noncontrolling
interests
Total
equity
Yen millions
Balance as of March 31, 2016
32,641
21,083
34,221
707,508
(102,285)
(17,807)
675,361
9,272
684,633
Equity transaction of consolidated
subsidiaries and other
Cash dividends
Transferred to legal reserve
Comprehensive income
Net income
Other comprehensive
income (loss)
Total comprehensive income
(loss)
Acquisition of treasury stock
Sale of treasury stock
(5,734)
(80)
(15,137)
3,506
(3,506)
(143)
397
(5,560)
(15,137)
—
(1,625)
(7,185)
(76)
(15,213)
—
145,099
145,099
461
145,560
(6,147)
(6,147)
472
(5,675)
138,952
933
139,885
(3)
1
(3)
1
(3)
1
Balance as of March 31, 2017
32,641
15,349
37,727
833,884
(108,575)
(17,412)
793,614
8,504
802,118
2017
Common
stock
Additional
paid-in capital
Legal
reserve
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury
stock
Total TDK
stockholders’
equity
Noncontrolling
interests
Total
equity
U.S.$ thousands
Balance as of March 31, 2016
291,438
188,241 305,544 6,317,036
(913,259)
(158,991) 6,030,009
82,786 6,112,795
Equity transaction of consolidated
subsidiaries and other
Cash dividends
Transferred to legal reserve
Comprehensive income
Net income
Other comprehensive
income (loss)
Total comprehensive income
(loss)
Acquisition of treasury stock
Sale of treasury stock
(51,197)
(714)
(1,277)
3,545
(49,643)
(14,509)
(64,152)
(135,152)
31,304
(31,304)
(135,152)
(678)
(135,830)
—
—
1,295,527
1,295,527
4,116 1,299,643
(54,884)
(54,884)
4,214
(50,670)
1,240,643
8,330 1,248,973
(27)
9
(27)
9
(27)
9
Balance as of March 31, 2017
291,438
137,044 336,848 7,445,393
(969,420)
(155,464) 7,085,839
75,929 7,161,768
For convenience only, an exchange rate of U.S.$1 = ¥112 has been used.
82
83
TDK CorporationAnnual Report 2017
Consolidated Statements of Cash Flows
TDK Corporation and Consolidated Subsidiaries (U.S. GAAP)
For the years ended March 31, 2017 and 2016
Corporate Information
TDK Corporation and Consolidated Subsidiaries (U.S. GAAP)
As of March 31, 2017
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
Deferred income taxes
Impairment of long-lived assets
Impairment of goodwill
Gain on sale of business
Changes in assets and liabilities:
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued expenses
Decrease (increase) in other assets and liabilities, net
Other–net
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Proceeds from sales of tangible and intangible assets
Proceeds from sale and maturity of short-term investments
Payment for purchase of short-term investments
Proceeds from sale and maturity of securities
Payment for purchase of securities
Proceeds from sale of business, net of cash transferred
Acquisition of subsidiaries, net of cash acquired
Receipt from collection of loans made by TDK
Other–net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from long-term debt
Repayment of long-term debt
Increase (decrease) in short-term debt, net
Dividends paid
Acquisition of noncontrolling interest
Other–net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and
cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
For convenience only, an exchange rate of U.S.$1 = ¥112 has been used.
84
2016
2017
Yen millions
Yen millions
U.S.$ thousands
66,623
145,560
1,299,643
Corporate Name
TDK Corporation
Corporate Headquarters
Shibaura Renasite Tower, 3-9-1 Shibaura, Minato-ku,
Tokyo 108-0023
Transfer Agent
Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233
Independent Registered Public Accounting Firm
KPMG AZSA LLC (the Japan member firm of KPMG International)
83,224
2,001
533
—
—
(7,262)
(10,591)
16,460
(509)
75
1,009
151,563
(160,674)
3,918
30,348
(27,352)
4,833
(1,112)
1,668
(15,165)
21,605
1,346
(140,585)
22,700
(1,289)
50,213
(13,864)
(28,504)
49
29,305
(19,919)
20,364
265,104
285,468
87,491
30,723
16,811
2,600
781,170
274,312
150,098
23,214
(149,538)
(1,335,161)
(59,152)
(21,709)
67,913
12,467
19,941
7,029
160,136
(167,631)
21,085
38,697
(73,632)
523
(837)
128,210
(16,819)
603
(1,310)
(71,111)
119,275
(52,246)
(81,063)
(15,132)
(8,914)
327
(37,753)
(6,352)
44,920
285,468
330,388
(528,143)
(193,830)
606,366
111,313
178,045
62,759
1,429,786
(1,496,705)
188,259
345,509
(657,429)
4,670
(7,473)
1,144,732
(150,170)
5,384
(11,697)
(634,920)
1,064,955
(466,482)
(723,777)
(135,107)
(79,589)
2,920
(337,080)
(56,714)
401,072
2,548,821
2,949,893
Date of Establishment
December 7, 1935
Authorized Number of Shares
480,000,000 shares
Number of Shares Issued
129,590,659 shares
Number of Shareholders
25,987
Common Stock
¥32,641,976,312
Securities Traded
Tokyo Stock Exchange (Listed on the 1st Section in October 1961)
Securities Code
6762
Number of Employees (Consolidated)
99,693
ADR Information
Type
Level 1 with sponsorship
ADR Ratio
1 common stock = 1 ADR
Ticker Symbol
TTDKY
CUSIP
872351408
Depositary Bank
Citibank, N.A. Shareholder Services
P.O. Box 43077
Providence, Rhode Island 02940-3077
U.S.A.
Tel: 1-877-248-4237 CITI-ADR (toll free)
Tel: 1-816-843-4281 (out of U.S.)
Fax: 1-201-324-3284
URL: http://www.citi.com/adr
E-mail: citibank@shareholders-online.com
Principal Shareholders (10 largest shareholders)
Name of shareholder
1. The Master Trust Bank of Japan, Ltd. (Trust account)
2. Japan Trustee Services Bank, Ltd. (Trust account)
3. Trust & Custody Services Bank, Ltd. (Securities investment trust account)
4. JP MORGAN CHASE BANK 380055
5. BNP Paribas Securities (Japan) Limited
6. Japan Trustee Services Bank, Ltd. (Trust account 5)
7. Goldman Sachs Japan Co., Ltd.
8. STATE STREET BANK WEST CLIENT - TREATY 505234
9. Japan Trustee Services Bank, Ltd. (Trust account 7)
10. Nippon Life Insurance Company
Total
Note: Other than the above, the Company holds 3,391 thousand shares of treasury stock.
Number of shares held
(thousands of shares)
Percentage of number of
shares held in the total
number of issued shares
(%)
20,669
12,880
3,939
2,938
2,126
2,070
1,914
1,858
1,693
1,640
51,727
16.38
10.21
3.12
2.33
1.68
1.64
1.52
1.47
1.34
1.30
40.99
Millions of shares
Status by Ownership
TDK Stock Price and Volume
Japanese Financial Institutions
45.05%
Foreign Institutions and Individuals 36.45%
8.36%
Japanese Individuals, etc.
6.60%
Japanese Securities Firms
2.62%
Treasury Stock
0.93%
Japanese Corporations
Yen
10,000
7,500
5,000
2,500
0
1 2 3
4 5 6 7 8
9 10 11 12
1 2 3
4 5 6
7 8
9 10 11 12
Stock price (left)
2015
Volume (right)
2016
1 2 3
2017
80
60
40
20
0
85
TDK CorporationAnnual Report 2017
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TDK Corporation
3-9-1 Shibaura, Minato-ku, Tokyo 108-0023
http://www.global.tdk.com/corp/en/index.htm