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L e ver ag ing
t he Streng t h of
O ur Diversity
A N N U A L R E POR T 2018
English Version
TDK Corporation
Nihonbashi Takashimaya Mitsui Building,
2-5-1 Nihonbashi, Chuo-ku, Tokyo 103-6128
http://www.global.tdk.com/corp/en/index.htm
C O N T E N T S
02
INTRODUCTION
14 Message from the President—To Our Stakeholders
22
Management Strategies:
Guided by Its Unchanging Founding Spirit, TDK Continues to March On
24 TDK Overview
26 Summary of the Previous Medium-Term Plan
28 Management Environment
30 Medium-Term Plan “Value Creation 2020”
32 Message from the Corporate Officer of Corporate Planning
34 Message from the Corporate Officer of Finance & Accounting
36 Executing Growth Strategies
44 Synergies Behind the Sensor Business
46 Moving to Improve Sustainable Corporate Value
46 Global Human Resource Strategies Bolstered
by Strength of Diversity
49 TDK’s Workstyle Innovation
50 The TDK Group’s Materiality
52 Optimization of the Value Chain
56 Consolidated Business Results Highlights
60 Overview of Business Conditions by Segment
62 Business Strategies
62 Passive Components Segment
64 Sensor Application Products Segment
66 Magnetic Application Products Segment
68 Energy Application Products Segment
70 Corporate Governance
70 Dialogue: TDK from Outside Perspectives
73 Strengthening Future-Oriented Governance
74 Sustained Improvements Stressing Effectiveness
78 Directors, Audit & Supervisory Board Members, and Corporate Officers
80 Corporate Information
Editorial Policy
Annual Report 2018 provides financial data, including
information on business results, business and market-
ing 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 informa-
tion, please visit the TDK website.
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, assump-
tions, 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 cau-
tion readers that, being subject to risks, uncertainties,
and other factors, the TDK Group’s actual results, per-
formance, achievements, or financial positions could
be materially different from any future results, perfor-
mance, achievements, or financial positions expressed
or implied by these forward-looking statements, and
the TDK Group undertakes no obligation to publicly
update or revise any forward-looking statements after
the issue of Annual Report 2018 except as provided
for in applicable laws and ordinances.
Constantly Upholding Our
Founding Spirit
Corporate Motto
Contribute to
culture and industry
through creativity
Ferrite in the early years
Annual Report 2018
01
Addressing future demand on a material levelToday’s TDK was founded in 1935 as Tokyo Denki Kagaku Kogyo K.K., with the goal of industrializing ferrite.Kenzo Saito, the Company’s first president, succeeded in commercializing ferrite, an unknown material at the time. Saito devoted his energy to examining technologies from the perspective of society’s future needs, pursuing the goal of creating value that does not yet exist in the world on a material level.This founding spirit is incorporated in the TDK Corporate Motto, and continues to be faithfully passed down today.
INTR ODUC TIO N
A Never-Changing TDK,
an Ever-Changing TDK
Since the invention of ferrite in 1930, 88 years ago, TDK has put the material to use in a constantly expanding range
of ferrite products. Passive components and magnets that utilize TDK’s core technologies in ferrite-based materials
and process technologies continue to be the foundation of Monozukuri (manufacturing excellence), for which TDK
is known. We are constantly building upon this foundation and developing new innovations from the perspective of
society’s future needs.
Ultrasonic sensors
Hall sensors
Inertial sensors
Semiconductor embedded
substrate (SESUB) modules
Acceleration
sensors
Gyroscope
sensors
Pressure sensors
MEMS
microphones
Gear tooth sensors
TMR sensors
Thin-film elec-
tronic
components
Current sensors
Temperature
sensors
Biosensors
High-frequency components/modules
PiezoHaptTM / PowerHapTM
Piezo actuators
Flash storages
Flash memory
controllers
Film solar cells
Transparent conductive
films
On-board chargers
A Never-Changing TDK
Radio wave
anechoic
chambers
Varistors
HDD magnetic heads
Radio wave absorbers
Noise suppression sheets
Rechargeable lithium
polymer batteries
An Ever-Changing TDK
Switching
power supplies
DC-DC converters
for xEV
CORE TECHNOLOGY
Materials
Technology
CORE TECHNOLOGY
Process
Technology
We research the properties of materials at the
atomic level and develop original electronic
components and devices to meet advanced needs.
Materials design technology
Powder control technology
Microstructure control technology
We create high-performance and function products
with nanometer-order control technology.
Forming technology
Sintering technology
Thick-film process technology
Thin-film process technology
Arresters
NTC/PTC thermistors
Common mode filters
3-terminal filters
Chip beads
Noise suppression filters
Clamp filters
Transformers
Reactors
Inductors
Ferrite cores
Electric double-layer capacitors
(EDLC)
Aluminum electrolytic
capacitors
Film capacitors
Ceramic capacitors
Bond magnets
Neodymium magnets
Ferrite magnets
Materials
Technology
A Never-Changing
TDK
Process
Technology
TDK, which positions ferrite as its
foundation, has expanded the potential
of innovation guided by the concept of
“A Never-Changing TDK.”
P.10–P.11 Five Core Technologies as the Foundations of Growth
Ferrite
Four Great World-Class Innovations by TDK
1935
INNOVATION 1
1968
INNOVATION 2
Ferrite
The invention of ferrite by the Tokyo Institute
of Technology and the commercial develop-
ment of ferrite cores by TDK was recognized in 2009 by the Institute of
Electrical and Electronics Engineers as an IEEE Milestone—a historic
achievement that has made significant contributions to society and the
global electronics industry.
Music cassette tapes
TDK developed the world’s first cassette
tape for music in response to demand
from consumers to enjoy music easily. Our top-notch magnetic
material and coating technologies later became the foundation
for various innovations.
1980
INNOVATION 3
Fine multilayering technology
TDK developed the world’s first multilayer chip
inductor by laminating a three-dimensional
helical coil inside a chip. This technology has
become the foundation for the miniaturization
and weight reduction of electronic equipment.
1987
INNOVATION 4
Thin-film head technology
TDK has contributed to the astonishing
high recording density of hard disk
drives (HDDs) by utilizing nano-level
thin-film process technology.
02
TDK Corporation
Annual Report 2018
03
INTR ODUC TIO N
TDK Evolves Constantly Based on
a Never-Changing TDK
TDK has a solid foundation of passive components and ferrite-based products and core technologies, centering on
materials and process technologies. While our core products continue to sell well, we are sowing seeds in anticipation
of future demand from society based on a sustainable growth plan of nonlinear evolution that entails boldly replacing
Social demand
Electrification of automobiles accelerates
Social demand
Cloud computing
Social demand
Smartphone use spreads and performance
improves continuously
Next-generation
electronic components
our core businesses.
Social demand
Self-transformation ahead of
demand from society
New innovation
Growth
Social demand
Personal computer use spreads and storage capacity
expands continuously
Batteries
Sensors and
actuators
High-frequency
components
Power
supplies
HDD magnetic heads
Growth
Sowing
Sowing
Commoditization
Commoditization
Social demand
Electrical appliance use spreads
Inductors
Cassette tape use spreads
Magnets
Magnetic tapes
Capacitors
An Ever-Changing TDK
A Never-Changing TDK
1935
1960
1961
1965
1970
1980
1986
1990
2000
2000
2001
2005
2007
2008
2010
2011
2013
2015
2016 2017
2017
2018
2019
2020
2021
CORPORATE
HISTORY
Founded in Shiba-ku, Tokyo, with the
goal of industrializing the world’s first
ferrite core.
TDK shares listed on the
First Section of the Tokyo
Stock Exchange.
Establishes TDK Electronics Corporation, a local subsidiary
in New York (with manufacturing and sales sites later
established around the world).
Acquires SAE Magnetics,
a magnetic head manufacturer.
Acquires Headway
Technologies, a magnetic
head manufacturer.
Acquires ATL, a manufacturer
and seller of rechargeable
lithium polymer batteries.
Acquires EPCOS, an electronic
device manufacturer.
Acquires Lambda Power Group,
the power supply business of Invensys plc.
Acquires Micronas, a developer and
manufacturer of magnetic sensors.
Acquires Hutchinson, an HDD suspension
manufacturer.
Acquires Tronics, a MEMS design and
manufacturing company.
Acquires ICsense, an
Application Specific Integrated
Circuit (ASIC) development and
custom IC design company.
Acquires InvenSense,
a company with an extensive
portfolio of MEMS and other
sensor products.
Self-Transformation
Is the Driving Force
behind TDK’s Growth
TDK has transformed itself as a company in many
ways, not merely in its business portfolio. We have
achieved rapid globalization as a result of expanding
our overseas sites to establish suitable production
locations and by pursuing a dynamic M&A strategy.
In addition, we continue to strengthen corporate
governance—for example, by switching to global
standards to match our global business structure—
not in response to external demand, but to improve
the chances of success of our strategies from a long-
term perspective.
Increasing Globalization
Strengthening governance
Growing in the automotive market
Overseas
production ratio
85%
2018
Overseas sales ratio
91%
2018
42%
1995
57%
1995
Number of Outside Officers
(Directors and Audit &
Supervisory Board Members)
5people
2018
Japanese
Corporate Officers
11 people
1 person
2002
Non-Japanese
Corporate Officers
6people
(as of June 2018)
Sales in the automotive market
About ¥230.0 billion
2018
About ¥97.0 billion
2010
04
05
TDK CorporationAnnual Report 2018 INTR ODUC TIO N
To Answer the Needs of
a New World
Anticipating a transformation of social structures, TDK is breaking ground on another path of nonlinear
evolution. Taking a long-term view, TDK has made many bold moves, including selling its high-frequency
components business, which had been driving profitability, and focusing on M&As in the area of sensors.
2015
Consolidated net sales
(external)
¥1,082.6 billion
Consolidated operating income
(internal)
¥72.5 billion
New “nonlinear evolution”
Passive Components
Magnetic Application Products
Film Application Products
Other
EXIT
Sale of high-frequency components
business and deepening of collabora-
tion with Qualcomm
TDK and Qualcomm established RF360 Holdings, a joint
venture to supply high-frequency components, and the
Company will complete the sale of all shares to Qualcomm
in August 2019. The sale of the high-frequency compo-
nents business, a driving force for earnings, is a manifesta-
tion of TDK’s strong will to transformation itself with a view
toward the future of society.
TD K
Qualcomm
Main synergies from the collaboration
• Technical cooperation on a wide range of cutting-
edge technologies in next-generation mobile com-
munications, IoT, and automotive-related fields
including passive components, batteries, wireless
power transfers, sensors, and MEMS
• Enhanced reference design capabilities through
Qualcomm
INVEST
Dynamic M&As focusing on sensors
TDK has changed its business portfolio through acquisi-
tions focusing on sensors and has developed a new growth
foundation for the future.
SENSOR
March 2016
Micronas
Hall sensors
HDD
October 2016
Hutchinson
HDD suspensions
SENSOR
December 2016 Tronics
MEMS inertial sensors
SENSOR
March 2017
ICsense
ASIC design and development
SENSOR
May 2017
InvenSense
Acceleration sensors,
gyroscope sensors
SENSOR
February 2018
Chirp
Ultrasonic sensors
Establishing a Foothold
for the Future
2018
Consolidated net sales
¥1,271.7 billion
Consolidated operating
income*2
¥85.6 billion
Passive Components*1
Net sales 32.9%
(¥417.8 billion)
Sensor Application Products*1
Net sales 6.1%
(¥77.4 billion)
Magnetic Application Products*1
Net sales 21.8%
(¥277.5 billion)
Energy Application Products*1
Net sales 34.8%
(¥442.8 billion)
Other*1
Net sales 4.4%
(¥56.3 billion)
*1 In accordance with segment reorganization in the first quarter of fiscal 2019, the Energy Application Products segment was newly established. Certain products of Other Passive
Components in the Passive Components segment were classified into the Other segment, certain products of the Other segment were classified into Other Passive Components in
the Passive Components segment, and certain products of the Sensor Application Products segment were reclassified into the Other segment. Sales in fiscal 2018 have also
been reclassified to conform to the new segmentation.
*2 To comply with the U.S. Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost, we are revising our business results for fiscal 2018, which were reported on April 27, 2018—operating income, research and development
expenses, cost of sales, and selling, general and administrative expenses (revised operating income: ¥85,633 million to ¥89,692 million; revised research and development
expenses: ¥103,457 million to ¥102,641 million). The disclosure of revised cost of sales and selling, general and administrative expenses will be made at the announcement of
financial results for fiscal 2019. The figures before adjustment are shown.
Prospective demand for sensors
worldwide (non-optical)
by product
U.S.$ millions
%
e
g
a l a v e r a
w t h r a t e o f 8
u
n
A
n
g r o
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
FY
17
18
19
20
21
Microphone
Temperature
Ultrasonic
(TDK estimates)
Pressure
Magnetic
Inertial
A new world is coming with advances in IoT and AI whereby everything will connect
via the Internet, behave autonomously, and be upgraded autonomously. In such
a world, we expect the following business opportunities to emerge in which we can
make use of our core technologies.
Numerous sensors will connect the real world and cyberspace; steady growth
is expected in our target non-optical sensor market
Demand will expand for small, large-capacity, high-reliability batteries
supporting the autonomous operation of things
The electrification of automobiles will advance further, with self-driving
vehicles to appear in the future
IoT will accelerate the digitization of manufacturing and conversion to services
Renewable energy will spread rapidly
In our existing businesses, the following changes in the business environment have
been clearly observed.
Shrinking of the HDD market due to the expanded use of SSDs, but growth in
demand for data centers
(
P.66–P.67 Magnetic Application Products Segment)
Demand for modularization due to the further enhancement of smartphone
functionality
06
Annual Report 2018
07
TDK Corporation INTR ODUC TIO N
Transforming Our Business Model
with a View Toward the Future
TDK is proceeding to switch from a conventional business
model involving production to order and single-item sales to
a new business model. Going forward, we will be generating
ideas from Kotozukuri (integrated solutions)—sensor solu-
tions, power solutions, and package solutions—and convert-
ing them into products through Monozukuri (manufacturing
Conventional business model
Customers
Passive
Components
Sensors
HDD Heads
excellence), the foundation of our business. This approach
Batteries
Power Supplies
Others
is nothing less than a reexamination of the origins of
TDK stated in the corporate motto, “contribute to culture
and industry through creativity.”
Trans-
formation
Customers
Customers
ICT
ICT
Automotive
Automotive
Industrial & Energy
Industrial & Energy
Turnkey
Turnkey
Solution Partners
Solution Partners
Kotozukuri
Kotozukuri
(Integrated Solutions)
(Integrated Solutions)
Distribution
Distribution
Partners
Partners
Solutions
Components
Processes
Materials
Package
Package
Solutions
Solutions
Sensor
Sensor
Solutions
Solutions
Power
Power
Solutions
Solutions
Semiconductor
Semiconductor
Partners
Partners
HDD Heads
HDD Heads
Passive
Passive
Components
Components
Batteries
Batteries
Magnets
Magnets
Monozukuri
Monozukuri
(Manufacturing Excellence)
(Manufacturing Excellence)
Thin-Film
Thin-Film
Processes
Processes
Coating
Coating
Processes
Processes
Powder
Powder
Mixing & Sintering
Mixing & Sintering
Processes
Processes
Precision
Precision
Machining
Machining
Processes
Processes
Semiconductor
Semiconductor
Materials
Materials
Organic
Organic
Materials
Materials
Magnetic
Magnetic
Materials
Materials
Piezoelectric
Piezoelectric
Materials
Materials
Multilayer
Multilayer
Processes
Processes
Dielectric
Dielectric
Materials
Materials
Competitive advantages supporting the sustainability of our business model
Materials and Process Technologies
Creating “black boxes” to prevent imitation
Materials technology elicits raw materials suitable for 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 tech-
niques for controlling crystal particles at the atomic level, for intellectual property, and
for other know-how makes them difficult to imitate overnight.
Customer Base
Enabling investment from a long-term perspective
TDK has built strong relationships with its customers in the automotive, ICT, industrial
& energy markets, and other markets. This allows us to more accurately forecast future
changes in technology trends, and reduces the risks involved in making aggressive R&D
and capital investments.
Strength of Diversity
A spirit of equality leading to M&A success
TDK has built relationships with the companies it has acquired based not on controlling
them but on positioning them as equal partners. This expertise in post-merger integration
(PMI) is a powerful weapon in ensuring the success of our business portfolio.
Global Business Base
Overseas sales in excess of 90%
TDK’s global business base, with 84.5% of production outside of Japan and 91.1% of
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.
Integrated Production
A powerful competitive advantage in the age of IoT
Integrated production, where everything from materials to the final product is handled
in-house, allows TDK to improve its manufacturing excellence and increase productivity
through the introduction of IoT and robots. Our ability to also control quality entirely
in-house gives TDK a competitive advantage in areas where quality requirements are
particularly high, including the automotive market.
08
09
0102030405 TDK CorporationAnnual Report 2018 INTR ODUC TIO N
Five Core Technologies
as the Foundations of Growth
Since its inception, TDK has grown on the strength of five core technologies: materials technology based on ferrite; pro-
cess technology used to realize materials’ characteristics; evaluation and simulation technology to promote development
designs; product design technology for merging electronic components into advanced and multiple functions; and
production technology to support mass output.
TDK continues to steadily polish this core know-how not to make defects during the production process. The goal is
the Arubeki Sugata (ideal process) of Monozukuri through harmony between people and robots, moving to realize
“Industry 4.0 + Zero Defect.”
Materials Technology
Researching the properties of materials at the atomic level and developing original electronic components and devices
to meet advanced needs.
Materials design technology
Realizing required characteristics
through main materials blending and
trace additive control.
Powder control technology
Improving materials’ characteristics
through crystal grain miniaturization
and uniformity.
Microstructure control technology
Realizing required characteristics
through control of crystal grain inter-
nal composition and grain boundaries.
Process Technology
Creating high-performance and function products with nanometer-order control technology.
Evaluation and Simulation Technology
Initiating such as material analysis, simulation of product structure, heat and magnetic fields, and noise
measurements and countermeasures to raise product functions.
Evaluation and analysis technology
Conducting microstructure observa-
tions, atom distribution visualization,
and other advanced processes.
Simulation technology
Visualizing heat distribution released
from circuits, distribution of noise-
causing magnetic fields, among others.
EMC countermeasure technology
Protecting electronic equipment from
external noise penetration, as well
as controlling noise released by
such equipment.
Product Design Technology
Integrating electronic components to realize high-performance/multiple-function electronic devices and optimum
combination modules.
Circuit technology
Using optimum component
selection, wiring, radiant
heat design, and other
simulation to advance
circuit designs.
Packaging technology
Pursuing smaller size and
higher performance with
component final assembly,
binding, sealing, advanced
structural design, configura-
tion design, and other
expertise.
Semiconductor Embedded
Substrate (SESUB)
technology
Embedding ICs, components,
wiring, and other elements
in substrate thickness to
achieve modularization.
Low temperature cofired
ceramic (LTCC) technology
Printing and laminating
capacitors, inductors, and
numerous other elements on
dielectric sheets.
Forming technology
Adding binding agents
to material powder and
forming small, slim and
complex-shaped products.
Sintering technology
Sintering to solidify and
harden with precision con-
trol of temperature and
atmosphere (gas compo-
nents in the furnace).
Thick-film process
technology
Printing and multilayering
electrodes and other ele-
ments to produce chip
capacitors, chip inductors,
and other layered electronic
components.
Thin-film process
technology
Forming thin film to create
electrodes, coils, and head
elements to manufacture
HDD magnetic heads and
thin-film electronic
components.
Production Technology
Stepping to further raise quality, cost,
delivery, and service (QCDS) via speedy
responses to market changes, together
with increasing product capacity.
Equipment technology
Superb products emerge from superb
production equipment. Development of
original engineering methods and in-
house creation of production facilities
are key TDK Monozukuri strengths.
10
11
TDK CorporationAnnual Report 2018 INTR ODUC TIO N
The Impressive TDK Electronic Component
Lineup
Passive components
We supply a wide range of passive components such as multilayer
ceramic chip capacitors (MLCCs), for which over 1,000 units are used in
high-end smartphones, inductors, piezo actuators, aluminum electrolytic
capacitors, and other items.
Ceramic capacitors
Piezoelectric material components,
circuit protection components
Inductive devices
Aluminum electrolytic capacitors,
film capacitors
Five Core
Technologies
Fertile resources to
address diversified needs
TDK contributes to society with a
wide-ranging electronic component
lineup created with core technologies
and “Monozukuri power.” The list
includes passive components indis-
pensable for advanced functions in ICs
and other active components; a broad
selection of non-optical sensors; the
core product of magnets since the
Company’s foundation; HDD magnetic
heads leading the world; batteries earn-
ing global top-class shares for use in
mobile devices; and other offerings.
ICT
Sensors
TDK fields a top world-ranking array
of non-optical sensors. The lineup
includes magnetic, temperature,
pressure, gas, microphone, gyro-
scope, acceleration, barometric
pressure, ultrasonic, and other
sensor types.
Power supplies
Focused on industrial equipment models,
the TDK power supply lineup spans AC-DC
switching power supplies, DC-DC convert-
ers, and storage battery chargers, along
with models for use in xEVs as well.
HDD magnetic heads
TDK is the world’s only specialized manufac-
turer of HDD magnetic heads. Thermal
assisted magnetic recording (TAMR) and
other cutting-edge technologies play key
roles in the continuing quest to expand HDD
memory capacity.
Batteries
Rechargeable lithium polymer batter-
ies for smartphones and other smart
devices from ATL have earned TDK
the world’s leading position in this
domain, with the mission to pioneer
even more powerful models ongoing.
Contributing to Society
Behind the Scenes
Magnets
TDK magnets support energy and resource
saving and higher efficiency in automobiles,
infrastructure, industrial equipment, and
other vital sectors.
Automotive
12
13
Industrial & Energy TDK CorporationAnnual Report 2018 To Our Stakeholders
With its founding spirit
as an immutable guidepost,
TDK will achieve sustained
improvement in corporate value.
Under its new Medium-Term Plan, TDK will contribute to a more affluent society
through electronics, offering solutions based on Kotozukuri (integrated solutions)
and realized through Monozukuri (manufacturing excellence).
A never-changing TDK,
an ever-changing TDK
electronics industry to this day. Throughout its long
history, the Company has kept its focus on this kind
of Monozukuri as the base for a never-changing TDK.
About 88 years ago, a black substance was invented;
Kenzo Saito continuously took on new challenges,
this was the magnetic material ferrite, a product
considering his own mission from the perspective of
of research conducted by Dr. Yogoro Kato and Dr.
society’s future needs. That management philosophy
Takeshi Takei of the Tokyo Institute of Technology.
is reflected in TDK’s corporate motto, “Contribute to
Tokyo Denki Kagaku Kogyo K.K. (today’s TDK),
culture and industry through creativity,” and in its
founded in 1935 by Kenzo Saito, was the first to
corporate principles of “Vision,” “Courage,” and
commercialize this previously unknown material
“Trust.” Having inherited this founding spirit, TDK
with the development of its so-called “ferrite core.”
has always been quick to respond to the future needs
Since its pioneering appli-
cation in wireless telecom-
munications equipment in
1937, the uses of ferrite
have expanded to include
radio, television, micro-
wave ovens, and more.
Ferrite continues to play
TDK has always
focused on the future
needs of society
of society. Starting with
the commercialization of
ferrite, TDK’s electronic
components, along with
its four great world-class
innovations, have been
nurtured by uses beneficial
to society, from the cas-
a role as an essential magnetic material across a
sette tapes that answered the desire to listen to music
wide array of fields, from flat-screen televisions to
on-the-go, to multilayer electronic components that
components in automobiles, as they rely increasingly
even today contribute to more compact electronic
on electronics. As TDK’s core technologies, materials
devices, to the HDD magnetic heads that supported
technology that is derived from ferrite and the process
the explosive expansion in memory capacity.
technology that maximizes the properties of materials
This ability to continue to anticipate society’s future
have brought the world a variety of new products. From
needs and translate those needs into products through
ceramic capacitors, to passive components that have
Monozukuri is what has allowed us to transform our
continued to evolve through technical refinements,
product portfolio before our mainstay products enter
to magnets, they serve as the foundation of the
a decline, leading to our sustainable growth.
Shigenao Ishiguro
President & CEO
14
15
TDK CorporationAnnual Report 2018 To Our Stakeholders
Self-transformation with an eye
on the future
services will require components to be more highly
integrated and highly functional. These technical
requirements will be taken to an even higher dimen-
and a wide variety of other fields, is expected to
communication module to send the collected data,
quickly accelerate, and the efficient use of energy
along with batteries, processing circuits, and soft-
will become an issue. With rechargeable lithium
ware, TDK could offer a solution in the form of a
Going into the new millennium, TDK was confident
sion in more compact IoT devices. Intelligent compo-
polymer batteries from ATL, power supplies provided
packaged, modularized product, thus greatly expand-
that the spread of mobile phones and smartphones
nents utilizing AI are also developing, going beyond
by TDK-Lambda Corporation (TDK-Lambda), and the
ing its business opportunities. What that will require
pointed to one trend representing the future needs of
automobiles and industrial equipment to play a role
magnets built into generators and motors, TDK can
is Kotozukuri that dovetails with a founding spirit
society. In 2005, we acquired Amperex Technology
throughout our daily lives, and representing the for-
Limited (ATL), a manufacturer of rechargeable lith-
mation of a new ecosystem for an industry structure
ium polymer batteries. In 2008, we made our full-
built around integrated circuits.
scale entry into the
high-frequency compo-
nents business through
our acquisition
of EPCOS AG (EPCOS).
Taking advantage of our
proprietary fine process-
ing, module, and other
The right path was already
in front of us
It made sense, then,
that TDK should ask how
it can provide its custom-
ers with timely solutions
not by insisting on self-
sufficiency, but by com-
paring and adjusting its
technology to that of the
technologies, we went on to contribute to the global
semiconductor manufacturers. These factors were
contribute to resolving
these issues across a wide
range of fields.
Conventional electronic
components were a build-
to-order industry, with
products developed and
manufactured according
Contributing to society
through Kotozukuri
originating in an under-
standing of society’s
future needs.
Under Value Creation
2020, its new Medium-
Term Plan covering the
period from fiscal 2019
through fiscal 2021,
to customer specifications, and were essentially sold
TDK will turn to its founding spirit as a guidepost in
on an individual basis. Today, however, a succession
offering a timely response to society’s requirements,
of completely new services, products, and functions
utilizing Monozukuri to realize solutions based on
are being created that are not simply an extension of
the Kotozukuri concept—sensor solutions, power
spread of mobile devices. During our previous
behind the management decision to carve out a por-
existing offerings, and that take advantage of dramat-
solutions, and package solutions—while continuing to
Medium-Term Plan (from fiscal 2016 to fiscal 2018),
tion of our high-frequency components business
ically evolving technology. By, for instance, combin-
follow a cycle that ties Kotozukuri to the further
these smartphone components continued to deliver
through a joint venture with Qualcomm Incorporated
ing multiple sensors with different functions, a
evolution of Monozukuri.
strong earnings growth, but by then we had already
(Qualcomm).
begun turning our thoughts to the next thing that
In the two years since I was appointed president in
would represent the future needs of society.
2016, we have worked to build a new pillar for growth
In smartphones, the anticipated start of commercial
that would replace our high-frequency components;
fifth-generation mobile communications system (5G)
the right path, however, was already in front of us.
Our founding spirit as a guidepost
processing technologies, will ensure we can respond
Improving corporate value through the
pursuit of three types of value
target of operating income ratio above 10% with an
ROE of more than 14%. Plans call for capital invest-
ments totaling ¥500 billion over three years, the
Under Value Creation 2020, our new Medium-Term
same level as the previous Medium-Term Plan. In
Plan, we have broken down corporate value into three
terms of operating income, we now see a clear trend
components—Commercial Value (execution of growth
toward profit growth in the Passive Components seg-
In an advanced “smart” society created by IoT, where
TDK has been active in pursuing M&A as a means
and Social Value (enhancing enterprise value)—and
industrial equipment markets, and in the Energy
to advanced requirements for precision.
strategy), Asset Value (improving asset efficiency),
ment, where demand is strong in the automotive and
everything around us—from electronic devices to
of building a lineup of sensor technologies that offer
automobiles and production equipment—is connected
potential synergies with the magnetic sensors and
through the internet and capable of exchanging infor-
temperature and pressure sensors it has worked on
mation and operating autonomously, I believe the
until now. We have worked to expand our offerings in
potential for electronic components will see limitless
non-optical sensors, targeting companies that con-
expansion. Among those components, sensors are
tribute to the development of the MEMS sensor
one area in which we are confident TDK can contrib-
market, which is expected to see enormous growth
ute to society by leveraging our core technologies. By
going forward.
have established targets
and specific measures for
each of these.
The target set for
Commercial Value calls for
achieving net sales of
¥1.65 trillion in fiscal
2021, or growth of about
Involving all employees in
advancing strategy
Application Products seg-
ment, primarily batteries.
The Sensor Application
Products segment, which
has reached a stage that
requires a certain level of
development investment
in addition to acquisition-
taking advantage of our materials technology, we can
Power electronics is another area we have posi-
30% over fiscal 2018, and a compound annual
related expenses, will also be developed into a busi-
greatly improve quality and performance, and our
tioned as a pillar of our business. Society’s shift
growth rate (CAGR) of 9%.
ness that will contribute to profit during the term of
process technology, including thin-film and fine
from fossil fuels to renewable energy, in automobiles
Regarding Asset Value, we have established a
this Medium-Term Plan.
16
17
TDK CorporationAnnual Report 2018
To Our Stakeholders
To enhance the effectiveness of our strategy and
quickly in the prototype development process and
increase the likelihood of achieving the Plan’s tar-
production. That kind of speed is a differentiating
gets, we will design and manage a logic tree that
component in advancing Kotozukuri and, through
takes the three types of value down to the level of
enhanced added value and an improved cash conver-
specific measures for each business and work site.
sion cycle, is also a factor affecting profitability. TDK
We will place particular emphasis on business speed.
will establish a “First-to-Market product ratio” as a
The greatest reason ATL enjoys the support of so
key performance indicator (KPI) and accelerate the
many customers is its unrivaled ability to respond
business cycle across all of its organizations.
Providing solutions across
a wide range of fields
a wide range of fields in which we have determined
we can make a contribution to society.
To do that, all of our organizations—from TDK
combination of Faraday Semi’s semiconductor with
this so-called “battery componentization,” enabling
TDK’s SESUB (Semiconductor Embedded Substrate)
a complete solution on the substrate, we plan to seek
packaging technology is one such example. We are
its potential across all types of IoT devices.
also first in the world to begin mass production of a
* μPOL™: A DC-DC converter placed adjacent to the ASIC, FPGA, or other LSI.
rechargeable solid-state battery. Taking advantage of
Achieving growth across all segments
sensors, ToF sensors, and other MEMS sensors.
1. Passive Components
We anticipate enormous growth in sensors for con-
sumer products, exceeding that for automotive sen-
We will target a CAGR of 7%. We will offer customized,
sors. In the magnetic sensor field, progress is being
optimal solutions in GPUs, CPUs, power supplies, inter-
made in replacing them with TMR sensors, which
faces, and a broad range of other areas, pursuing the
feature high accuracy and low power consumption.
high reliability and large capacity required in automo-
We will also move forward with development of new
2017 was a year in which we sensed a clear global
Group operating companies and sales, our customer
biles. For smartphones, we will achieve growth centered
applications for microphones, ultrasonic sensors, and
trend toward electric vehicles. As use of xEV spreads,
contact point, to the front lines of Monozukuri and
on ceramic passive components. We will expand appli-
other MEMS sensors for use in smart speakers, fin-
and in the evolutionary process from there to con-
our R&D sites—will be joined organically and autono-
cations for and our customer base in other fields as
gerprint authentication, and other areas.
nected cars and advanced driving assistance systems
mously to create a stream of Kotozukuri architecture.
well, with the goal of achieving stable growth.
(ADAS), we believe the role of electronic components
Essential to that effort will be open collaboration
3. Magnetic Application Products
will expand further, serving as the interface between
with partners having technology that TDK does not,
2. Sensor Application Products
Rather than assuming any great growth in HDD mag-
IC algorithms and the real world. Further, the trend is
with a particular focus on close cooperation with IC
In anticipation of reaching ¥200 billion in net sales,
netic heads, our policy is to grow sales of power-
toward society-altering, cutting-edge technologies to
manufacturers.
our plans call for steady growth in sensors for auto-
related magnetic products, including magnets, while
first be adopted in smartphones, before then being
With Qualcomm, we are now working together on
mobiles and for expanding sensors for consumer
ensuring a CAGR of 2%. By providing technology to
applied to automobiles and industrial equipment,
high-frequency solutions across a wide range of
products, achieving major growth with a target CAGR
meet the needs of the high capacity storage age, we
and we sense a similar
progression taking place
with wireless power sup-
plies, biometric authenti-
cation, and other
technologies. In batter-
ies, as well as in passive
components—where we
Creating a stream of
Kotozukuri architecture
areas, including next-gen-
eration mobile communica-
tions, IoT, and
automotive-related fields.
We are also engaged in a
variety of joint development
projects, including sensor
reference design. In addi-
of 35%. Through M&A activity since 2016, TDK has
will contribute to the HDD industry as the only manu-
acquired a world-class arsenal of technology in non-
facturer specializing in HDD magnetic heads. We will
optical sensors, including temperature and pressure
also attempt to apply HDD suspension technology
sensors, magnetic sensors, and MEMS sensors. This
from Hutchinson Technology Incorporated
will allow for a growth rate of about 10% per year as
(Hutchinson) to areas such as the ICT market and
we focus our target on the entire non-optical sensor
medical field. Profitability in magnets has improved,
market, which is expected to grow to US$12 billion
with losses halved in fiscal 2018, and during the
by 2021.
current medium-term, we plan to shift toward a
transferred a portion of our high-frequency compo-
tion to IC manufacturers, we will work with IoT solu-
We will steadily expand sales of automotive sen-
structure that can generate profit. One particularly
nents business—we do not plan to intentionally
tion partners, and press forward in cooperating with
sors through organic growth. TDK is currently consid-
promising area is magnets for in-vehicle motors.
reduce the ratio of products for smartphones. We will
industries and organizations with which TDK may not
ering development of a sensor that offers
Leveraging our core technology to realize innovations
continue to take on that market while keeping a close
have had direct contact in the past.
redundancy, combining tunnel magneto resistance
in configuration and performance, we hope to con-
eye on 5G and other future communication stan-
In May 2018, TDK acquired Faraday Semi LLC
(TMR) sensors that apply HDD magnetic head tech-
tribute to maximizing motor and generator efficiency.
dards. With the addition of other fields, including the
(Faraday Semi), a venture company. The company’s
industrial equipment and energy sector—where inno-
Point of Load (POL) power semiconductor μPOL™*,
vation, backed by Industry 4.0, is progressing—,
among the world’s smallest, has enormous potential
home appliances, and others, we will offer sensor
as a solution for reducing power supply space, offer-
solutions, power solutions, and package solutions. In
ing greater system functionality, and shortening
the medical sector, we hope to sow the seeds across
design time. The power solution realized through the
nology cultivated by TDK with Hall sensors. In addi-
tion, since the temperature and pressure sensors
installed in gasoline-powered vehicles will also be
needed in xEVs, we expect demand to continue grow-
ing. We will also expand applications for automotive
use, including acceleration sensors, gyroscope
18
19
TDK CorporationAnnual Report 2018
To Our Stakeholders
4. Energy Application Products
vehicles (AGVs), drones, and others. In power supply
we are undertaking a fundamental review of
detecting signs of potentially defective products. In
Here, we will aim for stable growth with a CAGR of
products, our efforts will center on TDK-Lambda,
Monozukuri. We have already completed and are
the common language of TDK, this activity has
8%. Rather than assuming major growth in batteries
providing customized power supply solutions for
working to test a model line that prevents defects
become known as Arubeki Sugata, and is being uti-
for smartphones, we will move forward with a hori-
medical devices, robotics, and other uses through
before they happen, by ensuring optimal coordination
lized in front-line improvements at our sites around
zontal deployment of ATL’s “First-to-Market” success
vertical integration from materials to finished prod-
between robots and human workers, using sensors to
the world.
model by expanding our applications and customer
ucts. In automotive power supply, we will pursue
monitor every step of the production process, and
base. We will also push to develop the small cell
smaller, lighter, and more highly efficient products
market, including wearable devices, while also devel-
while offering solutions through redundant, reliable
oping the market for use in more high-powered
design with an eye toward the full-scale expansion of
devices such as e-scooters, automated guided
the xEV market.
Areas where refinements should continue
for sustainable growth
sustainable growth.
As the globalization of TDK has progressed further
through M&A in recent years, diversity management
TDK has worked to strengthen its ability to develop
has become an important issue. This is why, under the
its own candidates for acquisition while gaining
Human Resources HQ, we are pushing ahead with
insight into each company’s technology and corpo-
programs to discover and foster outstanding human
rate culture. Rather than adapting these companies
resources worldwide to serve as management candi-
to TDK’s way of doing things following an acquisition,
dates. With more than 90% of our personnel consist-
we have respected their different approaches and
ing of non-Japanese employees, we believe HQ
cultures, handing them leadership over their own
functions do not necessarily need to be located in
businesses. Cultivating the strength of diversity by
Japan, or led by Japanese managers.
The aspirations embodied
in Social Value
emphasize that profit is not the goal, but the result of
contributions to society. Social Value embodies my
determination to return us to our founding spirit,
I would like to close by talking about my aspirations
which has something in common with this concept.
for Social Value, the last of the three types of value
The road we are to follow will not necessarily be an
highlighted in our new Medium-Term Plan. When I
easy one. A variety of competition exists in growth mar-
joined TDK 36 years ago, our business in the auto-
kets, and the megatrends bringing major changes to
motive industry involved
only very limited fields,
such as car radios. Today,
though, we have entered
an era in which automo-
biles cannot move without
electronics. The things
that electronic compo-
Moving forward,
encouraged by our
founder’s beliefs
the structure of industry
make it impossible to
clearly foresee the future of
our business environment.
Still, encouraged by the
beliefs of our founder, we
will not be led astray by
these uncertainties, and
allowing our varied human resources to maximize the
We also will not compromise when it comes to
nents can do to benefit society will likely expand
will continue moving forward with our corporate
potential of their individual capabilities has become
refining Monozukuri, the foundation of our sustain-
even further going forward. Advanced technology is
motto “Contribute to culture and industry through
the driver of nonlinear self-transformation.
able growth. In the automotive field, where TDK
Pushing forward with Kotozukuri will require bring-
hopes to continue expanding its business, a single
not merely for the select few. It can contribute to
creativity.”
resolving issues in ultra-aging society, and can enrich
ing the approximately 140 companies of the TDK
incidence of a product defect that leads to the loss
the lives of even society’s most vulnerable.
October 2018
Group together, heading in
the same direction even as
we reinforce the dynamism
of diversity. While progress
is already being made
toward collaboration
among Group companies in
a variety of areas, includ-
Moving forward with
innovation aimed at
true globalization
of human life could
threaten our very survival
as a company. This is why
we continue to press for-
ward with Monozukuri
Innovation, which com-
bines Industry 4.0 con-
cepts with a zero-defect
ing product development and quality control, we
approach to quality. For the past several years, our
intend to introduce cross-functional cooperation as
factories in Akita Prefecture, where TDK was founded,
a means of further strengthening these organic link-
have engaged in Monozukuri activities based on our
ages. As part of that effort, Andreas Keller, our gen-
concept of Arubeki Sugata (ideal process). At its most
eral manager of the Human Resources HQ, is building
basic, the Arubeki Sugata behind improved reliability
a global human resource system. Going forward,
should involve preventing defects during the produc-
enhancing the mobility of our human resources glob-
tion process, rather than the conventional approach
ally will help further reinforce our base for long-term
of sifting out defective products. With this in mind,
Technology also has the power to solve issues on a
global scale, including tightened energy supply and
demand and global warming. Sustainable develop-
ment goals (SDGs) and other worldwide trends
President & CEO
October 2018
President & CEO
20
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TDK CorporationAnnual Report 2018 Management Strategies:
Guided by Its Unchanging Founding Spirit, TDK Continues to March On
A n E v e r - C h a n g i n g T D K
Automotive
ICT
Industrial & Energy
Infinite Possibilities
Pursuing automotive quality in reliability
and energy efficiency, TDK will contribute
Targeting the fifth-generation mobile
communications system (5G) and beyond,
Working to supply answers true to the concept
of Kotozukuri (integrated solutions),
By no means limited to the “Automotive,”
“ICT,” and “Industrial & Energy” markets,
to the electrification of automobiles and
TDK will provide solutions including increased
TDK will contribute to the solution of social issues
TDK will steadily expand the infinite possibilities of
the popularization of xEVs.
component miniaturization and space saving and
linked to industrial equipment and energy sectors.
electronic components to a diverse range of domains.
high-efficiency electric power management.
A N e v e r - C h a n g i n g T D K
22
23
TDK CorporationAnnual Report 2018 Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
TDK Overview
In accordance with segment reorganization in the first quarter of fiscal 2019,
the Energy Application Products segment was newly established. Certain prod-
ucts of Other Passive Components in the Passive Components segment were
classified into the Other segment, certain products of the Other segment were
classified into Other Passive Components in the Passive Components segment,
and certain products of the Sensor Application Products segment were reclassi-
fied into the Other segment.
Automotive
ICT
Industrial & Energy
World shares of main products
(TDK research)
Capacitors
Soft-termination multilayer ceramic chip capacitors,
aluminum electrolytic capacitors, etc.
Inductive devices
SMD inductors with guaranteed high temperature rat-
ings, common mode filters for automotive-use LAN, etc.
Other passive components
Piezo actuators
Capacitors
3-terminal feed-through capacitors, etc.
Inductive devices
SMD inductors, thin-film common-mode filters, etc.
Other passive components
Ceramic high-frequency components, VCMs/OISs,
multilayer chip varistors, etc.
Competitors
Capacitors: Murata Manufacturing, TAIYO YUDEN, SEMCO (Korea), Yageo (Taiwan), etc.
Inductive devices: Murata Manufacturing, TAIYO YUDEN, SEMCO (Korea), Cyntec (Taiwan), etc.
Other passive components: Murata Manufacturing, ALPS ELECTRIC, Panasonic, AMOTEC (Korea), etc.
Capacitors
Film capacitors, aluminum electrolytic capacitors, etc.
Inductive devices
Transformers, EMC filters, etc.
Other passive components
Varistors, arresters, etc.
Capacitors
Ceramic capacitors
for automobiles
Inductive devices
Inductors
Other passive components
Ceramic high-frequency
components
Varistors
Gas arresters
Sensors
Sensors (gear tooth, pressure, angle, current,
temperature, etc.)
Sensors
Sensors (barometric pressure, gyroscope, acceleration,
MEMS microphone, etc.)
Sensors
Sensors (pressure, gyroscope, acceleration, current,
etc.)
Sensors
Temperature sensors
(NTC thermistors)
Other sensors: Currently undisclosed
Competitors
Murata Manufacturing, ALPS ELECTRIC, TAIYO YUDEN, Bosch (Germany), STMicroelectronics (Switzerland),
Infineon (Germany), Asahi Kasei Microdevices, Allegro (USA), Shibaura Electronics, etc.
Magnets
Magnets for motors (cooling fan, door lock),
magnets for xEV drive motors, etc.
Recording devices
HDD magnetic heads, HDD suspensions, etc.
Magnets
HDD magnets, etc.
Competitors
HDD magnetic heads*: Seagate Technology (USA), Western Digital Technologies (USA)
HDD suspensions: NHK SPRING, etc.
Magnets: Shin-Etsu Chemical, Hitachi Metals, ZHONG KE SAN HUAN (China), etc.
Power supplies
DC-DC converters, on-board chargers
Energy devices
Rechargeable lithium polymer batteries (for smart-
phones, tablet devices, notebook computers, wearable
devices, game consoles)
Power supplies
High current digital POL converters
Competitors
Energy devices: Samsung SDI (Korea), LG Chemical (Korea), Murata Manufacturing, Panasonic, Maxell, etc.
Power supplies: XP Power (Singapore), MEAN WELL (Taiwan), Delta Electronics (Taiwan), Cosel, etc.
Magnets
Magnets for industrial equipment, etc.
Recording devices
HDD magnetic heads
HDD suspensions
Energy devices
Rechargeable lithium polymer batteries (for drones,
AGVs)
Energy devices
Rechargeable lithium
polymer batteries
Power supplies
Bidirectional DC-DC converters, AC-DC power modules
Power supplies
Power supplies for
industrial equipment
P
a
s
s
i
v
e
C
o
m
p
o
n
e
n
t
s
P
r
o
d
u
c
t
s
P
r
o
d
u
c
t
s
P
r
o
d
u
c
t
s
S
e
n
s
o
r
A
p
p
l
i
c
a
t
i
o
n
M
a
g
n
e
t
i
c
A
p
p
l
i
c
a
t
i
o
n
E
n
e
r
g
y
A
p
p
l
i
c
a
t
i
o
n
40–45%
20–25%
30–35%
30–35%
75–80%
30–35%
20–25%
55–60%
30–40%
15–20%
* TDK is the world’s only specialized manufacturer of HDD magnetic heads. HDD magnetic head production is currently concentrated at three companies—TDK, Seagate Technology,
and Western Digital Technologies.
24
25
TDK CorporationAnnual Report 2018
Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Summary of the Previous Medium-Term Plan
Through fiscal 2015
Sowing seeds to grow with the expanding
smartphone market
In 2005, TDK acquired ATL of Hong Kong, an entity possessing origi-
nal technology in rechargeable lithium polymer batteries. Purchased
in 2008 was EPCOS, which used competence in high-frequency com-
ponents and modules technologies to forge a powerful presence in
European automobile and industrial equipment markets. Combining
their technologies with our own expertise in components and produc-
tion technologies, we strategically moved to tap into the expanding
markets for cellphones, smartphones, and other products.
Promoting large-scale structural reform
The swift decline with the global financial crisis triggered by the
September 2008 collapse of Lehman Brothers, the Great East
Japan Earthquake of 2011, flooding in Thailand, appreciation of
the Japanese yen to peak at ¥75 to the US dollar, and other devel-
opments harshly impacted our business environment. Moving to
shore up its earnings framework, TDK advanced sweeping struc-
tural reforms from fiscal 2012. This included withdrawal from
recording media and other non-core businesses, concentrating
management resources in core units, consolidation of domestic
and overseas business sites, optimizing personnel and business
sites, and other strategies. Our performance figures shifted into a
rapid recovery mode from fiscal 2013.
Structural reforms to bolster
integrated production
In Japan, we closed aging passive component manufacturing
bases and concentrated business sites while adopting in-
house production processes previously outsourced to collab-
orating plants. Overseas, we acted to simplify complex
supply chains. These initiatives, focused on restoring
Monozukuri power through “integrated production,” proved
potent not only in lowering the group’s fixed costs, but also
in cutting lead time and distribution costs. This laid the
foundation for today’s Monozukuri Innovation concept
known as Arubeki Sugata (ideal process).
• Manufacturing base
closings and business
site concentration
• Shift to in-house
production processes
• Fine tuning of supply
chains
Enhanced integrated
production
Akita
Honjo
Inakura
M&A
2005
ATL
Rechargeable lithium polymer batteries
With its acquisition of ATL, TDK emerged
as one of the leading corporate forces in
the production of rechargeable lithium
polymer batteries for use in smartphones
and other mobile devices.
2007
2008
Lambda Power Group
Power supplies for industrial equipment
Magnecomp
HDD suspensions
EPCOS
Full lineup of electronic components, mod-
ules, and systems
Riding the tailwind of the global smart-
phone boom, EPCOS high-frequency
components have been a pivotal driving
force behind the growth of TDK revenues.
Structural reform
2011
Business portfolio slimming
Withdrawal from organic EL displays,
Linear Tape-Open (LTO*), Blu-ray, and
other non-core businesses
Product-specific reassessment
*LTO: Standard for computer-use magnetic tape
Groupwide business efficiency
improvements
Promotion of domestic and overseas
business site consolidation
Sales of idle properties
Optimization of personnel and business sites
Simplification of organization and business
processes
Management resource concentration
in growth sectors and core businesses
Expansion of the thin-film components
business utilizing magnetic and magnetic
head technologies
Strengthening of core technologies such as
materials and process technologies, devel-
opment of micro-size, high-function passive
components
Smartphone market trends (unit shipments)
M&A
Feature phones
Smartphones
(100 million units)
Forecast
2016
Micronas
Hall sensors
25
20
15
10
5
0
Year
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
Hutchinson
HDD suspensions
Tronics
MEMS inertial sensors
2017
ICsense
ASIC design and development
InvenSense
Acceleration sensors, gyroscope sensors
Source: IHS Technology
Fiscal 2016 to fiscal 2018
Harvesting and fruits of structural reform
Reviewing the results of the previous Medium-Term Plan (fiscal 2016 to fiscal 2018), sales set all-time record highs each term,
with structural reforms proving effective in strengthening the earnings structure and operating income also gaining ground. TDK
cultivated ATL’s rechargeable lithium polymer batteries and EPCOS’s high-frequency components, riding the tailwind of the global
expansion of the smartphone market. This stance was accompanied by solid efforts to address demands for component miniatur-
ization and modularization to keep pace with the steady move to higher smartphone function, polishing our underlying technol-
ogy to be ready for the next stage of evolution.
Operating income ratio
Sales to the automotive market
2.6%
2013/3
6.7%
2018/3
¥142.7 billion
2013/3
¥231.4 billion
2018/3
New strategic positioning to meet
the next stage of social needs
Against the backdrop of redoubled demand for custom-
ization and modularization in the smartphone market,
needs have grown for coordination of the various elec-
tronic components mounted in those products. To con-
stantly supply customers with optimum solutions, TDK
moved from traditional in-house self-sufficiency to coop-
eration with IC manufacturers, transferring one
portion of our high-frequency component business to
Qualcomm. Similarly, in gearing up to meet the next
stage of social needs, from 2016 we pursued sensor-
focused M&A as a means to field a wide-ranging arsenal
of technology, while solid growth investment was
advanced to expand sales to the automotive market.
Growth investment targeting the future
Fiscal 2016 to
fiscal 2018
Capital expenditures
¥506.9 billion
R&D expenses
¥279.6 billion
Fiscal 2013 to
fiscal 2015
¥256.7 billion
¥188.0 billion
26
27
TDK CorporationAnnual Report 2018 Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Management Environment
Within the Automotive, ICT, and Industrial & Energy markets targeted by TDK, major structural changes are unfolding
Megatrend 1
to reflect today’s technological evolution. This trend is also instrumental in boosting innovation in terms of Industry 4.0
and other forms of Monozukuri.
• Increased on-board use of electronic components powered by the evolution in advanced
Market environment
driving assistance systems (ADAS) and autonomous driving
• Full-fledged surge in the xEV market
• Greater demand for safety designs in-vehicle components
Automotive
• Slowed growth in markets of developed nations
• Expanding demand in India and other emerging markets
• Advances toward slimming and multiple and higher functions in mobile terminals
ICT
• Expanding modularization demands
• Commercialization of fifth-generation mobile communications system (5G)
• Expansion of “smart cities” in which “smart grids” (next-generation power distribution
network) being built in various regions serve as energy infrastructure
• Growing demand for wind power generation, solar power generation, and other renewable
Industrial &
Energy
energy
• Rising need for improved power generation efficiency
Monozukuri
• “Industry 4.0” and other production innovations utilizing cutting-edge technologies such
as the IoT
• Growing need for increased quality with increased mounting of electronic components in
automobiles, medical devices, and other domains demanding high reliability
• Surging labor costs in China
• Projections for a steady decrease in Japan’s working-age population
• Heightened role of companies in achieving sustainable development goals (SDGs)
• Expanding interest in environmental, social, and governance (ESG) investment
ESG
28
Full-fledged surge in the xEV market
With tightened environmental regulations in major countries,
the shift to xEV by major manufacturers, entries into the
market by newly emerging makers, and lower costs sparked
by technological advances and increased volume, the move
toward electric vehicles is set to become irreversible. This
trend is forecast to increase demand for passive components,
sensors, on-board power supplies, motor-use magnets, and
other components.
Spread of electric vehicles (HV, PHEV, EV)
Units
600,000
500,000
400,000
300,000
200,000
100,000
0
Year
xEV unit expansion
X
Component unit expansion
14
15
16
17
18
19
20
25
30
HV
PHEV
EV
Source: Sogo Planning Inc., 2017 Latest Trends in and Forecasts for Electric Vehicle-related
Markets
Megatrend 2
Global market forecast for in-vehicle motors by system area
Million units
5,000
4,000
3,000
2,000
1,000
0
Year
16
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 2017 and beyond (as of March 2018)
Source: Yano Research Institute Ltd., The latest trends and future prospects of on-vehicle
motor market
Global in-vehicle motors market scale
Approx.4.470 billion units
Approx.2.999 billion units
Increase of approx.49%
2025
(Forecast)
2016
Note 1: Based on number of vehicles produced
Note 2: Forecast figures for 2025 and beyond (as of March 2018)
Source: Yano Research Institute Ltd., The latest trends and future prospects of on-vehicle
motor market
Megatrend 3
Dawning of the one-trillion-sensor age
Sensor demand in the IoT society, in which all things will
Expanding demand for safer and highly
efficient rechargeable batteries
come to be linked on the Internet, is estimated at several tril-
The IoT age is forecast to generate demand for safer, smaller,
lion units.
and thinner batteries.
Outlook for global sensor demand by market (non-optical)
U.S.$ millions
Forecast of worldwide demand for rechargeable batteries (non-ICT market)
MWh
15,000
12,000
9,000
6,000
3,000
0
FY
A v e r a g e a n n u a l g r o w t h r a t e o f 8 %
17
18
19
20
21
25,000
20,000
15,000
10,000
5,000
0
FY
18
19
20
21
22
23
Automotive
(TDK estimates)
IoT/Industrial equipment
Mobile
Power tools/Gardening tools
Jump starters
Cleaners
(TDK estimates)
UPS/ESS (compact)
Others
Drones
Megatrend 4
Evolution of IC-focused ecosystems
Along with the electrification of automobiles, higher functions in smart devices, and the move
to smart capacity in various areas, the evolution of industrial ecosystems is advancing with the
focus on semiconductor manufacturers as enterprises shouldering the burden of those core
functions.
Annual Report 2018
29
TDK Corporation Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Medium-Term Plan “Value Creation 2020”
Working from the future-focused growth foundation developed to date as a solid foothold, TDK has unveiled its newest
three-year Medium-Term Plan, set to run from fiscal 2019 through fiscal 2021. This vision has been launched with the
aim of forging sustainable improvements in corporate value.
Commercial Value
Management targets in the medium term: Sales by segment
Medium-Term Plan Basic Policy
“Value Creation 2020”
Leap to new heights by providing market-needed solutions
based on our electronic components business
Based on the new Medium-Term Plan “Value Creation 2020,”
TDK is aiming to generate three types of “value” aimed at
raising its corporate worth—Commercial Value (execution of
growth strategy), Asset Value (improving asset efficiency), and
Social Value (enhancing enterprise value)—while serving
society and growing its business in the wake of that progress.
Toward this end, the essential focus will be firmly placed on
the electronic components business that has excelled as the
cornerstone of TDK growth since its foundation, while vigor-
ously advancing collaboration with IC manufacturers and IoT
solution partners as well. By combining the solutions stem-
ming from the concept of Kotozukuri (integrated solutions)
with our traditional Monozukuri (manufacturing excellence),
we will supply the values sought by our customers.
Customers
Customers
ICT
ICT
Automotive
Automotive
Industrial & Energy
Industrial & Energy
Turnkey
Turnkey
Solution Partners
Solution Partners
Kotozukuri
Kotozukuri
(Integrated Solutions)
(Integrated Solutions)
Distribution
Distribution
Partners
Partners
Package
Package
Solutions
Solutions
Sensor
Sensor
Solutions
Solutions
Power
Power
Solutions
Solutions
Semiconductor
Semiconductor
Partners
Partners
Solutions
Components
Processes
Materials
HDD Heads
HDD Heads
Passive
Passive
Components
Components
Batteries
Batteries
Magnets
Magnets
Monozukuri
Monozukuri
(Manufacturing Excellence)
(Manufacturing Excellence)
Thin-Film
Thin-Film
Processes
Processes
Coating
Coating
Processes
Processes
Powder
Powder
Mixing & Sintering
Mixing & Sintering
Processes
Processes
Precision
Precision
Machining
Machining
Processes
Processes
Semiconductor
Semiconductor
Materials
Materials
Organic
Organic
Materials
Materials
Magnetic
Magnetic
Materials
Materials
Piezoelectric
Piezoelectric
Materials
Materials
Net sales
CAGR by segment
Results (fiscal 2018): ¥1,271.7 billion
Passive Components:
7%
Target (fiscal 2021): ¥1,650.0 billion
Sensor Application Products: 35%
CAGR:
9%
Magnetic Application Products: 2%
Energy Application Products: 8%
P.60–P.69
Overview of Business
Conditions by Segment,
Business Strategies
Asset Value
Medium-term financial strategy
• To execute growth strategies and promote the improvement of our financial condition, we aim to
achieve positive free cash flow while executing well-balanced capital allocation to investments,
shareholder returns, and the reduction of interest-bearing debts.
• Aiming for the steady recovery of previous investments
• Pursuing the enhancement of Companywide asset efficiency
• Steadily recover growth investments executed toward transforming business earnings structure
• Execute further growth investments based on a well-balanced capital allocation
Well-balanced capital allocation
• Growth investments
• Shareholder returns
• Repayment of interest-bearing debt
Negative free cash flow
Positive free cash flow
P.34–P.35
Message from the
Corporate Officer of
Finance & Accounting
Capital efficiency
• Operating income ratio:
over 10%
• ROE: over 14%
Medium-term financial targets
Shareholder returns
• Increase dividends stably
through growth of income
per share
• Target a 30% dividend
payout ratio
Financial soundness
• Stockholders’ equity ratio
over 50%
• Net cash
Multilayer
Multilayer
Processes
Processes
Dielectric
Dielectric
Materials
Materials
Social Value
Aiming for a sustainable society and enterprise
• TDK will realize greater happiness and well-being in society through cutting-edge technologies
• TDK will effectively utilize finite resources
• TDK will be a global and diversified enterprise
P.46–P.55
Moving to Improve
Sustainable Corporate Value
30
31
TDK CorporationAnnual Report 2018
Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Message from the Corporate Officer of Corporate Planning
Integrating the TDK Group’s diverse
management resources in an autonomous
and organic manner and contributing to
the innovative society unfolding before us
Seiji Osaka
General Manager of the Corporate Strategy HQ
Executive Vice President
Director
Key point of Value Creation 2020
Autonomous and organic integration of
management resources
application products. As well through aggressive M&As in
recent years, we have built an impressive lineup of sensor
application products. TDK’s wide-ranging component technol-
ogies will also be essential in continuing technological evolu-
Ever since its foundation, TDK has cherished its corporate
tions such as the IoT, fifth-generation mobile communications
motto of “Contribute to culture and industry through creativ-
system (5G), and renewable energy.
ity.” On the basis of ferrite, we have developed various mate-
Furthermore, TDK’s management resources, including our
rial and component technologies. Even after eight decades,
outstanding human resources, extend around the globe. The
this great ferrite tree continues to grow. In addition, to
key point of Value Creation 2020 is to autonomously and
respond to the requirements of customers, rather than always
organically integrate these resources and create a single
going it alone, we have cooperated with partners around the
mighty force that can supply timely solutions to customers.
world and boldly engaged in mergers and acquisitions so as to
obtain the technologies and management resources required.
In the previous Medium-Term Plan period, because the smart-
Logic tree toward the realization of Value Creation 2020
phone market was growing rapidly and the demand for modu-
larization further increasing, we carved out part of our
high-frequency components business to establish a joint
All measures linked in consideration of
each business’s characteristics
enterprise with Qualcomm and embarked in technical cooper-
TDK has 4 business companies, 20 business groups, and
ation with them.
numerous cash-flow business units. Each unit has a leader
In our new Medium-Term Plan, Value Creation 2020, our
with responsibility for invested capital and profit/loss and a
main vision is to seize business opportunities in the xEV and
team consisting of professional human resources. We have
IoT markets through a combination of Kotozukuri (integrated
built a logic tree of management strategy so as to autono-
solutions) in cooperation with IC makers and a wide range of
mously and organically integrate these units and realize our
other partners and Monozukuri (manufacturing excellence)
Medium-Term Plan.
using TDK’s own outstanding material and process technologies.
There are common reasons for the success of competitive
TDK has the most wide-ranging product and technology
products, such as passive components, rechargeable lithium
portfolio in the electronic components industry. In the auto-
polymer batteries, and HDD magnetic heads. These include
motive field, for example, we have various passive components
the fostering of distinctive core technologies, which are essen-
for autonomous driving and electric vehicles, as well as mag-
tial for business growth; the setting of strategic applications;
netic application products such as magnets used in motors,
the identification of priority customers and value-chain part-
DC-DC converters, and on-board chargers and other energy
ners; the building of a roadmap for product design; and
efforts to synchronize product design and the manufacturing
corporate principles proclaimed at the time of our founding in
process in the best possible way. Since market structures and
1935 of “Vision,” “Courage,” and “Trust.” Throughout TDK’s
competition factors differ by product and strategic business,
history of eight decades, while constantly innovating our core
the structure of the strategic logic tree will also differ for each
businesses, we have maintained a venture spirit with our mul-
business. We established Value Creation 2020 after clarifying
tilateral businesses and global human resources acquired
the direction of growth for each business (priority markets and
through M&As and more, creating a positive chemical reac-
technology differentiation) and repeating the task of checking
tion. Our aim is to be a company that is aware of the future
whether all work was being properly conducted in line with
affluent society awaiting the electronic components business,
this direction. We will share specific visions and key perfor-
directly confronts the challenges of diverse customers, diffi-
mance indicators among the teams as a whole and link their
cult technologies, and fierce competition, and will continue to
work so as to steadily realize our targets.
grow and evolve even after 100 years. We have encapsulated
these feelings in the words “Attracting Tomorrow*,” which we
are using as a communication message to our stakeholders.
* Attracting Tomorrow: TDK created this communication message in 2015, when the Company
marked its 80th anniversary. It implies an attitude of making deliberate efforts ourselves to
attract the future, rather than just waiting for the future to come.
Inheritance and practice of founding spirit
Aiming to be a company that will continue
to grow even after 100 years
It is said that when a company gets bigger, cracks begin to
appear. TDK has grown into an enterprise with net sales of
more than ¥1 trillion, but we will continue to cherish the
Logic tree of management strategy
“Value Creation 2020”
Leap to new heights by providing market-needed solutions
based on our electronic components business
Commercial Value
(Execute Growth Strategy)
Asset Value
(Improve Asset Efficiency)
Social Value
(Enhance Enterprise Value)
Sales ¥1,650.0 billion
Operating income ratio over 10%
over 14%
ROE
¥500.0 billion
Capex (3 years)
Contribute to society through
sustainable business activities
32
33
TDK CorporationAnnual Report 2018
Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Message from the Corporate Officer of Finance & Accounting
Strengthening the foundations of growth
through the definite retrieval of growth
investment and implementation of further
growth investment by means of balanced
capital distribution
Tetsuji Yamanishi
General Manager of Finance & Accounting HQ
Senior Vice President
Representative Director
Fiscal 2018 review
Base financial and capital strategy in Value Creation 2020
Building a foothold for the next stage
based on support from existing businesses
In fiscal 2018, using funds obtained from the partial transfer
Reaping the benefits of completed
investment and aggressively
implementing growth investment
of its high-frequency components business, TDK made efforts
In fiscal 2018, cash outflow took precedence with a view to
to change its business portfolio through M&As, mainly involv-
the next Medium-Term Plan. As well as establishing a foot-
ing sensor companies, and also implemented aggressive capi-
hold for medium-term business growth and reaping the bene-
tal investment toward the further growth of existing
fits of investments made so far, it is necessary for us to
businesses. Although TDK recorded losses due to the transfer
continue aggressively implementing growth investment so as
of its high-frequency components business, net sales regis-
to respond to vigorous demand. Achieving a sound financial
tered a record high for the fifth consecutive term. Operating
condition is another important theme. The basic policy of our
income declined 59.0% from fiscal 2017 to ¥85.6 billion*.
financial and capital strategy is to aim to put our free cash
However, when temporary profits and losses, including
flow in the black by channeling cash equally to investments,
¥144.4 billion in transfer gains and ¥21.2 billion in struc-
shareholder returns, and the reduction of interest-bearing
tural reform expenses included in the previous term’s operat-
debts. For this purpose, it is important to improve the capital
ing income are subtracted, the figure still came to ¥85.5
efficiency of TDK as a whole. That is the reason why we iden-
billion, showing that the operating income in fiscal 2018 was
tified financial and capital strategy as our Asset Value, one of
actually up over the previous term. Registering a real increase
the three components in improving corporate value, in Value
in operating income mainly through our existing businesses,
Creation 2020.
even when ¥10.9 billion spent on the acquisition of InvenSense,
was a major achievement.
However, our return on equity (ROE) and operating income ratio
Projected scenario to put free cash flow in the black
were only 7.8% and 6.7%, respectively, so the improvement of
our earning capacity is still incomplete. In addition, although we
have aimed to put our free cash flow in the black, because of
Realizing a surplus through balanced
capital distribution
bringing forward capital investment in response to robust demand
The operating income ratio of the Passive Components seg-
and other factors, even when acquisition funds are subtracted, our
ment in fiscal 2018 was almost the same as in fiscal 2017,
free cash flow registered a deficit. As a result, stockholders’ equity
when the transfer gains were excluded, signifying progress in
ratio dropped 4.4 percentage points to 43.3%, which was lower
the improvement of earning capacity. During the period of the
than what we had imagined was necessary from the perspective of
current Medium-Term Plan, demand for components in the
achieving a sound financial condition.
automotive market is expected to remain robust, so we can
* To comply with the U.S. Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement
Benefit Cost, we are revising our business results for fiscal 2018, which were reported on April 27, 2018—operating income, research and development expenses, cost of sales, and selling, general and
administrative expenses (revised operating income: ¥85,633 million to ¥89,692 million; revised research and development expenses: ¥103,457 million to ¥102,641 million). The disclosure of revised
cost of sales and selling, general and administrative expenses will be made at the announcement of financial results for fiscal 2019. The figures before adjustment are shown.
look forward to continuing stable income. The operating
Pursuit of Asset Value
income ratio of the Energy Application Products segment in
fiscal 2018 was 16.3%, which I think was higher than we
expected. Over the medium term we expect to maintain a
Enhancing efficiency in all business
activities as well as investment
level of about 15%. Regarding our HDD magnetic heads,
Of the capital investment of about ¥500 billion, we expect to
demand for personal computer HDDs is certainly going to
channel about 40% to the bolstering of production capacity
decline, but data center demand can be expected to increase
to meet the increased quantitative demand for batteries. Our
in a stable manner. Thus, for the Magnetic Application
plan is to have the most investment in the first fiscal year of
Products segment, we expect to secure an operating income
the plan and then gradually reduce the amount in the second
ratio of around 10%. The main focus is the Sensor Application
and third years. In the case of batteries, investment has run
Products segment. If we can realize a compound annual growth
ahead in recent years, but at last this sector is beginning to
rate (CAGR) of 35%, I believe we can expect an operating
generate a positive free cash flow. About 30% of the remain-
income ratio here of about 10%. This is our scenario for
ing capital investment will go to passive components and
achieving an operating income ratio in excess of 10%.
about 20% to other businesses, including magnets. Regarding
We expect depreciation and amortization to be ¥120–130
M&As, we will implement small-scale investments to supple-
billion a year on average, and our net cash provided by operat-
ment necessary technologies so as to respond to needs, but
ing activities in the final fiscal year is expected to be about
since we have established a foothold for business growth, we
¥100 billion. Regarding capital investment, we are planning to
do not expect any large-scale investments. With regard to
invest about ¥500 billion over the three years, which is the
investments, we will endeavor to pursue efficiency more than
same level as the previous Medium-Term Plan. Of this, we will
ever before. Our policy is to further strengthen investment
invest about ¥210 billion in fiscal 2019 and then around
appraisal, such as earning capacity and cash acquisition
¥150 billion in each of the remaining two years. With this
capability, based on the TDK Value Added (TVA) indicator
scenario, we aim to register a surplus in our free cash flow in
comparing earnings to cost of capital (weighted average cost
the plan’s final fiscal year.
of capital multiplied by invested capital).
Based on this scenario, we will promote the improvement
We will endeavor to improve the asset efficiency of TDK
of our financial condition by reducing interest-bearing debts
as a whole by not only raising business efficiency but also
and achieving a stockholders’ equity ratio of 50% and a debt-
accelerating the entire business cycle of sales and marketing,
to-equity ratio* of about 0.3. We will also implement share-
development, manufacturing, and headquarters functions.
holder returns with the aim of achieving a dividend payout
Our aim is to steadily execute measures through the operation
ratio of 30%.
of a logic tree connecting key performance indicators in busi-
* The debt-to-equity ratio is one indicator used to measure the soundness of a company’s man-
ness operations—such as asset turnover ratio and yield—and
agement; it indicates the ratio of liabilities to funds.
Financial and operation logic tree
medium-term financial targets, and to achieve an ROE in
excess of 14%.
Build a framework by which front line policies lead
to improvements in capital efficiency
Corporate
management
targets
ROE
over 14%
Business
ROA
Cost of
invested capital
Individual
business
targets
TVA
Financial
Leverage
After-tax
profit
Business
assets
Capital
cost ratio
Business
assets
P/L aspect
Profitability
assessment
Operating income
ratio 10%
B/S aspect
Assessment of
business asset
efficiency
Capex (3 years)
¥500.0 billion
C/F aspect
Assessment of
ability to
acquire cash
Related
accounts
Policies
Cost of sales
Cost reductions
Sales and
marketing expenses
Selling, general
and administrative
expenses
Accounts receivable
Inventory
Accounts payable
Marketing
Business
efficiency
improvements
Encouraging
debt collection
Inventory
reduction
Shortened pay-
ment terms
34
35
TDK CorporationAnnual Report 2018
Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Executing Growth Strategies
Growing xEV Market
TDK is targeting consolidated net sales of ¥1,650 billion in its new Medium-Term Plan. In order to achieve this goal, we are
leveraging our advanced materials and process technologies and our product lineup of sophisticated electronic compo-
nents to offer Kotozukuri solutions that solve the true needs of society in a timely manner.
Solution
What TDK delivers
Meeting specific automotive needs
Potential
Growing xEV Market
Expected xEV market size
2030
5-fold increase
About
million units
Needs
What electronic components must offer
The category of xEV (which includes HEVs, PHEVs, and EVs) is poised to experience
explosive growth on a global scale. The spread of advanced driving assistance systems
(ADAS) is progressing, and the race toward practical implementation of autonomous
driving is heating up. As a result of these developments, electronic components for use
in xEV must possess the following qualities.
1. Reliability
Because the malfunction or breakdown of an automotive component can lead to serious
accidents with loss of life, the ratio of defective parts must be resolutely driven toward
zero, and redundancy must be built in to guard against failure. This means that all com-
ponents used in systems for automotive use must meet stringent performance require-
ments. When used in combustion engines or electric motors as well as in other parts of
the power train, high heat resistance and vibration resistance are absolutely essential.
2. Light weight and high efficiency
In order to realize low power consumption, electronic components must become smaller,
lighter, and more efficient.
3. Suitable for realizing new driving experiences
Electronic control, networking, and other techniques not only serve to achieve more con-
venience and higher levels of operability but are also expected to enable new kinds of
driving experiences.
2016
About 2.6 million units
Since entering the field of automotive electronic components, TDK has accumulated extensive know-how that enables it to
provide products and solutions that are optimally suited to the requirements of xEVs.
Reliability
Pursuit of high-quality automotive components
Electronic components for use in automobiles are critical for safety. To withstand the extreme environmental conditions in which
they must operate, passive components such as multilayer ceramic chip capacitors (MLCCs) and inductors as well as all other
components need to be highly resistant to vibrations and shocks and possess high levels of heat and humidity resistance. TDK is cur-
rently engaged in Monozukuri Innovation aimed at achieving zero-defect quality.
P.42 Monozukuri Innovation
Improved energy efficiency
Key aspects for widespread acceptance of xEVs are improved fuel economy
and lower charging costs. TDK has successfully introduced more compact
and efficient DC-DC converters and power supply units for on-board char-
gers. Neodymium magnets from TDK contribute to make drive motors more
efficient, and its TMR sensors enable more precise control for further
enhanced efficiency. Through a variety of products, we are helping realize
more energy-efficient driving.
On-board charger
Magnet
Linking the algorithms of IC manufacturers to the real world
Engine control units (ECUs) for use in cars often incorporate a GPU for
handling three-dimensional image data as well as chips to process various
information. Passive components serve to link such microprocessors to
real-world conditions. In close cooperation with IC manufacturers, we are
heightening demand for ECUs.
Number of ECUs
For power train, body, safety,
multimedia applications, etc.
Between 10 to
as many as 50
In total, the electric and electronic
equipment in a car is made up of as
many as twenty to thirty thousand
individual components, including
some 3,000 or more multilayer
ceramic chip capacitors.
MLCCs
Inductors
Common mode filters
36
37
TDK CorporationAnnual Report 2018 Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Executing Growth Strategies
Sensors made possible by higher accuracy of materials technology
Modern automobiles employ a large number of TDK sensors for power train, body, safety, and communication applications.
Development of such high-performance sensors was made possible by improving the accuracy of our materials technology.
Enhanced safety, increased driving comfort, better fuel economy, and reduced power consumption are the result. Advanced driving
assistance systems (ADAS) rely on sophisticated sensing technology to provide accurate information about the vehicle as well as
its surroundings.
The industry’s largest lineup of non-optical sensors
Magnetic sensors
Ultrasonic sensors
Humidity sensors
Temperature sensors
Pressure sensors
Microphones
Barometric
pressure sensors
Gyroscope sensors
Acceleration sensors
C OLUMN
Wireless power transfer
In addition to the electromagnetic induction method that is
Haptics
Harnessing haptic technology that utilizes vibrations has
increasingly found in practical applications, TDK is working
enabled us to create the PiezoHapt™ actuator and
on systems for transferring power to moving objects using the
magnetic resonance method. We understood the potential of
PowerHap™ products with extremely fast response times.
This will prove useful for navigation system displays, console
this approach at an early stage and are promoting develop-
switches, and other automotive applications. In the future, we
ment aimed at practical realization. Once wireless power
intend to expand the product range to growth markets includ-
transfer has become a reality, making it possible, for example,
ing home appliances and electronic equipment, robots and
to safely recharge an xEV by simply parking it on a designated
industrial equipment, medical devices, and more.
space, significant changes in industrial and social infrastruc-
ture are bound to happen.
PiezoHaptTM
PowerHapTM
Potential
5G & Beyond
Maximum transfer rate of 5G
(Downlink logical value)
5G
Gbps
20-fold increase
Needs
What electronic components must offer
Commercial services using fifth-generation mobile communications system (5G) are
expected to begin operation in Japan in 2019. This will be accompanied by another leap
in smartphone performance and a growing number of IoT terminals. However, circuit
complexity will also increase further, making space savings through component minia-
turization as well as effective power management more important than ever.
Realizing smaller dimensions and higher performance
5G & Beyond
4G
1 Gbps
Solution
What TDK delivers
Advanced technology first implemented in smartphones tends to migrate to the automotive sector and other applications as well.
While closely watching progress in the area of 5G and subsequent communication standards, TDK continues to push the techno-
logical boundaries in the ICT market.
Capturing demand stimulated by 5G
SESUB technology
We are actively engaged in further advancing the state of the art in a range of fields.
This includes ceramic filters and other ceramic electronic components, the development
of packaged modules in technical cooperation with IC manufacturers, and rechargeable
lithium polymer batteries. We also expect IoT devices to further evolve toward smaller
footprints, lower profiles, and higher integration. TDK’s involvement in this area is exem-
plified by its semiconductor embedded substrate (SESUB) technology, which enables
the creation of highly competitive modules with small size and low profile. The next
generation of electronic components and modules is currently being created in our labs.
SESUB
Rather than simply mounting chips on a substrate, this unique technology enables three-
dimensional embedding of chips whose thickness has been reduced to as little as 100
μm directly in the substrate. Ultra-compact power supply modules as well as Bluetooth
and other similar modules created with this technology contribute to even thinner and
smaller mobile devices. Further advances in integration density and application to a wide
range of IoT devices are on the cards.
Bluetooth module
Power management unit
MEMS technology
MEMS microphone
MEMS pressure sensor
38
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TDK CorporationAnnual Report 2018 Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Executing Growth Strategies
Potential
Industry 4.0 & Society 5.0
Needs
What electronic components must offer
Industry 4.0 is a concept for thorough innovation of industrial production that is being realized in various countries
around the globe. In Japan, work is progressing on a system that integrates IoT, AI, robots, autonomous driving, and more
in a high-level fusion of cyberspace and physical space. The aim of this so-called “Society 5.0” concept is to combine
economic advancement with finding solutions for social issues, through cooperation by the public and private sectors.
Sensors and other electronic components incorporated in a multitude of different objects must deliver unprecedented
levels of durability and safety.
Solution
What TDK delivers
Enriching society with state-of-the-art technology
Industry 4.0 & Society 5.0
While forging ahead with production innovation, TDK is also engaged in efforts to improve energy efficiency, boost the spread of
renewable energy, and reduce the burden of medical treatment and care providers, among others, through the supply of solutions
based on the concept of Kotozukuri.
Expanding market for consumer-use sensors
Our extensive lineup includes magnetic sensors, MEMS sensors, advanced high-accuracy motion sensors with three-, six-, or
nine-axis, and various other types. These sensors are being increasingly used not only in smartphones and other mobile devices
but also in various other consumer product applications.
Kotozukuri in the medical and nursing care field
The fusion of sensor technology and software technology in wearable devices makes it possible to measure
and store vital data, supporting Kotozukuri solutions in the fields of medicine and caregiving. In cooperation
with TOKAI Corporation, a company known for its involvement in hospital and nursing care facilities, we are
working to achieve the early realization of 24-hour remote monitoring. Another remote monitoring system to
detect wandering of dementia patients is being developed in collaboration with the Oita University Faculty
of Medicine.
Wristband type wearable device
Silmee™ W20
COLUMN
Drones and TDK
The use of industrial drones is expanding beyond agri-
culture, logistics, surveying, and disaster countermea-
sures to other fields as well, and further market growth
is expected. TDK is contributing to the evolution of
drones by supplying a seven-axis sensor (three-axis gyro-
scope, three-axis acceleration, and barometric pressure)
as well as batteries and other parts.
Robotics and TDK
In smart factories, multiple industrial
robots are connected to the cloud to
share data collected by sensors,
enabling AI-based analysis for an enormous improve-
ment in production efficiency. TDK is able to provide
the various non-optical sensors required for this type of
application. Furthermore, the robot joints use a large
number of electric motors. TDK magnets for such
motors also contribute to the evolution of robotics.
Enhancing the power efficiency of things that drive the IoT society
In 2025, it is expected that IT-related power consumption will account for about 15% of the world’s electricity consumption.
Building energy systems with high efficiency and low power consumption is therefore crucial for the IoT society.
TDK has its roots in a revolutionary magnetic material called ferrite, and developed magnetics expertise into one of its core
technologies. Now, TDK has somewhat shifted its focus from traditional component sales to modular solutions that combine
hardware and software aspects. We are offering a versatile lineup of power solutions, focused on the three areas of energy
conversion, energy storage, and energy control. In all of these areas, we are able to provide high added value through sophisti-
cated synergy.
Energy conversion
• Bidirectional converters
• AC-DC/DC-DC converters
• Magnets for drive and power generation applications
Energy storage
• Rechargeable lithium polymer batteries
• Electric double layer capacitors (EDLCs)
• Transformers for battery management systems
• Battery management units
Energy control
• IGBT transformers
• Various sensors (current sensors, temperature sensors, etc.)
• SESUB technology
40
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TDK CorporationAnnual Report 2018 Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Executing Growth Strategies
Monozukuri Innovation
Post-Merger Integration (PMI) and Creating Synergies
Strengthening the Monozukuri power that drives Kotozukuri solutions
PMI expertise taken to the next level
The Kotozukuri solutions offered by TDK are based on a thorough mastery of materials technology, process technology, and inte-
grated production that results in highly competitive electronic components. In market sectors that are expected to see further
growth, improved reliability is a major requirement. TDK is therefore pursuing Monozukuri Innovation that combines the Industry
4.0 concept with its zero-defect quality policy.
Toward that end, the Akita Plant has come up with a special manufacturing concept on its own called Arubeki Sugata (ideal
process) quality. If one relentlessly improves quality and reliability, the end result will be a production line that does not make
defective products, which in effect is what the production process should be like. This is the aim of the drastic Monozukuri
Innovation that we are implementing. Automation, the use of robots, and other measures all serve to achieve this goal. We are
building a model line in which each process conforms to the Arubeki Sugata principle. After thorough testing and evaluation,
this will be applied to existing lines. Arubeki Sugata has become the watchword of the TDK Group as we engage in Monozukuri
Innovation at a global level.
Arubeki Sugata
Rather than having to sort out defective products
from the final output of a line, thorough quality
management covers the entire process from materi-
als input to completion of the product.
Management of zero-defect quality
Optimization of facilities and
human resources
Quality control activities from the
bottom up
Honjo Factory East Site, Akita Prefecture
C OLUMN
Implementing a model line
At the Honjo Factory East Site, which was completed in 2016, we are building a model line for MLCCs (multilayer ceramic
chip capacitors) that pursues the zero-defect quality policy. In the multilayering process, which has a major effect on the
quality of MLCCs, an enormous amount
of data about facility operation status
and the condition of the product is col-
lected and matched to reference quality
data. This results in a drastic improve-
ment in quality conditions. The know-
how obtained from this model line will
be applied to other production pro-
cesses as well.
Sensing utilization
Multilayering
Product
Process
Pressure
Relentless pursuit of
quality product conditions
Pursuit of Industry 4.0 + zero-defect quality
In keeping with efforts to reform our business structure, we embarked on a full-scale M&A strategy. More than 10 years before
the turn of the century, we made our first move by acquiring the magnetic heads manufacturer SAE Magnetics (H.K.) Ltd. in
1986. This was followed by the acquisition of Headway Technologies Inc. in 2000, another manufacturer in the same field. In
2005, we acquired the Lambda Power Group (now TDK-Lambda), a leader in industrial power supplies, and the rechargeable
lithium polymer battery manufacturer ATL. In 2008, the passive component manufacturer EPCOS with a forte in high-frequency
components became part of the TDK Group. These M&As provided a clear boost to our corporate value and have become the
drivers for TDK’s evolution in recent years. In the electronic component sector, an acquisition or merger requires careful assess-
ment of complex technological factors. As a result, we have accumulated extensive know-how in making our own judgments and
decisions regarding target companies. When we determine that a business excels in regard to management, strategy, technology,
and operation, we go ahead with the acquisition, but that does not
mean that we try to impose the TDK way. Rather, we want to maintain
the dynamism of the acquired company. This approach involves
respect for various cultures and business philosophies. Leveraging
our strength of diversity adds to the strength of Group companies.
Rule 1 We take the initiative in selecting a target company.
Rule 2 We do not try to impose the TDK way after acquisition.
We Are Truly Thrilled!
Behrooz Abdi
General Manager
MEMS Sensors Business Group
Sensor Systems Business Company
InvenSense, of which I am the CEO, is a pioneer in motion sensors. We began working on six- and nine-axis sensors
ahead of the entire industry. Our broad portfolio is made possible by a solid grounding in microphone, inertial, pres-
sure, and ultrasonic sensor technology. We have grown at a rapid pace, offering solutions for many consumer products
including smartphones, drones, wearables, game consoles, virtual reality (VR) and augmented reality (AR) devices,
inertial navigation systems, and image stabilization for cameras.
Just as decision making in humans relies on a combination of sensory input for seeing, hearing, smelling, and
touching, the future will require complex sensor combinations. InvenSense will blaze a path into this future together
with TDK. InvenSense has the capability to create solutions on a single system chip that integrate MEMS sensors
with firmware and proprietary algorithms. By merging this strength with TDK’s powerful materials technology and
semiconductor embedded substrate (SESUB) technology, and by fusing the Group’s management resources, a highly
unique business model has been created (
P.44–P.45 Synergies Behind the Sensor Business). Our access to mar-
kets and our scope of activities have expanded, responding to increasing demand in the area of advanced driving
assistance systems (ADAS), along with ICT, IoT, industrial equipment, and the automotive sector. We are truly
thrilled by these developments.
42
43
TDK CorporationAnnual Report 2018 Product Brand Marks
Product Brand Marks
Management Strategies: Guided by Its Unchanging Founding Spirit, TDK Continues to March On
Synergies Behind the Sensor Business
Product Brand Marks
Bold M&A strategy dramatically expands the sensor portfolio.
Impressive product lineup comprises all kinds of non-optical sensors.
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
Product Brand Marks
MEMS is a micromachining technology
that creates fine sensors as well as
movable mechanisms, etc., on silicon
substrates, utilizing similar manufac-
turing processes as those for semicon-
ductor integrated circuits.
MEMS technology
Software technology
Algorithm technology
Acceleration sensors
Inertial sensors
Ultrasonic sensors
IC technology
Product Brand Marks
Product Brand Marks
Product Brand Marks
Core technologies including
materials technology
Gyroscope sensors
Microphones
MEMS Sensors
Business Group
Module technology
ASIC design and development
Display ratios
Display ratios
Current sensors
TMR sensors
Magnetic Sensors
Business Group
Sensor integration
MEMS sensor
platform
Global expansion of solution business
using high-level sensor fusion
W
≤ 1.2W
≤ 0.65W
≤ 1.2W
W
≤ 1.2W
≤ 1W
≤ 0.65W
≤ 1.2W
≤ 1.2W
≤ 1.1W
Display ratios
Product Brand Marks
Display ratios
Hall sensors
Magnetics technology
Temperature &
Pressure Sensors
Business Group
Temperature sensors
≤ 1W
Pressure sensors
Three business groups unified in the
Sensor Systems Business Company* create
≤ 1.2W
a strong sensor business formation
≤ 1.1W
W
≤ 1.2W
≤ 0.65W
Packaging technology
≤ 1.2W
≤ 1W
≤ 1.2W
≤ 1.1W
Electronic ceramics technology
* Sensor Systems Business Company: Newly created entity that encompasses
the TDK sensor divisions and sensor-related Group companies
Sensor
Application
Products segment
targets a CAGR
of 35%
≤ 1.2W
W
Addition of Hall sensors strengthens
magnetic sensor technology
≤ 0.65W
Display ratios
TDK’s magnetic sensor technology
comprising TMR and other similar
sesors has been further strengthened
by the addition of Hall sensors from
Micronas, which have earned high
acclaim in the automotive industry.
Products that integrate TMR sensors
and Hall sensors have also been devel-
oped. Targeting the automotive and
W
industrial equipment markets, we are
growing the business with a wide
lineup of sensor solutions.
≤ 1.2W
Temperature and pressure sensors
drive electronic ceramics technology
≤ 0.65W
Various MEMS sensors significantly
expand the add-on portfolio
≤ 1.2W
Temperature sensors with NTC therm-
istors and pressure sensors utilizing
≤ 1W
piezo-ceramic technology are just a
few examples of the versatile product
portfolio developed by TDK and
EPCOS through advanced electronic
ceramics technology. We are also pur-
suing the technological synergy that
arises from the integration of different
sensors. Tangible results include the
development of integrated tempera-
ture/humidity/barometric pressure
sensor modules made possible by
MEMS technology.
≤ 1.2W
≤ 0.65W
≤ 1.2W
The MEMS sensor product and tech-
nology of the TDK Group received a
significant boost by the addition of
gyroscope sensors and acceleration
sensors from InvenSense, a company
with extensive design expertise, along
with inertial sensors from Tronics and
ultrasonic sensors from Chirp. The
MEMS sensor platform suitable for
advanced sensor fusion has also been
strengthened. We are expanding our
MEMS sensor solutions not only for
the ICT market but also for the auto-
motive market and others.
≤ 1.2W
≤ 1W
Securing IC design technology
indispensable for sensor systems
≤ 1.2W
The integrated circuit chips that pro-
cess the signals obtained through
sensing are an indispensable part of
any sensor system. The addition of
ICsense, Europe’s premier Application
Specific Integrated Circuit (ASIC)
design company, to the TDK Group has
further elevated our capability to pro-
vide high-performance, high-value-
added sensor products and solutions.
≤ 1.2W
≤ 1.1W
≤ 1W
High-level sensor fusion powered
by sophisticated software technology
≤ 1.1W
In systems that comprise a large
number of sensors, dedicated software
makes it possible to realize integrated
control of sensor-derived information,
enhance functionality and expandabil-
ity, and create new solutions along
with intricate power management.
InvenSense and other TDK Group
companies possess the required soft-
ware technology and expertise that
forms the basis for high-level sensor
fusion in the age of IoT.
≤ 1.1W
44
Annual Report 2018
45
Display ratios
W
≤ 1.2W
Technological synergyTechnological synergyTechnological synergy TDK Corporation Initiating a global HR strategies
In fiscal 2019, TDK began the full-scale implementation of its
global human resources strategy aimed at discovering and
developing borderless global talent. To promote this initiative,
the Human Resources HQ has been established in Munich,
Germany. It is headed by TDK corporate officer and general
manager Andreas Keller. With the Human Resources HQ located
outside of Japan and with non-Japanese in top management
roles, TDK is a rare example among Japanese companies.
Due to aggressive M&A in recent years, there has been
a sharp increase in the globalization of human resources
and diversification of specializations in the TDK Group.
Accompanying these developments, to ensure more objective
personnel evaluations, we are establishing common global
standards. We will promote the proper placement of talented
people beyond the boundaries of country or division, carefully
select management candidates, and work to further increase
our strength of diversity. We are already working on establishing
a consolidated human resource database and expanding the
scope of its use, and will go all out to develop global leaders.
G er many
Andreas Keller
Human Resources HQ: Munich
TDK’s global HR strategies
Establish the Human Resources HQ in Munich, Germany
Build a consolidated global HR database
Set common global standards for evaluating personnel
Cultivate global leaders beyond boundaries of country
or division
Territorial career development program
A territorial career development program is being implemented to find individuals within the Group who have strong,
untapped capabilities, to train a new generation of candidates for all key positions, and to develop global leaders who will
play an active role in a wide range of fields, thereby raising the management skills of the entire organization. Candidates
will participate in the program five times a year in their region. During the program, practical issues will be addressed
through group work with members gathered from various regions and divisions.
Moving to Improve Sustainable Corporate Value
Global Human Resource Strategies Bolstered
by Strength of Diversity
Strength of diversity built
through TDK-style
post-merger integration (PMI)
Since the 1960s when the Company began expanding over-
seas, TDK has led the movement toward globalization among
Japanese companies. In the 2000s, we began pursuing the
bold reform of our business structure through M&As. Starting
with Hong Kong-based ATL in 2005 and Germany-based
EPCOS in 2008, companies that have joined the TDK fold
are significantly driving TDK’s earnings many years on. The
secret to our integrative approach is to not control companies
through capital but to delegate authority on an equal partner-
ship basis. We take this approach because we understand
that electronic components are a highly distinctive business
field, and that every region has its own needs, business prac-
tices, systems, and other unique characteristics. Because the
corporate managers of the companies we have acquired are
familiar with those specifics, we feel they are the ones best
qualified to execute management strategies. Meanwhile, we
concentrate on maximizing the corporate value of the TDK
Group as a whole by creating synergies through the integra-
tion of management resources such as materials technology,
process technology, and the customer base.
A culture that encourages and harnesses diverse value sys-
tems to promote innovation is a hidden competitive advan-
tage of TDK’s strength-of-diversity approach.
Global Business Composition
Over 90% of
TDK employees are outside of Japan
8%
13%
5%
9%
9%
9%
2018
Net sales (internal)/
Number of employees
(external)
69%
78%
Japan
Asia, etc.
Europe
Americas
The growing need for an
HR strategies adaptive to
business globalization
Since 2016, we have been aggressively pursuing an M&A
strategy primarily in the area of sensors, and have been cre-
ating a new business structure. TDK has expanded its busi-
ness to more than 30 countries and regions around the
world, and in fiscal 2018 the overseas sales ratio was 91.1%
and the overseas employee ratio 90.7%. In order to provide
optimal solutions to customers in a market that is becoming
more globalized, we must further increase our strength of
diversity while at the same time maximizing Group synergies
by reaching beyond limitations imposed by time, geography,
and culture. Against this backdrop, we feel the growing
importance of further promoting management diversity, and
discovering, developing, and utilizing human resources
across international borders.
46
47
TDK CorporationAnnual Report 2018 Moving to Improve Sustainable Corporate Value
Global Human Resource Strategies Bolstered by Strength of Diversity
Promoting a Global Human
Resource Strategies to Realize
the Strength of True Diversity
TDK’s Workstyle Innovation
Diversification of workstyles to suit various stages in life
TDK introduced three schemes in October 2017 with the aim
of enabling employees to choose workstyles suited to various
stages in life and to continue working with peace of mind.
The Spouse Domestic Transfer Accompaniment Scheme
provides support to employees accompanying spouses who
undergo a domestic transfer requiring a change of residence
by, for example, investigating whether acceptance by a TDK
site in the employee’s desired area is possible. The Spouse
Overseas Transfer Leave Scheme enables employees wishing
to accompany spouses who are transferred overseas to take a
leave of up to three years. After the leave ends, in principle,
the employee returns to the same workplace as before the
leave. The Welcome Back Scheme (Former Employee
Reemployment Scheme) assists the return to work as regular
employees of former employees who have quit their jobs
because of marriage, childbirth, child-raising, nursing care,
spouse transfer, among other circumstances.
Andreas Keller
Corporate Officer
General Manager of Human Resources HQ
Introduction of schemes to diversify workstyles
Domestic transfer of spouse
Overseas transfer of spouse
Childbirth, child-raising,
nursing care
Over 100,000 employees are playing an active role
successors on a Groupwide basis to take over important
in the TDK Group. Approximately 90% of those employ-
positions. Under this policy, we will actively promote
ees are based in countries other than Japan, with nearly
interaction not only between our headquarters and
80% having joined the TDK Group through M&As. TDK
Group companies but also between Group companies
has a culture that values the individuality and working
themselves. This interaction will not only be limited to
approach of every new consolidated subsidiary that has
technical positions, but will also extend to employees in
joined the Group, without forcing these companies to
charge of corporate functions such as legal or others,
adopt a style similar to the Company. This cultural
thereby giving all employees an opportunity to play an
acceptance has been a major reason why each Group
active role on a global scale. Our aim is to accelerate
Company has been able to achieve growth as part of the
this interaction through the Global Communication and
TDK Group whilst leveraging its own individual strengths
English Training program, as well as introducing a con-
to the greatest possible extent. The true strength of
sistent global mobility guideline. This is just the begin-
the TDK Group’s diversity lies not only in the fact that
ning of our strive and ambition to establish a global
it possesses the technologies and capabilities of its
human resources platform.
subsidiaries, but rather in respecting the cultures of
Since entering the TDK Group 18 years ago as a staff
each individual Group company and offering motivation
member at a local subsidiary, I have gained much experi-
through the fostering of interaction between these com-
ence at Group companies in various countries. As of
panies. It also comes through sharing best practices
2018, I have been serving as a corporate officer at the
that should be incorporated at our headquarters and
company’s headquarters. Through this experience, I have
at other Group companies. Furthermore, to promptly
come to believe that providing our global employees,
achieve the TDK Group’s goals, I believe it is imperative
regardless of their Group company, with the opportunity
that we promote our human resource strategies on a
to play an active role on the global stage, and at the
global basis under a shared vision.
company’s headquarters, is a huge motivational factor.
To realize further growth whilst leveraging the
Going forward, whilst leveraging the individual charac-
strength of true diversity, we will adhere to a policy of
teristics of each Group company, we will promote our
putting the best people in the best place at the best
human resource strategies under the concept of One TDK,
W
o
r
k
L
e
a
v
e
R
e
e
m
p
l
o
y
m
e
n
t
Transfer Accompaniment
Scheme
If there is a TDK site near the spouse’s
transfer location, the employee can
request a transfer.
Transfer Leave Scheme
Childcare and Nursing
Care Leave Scheme
If the spouse is transferred overseas, the
employee can take leave.
Resignation
Welcome Back Scheme (Former Employee Reemployment Scheme)
If the employee is forced to resign, he/
she can return as a regular employee if
certain conditions are met.
Introduction of Second Career Scheme
TDK has also introduced the Second Career Scheme, which,
when an employee reaches mandatory retirement age,
extends the employment contract to the age of 65. The aim
of this scheme is to fulfill TDK’s social responsibility of
responding to the revised Act Concerning Stabilization of
Employment of Older Persons and to effectively utilize the
knowledge, skills, and experience of elderly employees for
the further growth of the Company.
Toward the realization of work-life balance
In April 2018, TDK introduced a Work-at-Home Scheme and
a Super Flextime Scheme. The aim of these schemes is to
support a work-life balance by providing employees who have
child-raising and nursing-care responsibilities with opportuni-
ties to work at home and by applying a flextime system that
does not have any core time. By making use of these
schemes, even more employees can improve their work-life
balance.
Unlike the usual flextime system, the Super Flextime
Scheme does not set any core time. Employees can choose
their working hours flexibly anytime from 6 a.m. to 10 p.m.
Image of the Super Flextime Scheme
Commuting
Fixed working hours
Break
Fixed working hours
Commuting
possible time, thus actively cultivating through various
thus bringing the entire Group together. By doing so, we
Escort
Commuting
Fixed working hours
Commuting
Break
Escort
At-home work
newly introduced management training programs
will realize further growth of the TDK Group as a whole.
At-home work
Break
At-home work
Break
At-home work
48
49
TDK CorporationAnnual Report 2018
Moving to Improve Sustainable Corporate Value
The TDK Group’s Materiality
TDK believes it is important to promote CSR activities that respond to changes among stakeholders and in the social and busi-
ness environment surrounding the Group. Since fiscal 2014, TDK has promoted the study of materiality in accordance with the
fourth edition of the Global Reporting Initiative guidelines (GRI-G4), and in fiscal 2016, we finalized our materiality*. With
regard to the designated important CSR issues of “Contribute to the World through Technology,” “Develop Human Resources,”
“Consider the Societal and Environmental Impact of the Supply Chain,” and “Develop and Prosper in Harmony with the Global
Environment,” we are continuing to promote activities.
* The details of the materiality finalization process may be viewed on the following website: http://www.global.tdk.com/corp/en/csr/csr_philosophy/csr02000.htm
The materiality finalization process
GRI-G4 made a revision from requiring comprehensive information disclosure to requiring information disclosure with the focus
on materiality. The objective of this revision was to encourage companies to determine their reporting content purposefully by
getting management to be more deeply involved in CSR. TDK held discussions with stakeholders outside the Company, imple-
mented a dialogue with management, and finalized materiality through the following process.
STEP 1
STEP 2
STEP 3
STEP 4
Identifying social issues
We confirmed the daily communi-
cations content with stakeholders
and conducted simulations of
various social issues in light of
ISO26000 and other interna-
tional standards relating to CSR.
Prioritizing material issues
from TDK’s own perspective
Prioritization from
stakeholders’ perspectives
We prioritized the importance of
the aforementioned identified
social issues by “management
strategies,” “impact of the
Group’s business on society,”
“degree of stakeholder interest,”
and “responses to the current
situation.”
We studied on prioritization from
stakeholders’ perspectives,
reflecting the CSR Report review
conducted by experts from Asia,
Europe, and the U.S. as well as
the exchanges of views with CSR
experts.
Finalization of materiality
We reconsidered our areas of pri-
ority from the perspectives of
TDK and stakeholders and, after
gaining approval from the
Executive Committee, finalized
the materiality of the TDK Group.
Finalization of the materiality
The prioritization in Steps 2 and 3 was conducted on the basis of 46 items chosen in consideration of items required by GRI-G4,
and 19 material issues were identified. These issues were further sorted and classified and finally condensed into the following
important themes for the promotion of activities going forward. After approval has been received from the Executive Committee,
the competent departments in TDK’s headquarters are taking the initiative in setting key performance indicators in coordination
with TDK Group companies in order to promote related activities.
Important CSR Issues
Important Themes
Contribute to the World through Technology
Contribution to regions
and communities
Develop Human Resources
Consider the Societal and Environmental
Impact of the Supply Chain
Protection of water
resources
Addressing social issues by developing new kinds of
products the world has not yet seen
Pursue zero-defect quality
Develop global human resources
Cultivate a corporate culture that respects diversity
Consider the work environment at manufacturing sites
Consider the work environment of suppliers
Response to conflict minerals
H
i
g
h
I
m
p
o
r
t
a
n
c
e
f
o
r
s
t
a
k
e
h
o
l
d
e
r
s
50
Important CSR Issues
Important Themes
Main Points
Contribute to the
World through
Technology
Addressing social issues
by developing new kinds of products
the world has not yet seen
TDK aims to solve social issues through unique technologi-
cal development.
Pursue zero-defect product quality
On the basis of our high level of technology, we will pursue
zero-defect quality through uniformly managed production
processes from materials to manufacturing.
Develop Human
Resources
Develop global human resources
Toward the promotion of genuine globalization, we will strive
to develop the human resources who will serve as its
foundation.
Cultivate a corporate culture that
respects diversity
In order to continue generating innovative creativity, we will
build a tolerant corporate culture that respects the diversity
of human resources.
Consider the work environment at
manufacturing sites
In light of the latest requirements, we will gauge consider-
ations for the labor environment at production sites, which
we need as a supplier, and if necessary implement educa-
tion and guidance toward improvement.
Consider the work environment of
suppliers
In light of the latest requirements, we will gauge consider-
ations for the labor environment of suppliers, which we
need as a buyer, and if necessary implement education and
guidance toward improvement.
Response to conflict minerals
We will execute our social responsibility as a midstream
company appropriately through the continued implementa-
tion of required efforts and an understanding of the latest
requirements.
Reduce environmental load throughout
life cycle stages
We will promote environmental activities on the basis of the
TDK Environmental Vision 2035*.
Creating a framework for gauging prod-
uct contributions
Through the setting of a framework for gauging product con-
tributions in the industry, we will promote social under-
standing of the level of TDK’s environmental contribution.
Consider the
Societal and
Environmental
Impact of the
Supply Chain
Develop and
Prosper in
Harmony with
the Global
Environment
Develop and Prosper in Harmony with
the Global Environment
Reduce environmental load throughout life cycle stages
Creating a framework for gauging product contributions
Management
Ensure corporate governance and compliance
Management
Ensure corporate governance and
compliance
Through the development of appropriate corporate gover-
nance and thorough implementation of compliance, we will
aim to enhance our corporate value.
Business activities in consideration
of biodiversity
Supply of product information
to consumers
Protection of customer privacy
Importance for the TDK Group
High
* For details of the goals and achievements of environmental activities, please see the following website: https://www.global.tdk.com/corp/en/csr/environmental_responsibility/csr03200.htm
51
TDK CorporationAnnual Report 2018
Moving to Improve Sustainable Corporate Value
Optimization of the Value Chain
Overall strategy
Monozukuri Innovation
Social factors
Environmental factors
Value Chain
Procurement
Development
and design
Manufacturing
Logistics
Sales
Strategic Fit (Optimization of value chain to promote strategy)
Stable procurement of magnetic
materials
Assurance of the quality of raw
materials
Procurement of rare-metal
alternatives, etc.
Overall value chain
• Pursuit of integrated production
from materials to finished products
• Creation of “black boxes” in core
domains to ensure firm control
of technological advantage
• Backflow of customer needs
upstream
• Enhancement of profitability by
accelerating the business cycle
across all processes
Acceleration of the development cycle
Development of demand areas through
our global 4-pole network
Concentration on strategic areas of
development resources
New product development based on
long-term road map
Fusion of intellectual property within
Group
Collaboration with IC manufacturers
Management and utilization of
intellectual property
Development of products not using
rare metals
Pursuit of location free to realize
uniform quality worldwide
Pursuit of zero defects through
source management
Pursuit of production efficiency
through utilization of IoT
Reduction of inventories through
shortening of lead times
Assurance of logistics quality
(contribution to “Just In Time”)
Strengthened relations with customers
Improvement of cash flows
Effective utilization of information
systems
ESG
Overall value chain
• Development of human resources
to promote Monozukuri Innovation
• Development of global human
resources
• Cultivation of a corporate culture
that respects diversity
• Reduction of environmental load
throughout lifecycle perspective
• Creation of a framework for gauging
product contributions
Assurance of procured product quality
Implementation of CSR check
sheets/audits
Green procurement
Response to conflict minerals
Consideration of work environment
of suppliers
Development of products contributing
to the environment
Product assessment
Reduction of environment load at plants
Improvement of energy efficiency
Consideration of work environment
at production sites
Reduction of environmental load
of logistics
Strengthening of quality assurance
setup
Promotion of sales of products
contributing to the environment
CSR-compliant supplier ratio
91.2%
Implementation of CSR
self-checks at manufacturing sites
100%
Reduction of CO2 emissions
through products
2,041
thousand t-CO2
52
53
TDK CorporationAnnual Report 2018 Moving to Improve Sustainable Corporate Value
Optimization of the Value Chain
FOCUS
Strategic Fit
FOC US
ESG
Reduction of procurement risk
relating to magnetic materials and
strengthening of materials
technology
For TDK, whose core technology is magnetics, the stable
procurement of magnetic materials is an important issue
in the promotion of medium- and long-term management
strategy. In particular, the dysprosium added to neodymium
magnets, which boast the strongest magnetic force, is a
rare-earth element. As well as ensuring the stable supply of
magnetic materials, TDK is making efforts to reduce busi-
ness risks, such as the development of neodymium magnets
that do not rely on rare-earth elements. We are also tack-
ling the continuous evolution of materials technology. In July
2018, TDK concluded a capital and business tie-up con-
tract with Toda Kogyo Corp. and agreed to turn it into an
equity-method affiliated company.
TDK’s active involvement in new mate-
rial development based on Toda’s forte
in magnetic materials and material
synthesis technology will lead to a
strengthening of the competitiveness
of our electronic components.
Neodymium magnets
R&D at global sites with
differing regional features
TDK is tackling innovations utilizing its strength of diversity.
For example, while TDK itself is strong in the development
of materials technology and production technology, there
are companies that are strong in the pursuit of state-of-the-
art technology, companies that are strong in the develop-
ment of applications, and companies that are strong in the
development of environment-friendly products, especially
in Europe, where environmental awareness is deep-rooted.
Companies with expertise in different fields, due to national
or regional characteristics or the like, are promoting R&D
utilizing their respective strengths. Through mutually com-
plementary development, we are endeavoring to enhance
our competitiveness on a global scale.
Acceleration of cycle time
TDK is making efforts to accelerate the business cycle in
all processes, including sales, manufacturing, and develop-
ment. In addition to accelerating the supply of samples
and improving development speed, we have set specific
KPIs, such as the reduction of inventories, the shortening
of production lead times, and the launch of products with
top market shares, so as to strengthen our competitiveness
and improve our earnings.
Sales
• Time taken to recover
accounts receivable
• Frequency of information
network use, etc.
Acceleration up of
the business cycle
through KPI target
Development
• Number of completed
R&D themes
management
• Number of patents
• Number of samples submitted
to customers, etc.
Manufacturing
• Shortening of lead times
• Review of manufacturing
processes
• Optimum inventory
management, etc.
TDK Environmental Vision 2035
At TDK, we believe that long-term environmental action plays a key role in the effort to
achieve sustainable development in society. TDK Environmental Vision 2035, launched
in fiscal 2016, sets the goal of “halving the CO2 emissions basic-unit in a life-cycle per-
spective by 2035,” based on operating businesses with low enough environmental loads
not to disturb natural cycles. This stance stems from the belief that minimizing the
environmental load in business activities, and revitalizing the natural environment, is
the duty of companies that supply products designed to contribute to its customers and
the society. Moreover, modeled on the United Nations Climate Change Conference (COP
21) Paris Agreement, which seeks to curb global warming by achieving a balance
between greenhouse gas emissions and absorption sources, TDK pursues the ideal cor-
porate posture.
Procurement
Disposal
FY2015
FY2026
FY2036
CO2
half
Production
Use
100
80
60
40
20
0
–30%
–50%
CO2 emissions
cut in half
Logistics
CO2 emissions basic-unit (FY2015 = 100)
Promotion of innovations
utilizing TDK’s strength of diversity
USA (San Jose)
Many semiconductor and related
companies are located in San Jose,
which is near Silicon Valley. Here,
TDK jointly implements surveys of
state-of-the-art information and
communications technology and
product development.
Germany (Munich)
In a region where awareness of the
environment and energy saving is
strong, TDK implements technical
surveys and development in such
fields as automotive and industrial
equipment.
China (Shenzhen)
Here, TDK develops technologies
that can be deployed in all direc-
tions, including the expanding
automotive, ICT, and industrial
equipment markets.
Israel (Tel Aviv)
There are many high-tech startups in Tel
Aviv, which is the site of TDK-Lambda.
Here, TDK implements surveys and
development of new technologies.
China (Shanghai)
Here, TDK implements EMC sup-
port, the proposal of optimum
components, and other activities.
Japan (Chiba)
Here, TDK implements R&D on
medium- to long-term themes
(new materials, new manufactur-
ing methods, new products, etc.).
Major achievements
Trends in CO2 Emissions from
Production Activities (Global)*
kt-CO2
FY2015 = 100
2,000
1,600
1,200
800
400
0
120
110.5
1,647
100
80
60
40
20
0
FY
14
15
16
17
18
CO2 emissions (left)
CO2 emissions basic-unit
(right)
Trend in the Reduction of CO2
Emissions through Products*
kt-CO2
FY2015 = 100
2,500
2,000
1,500
1,000
500
0
2,041
138.9
200
150
100
50
0
FY
14
15
16
17
18
CO2 emissions (left)
CO2 emissions basic-unit
(right)
* A third-party review of the calculation method
was performed. Please refer to the following
website for more information.
http://www.global.tdk.com/corp/en/csr/csr_data/
csr05900.htm
54
55
TDK CorporationAnnual Report 2018
Consolidated Business Results Highlights
Years ended March 31
Consolidated Business Highlights*1
Net sales
(Overseas sales)
Cost of sales
S elling, general and administra-
tive expenses
Operating income (loss)
Income (loss) before income taxes
Income (loss) from continuing
operations before income taxes
N et income (loss) attributable to TDK
Capital expenditures
Depreciation and amortization
Research and development expenses
R atio of overseas production to
net sales (%)
N et cash provided by operating
activities
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
¥ 866,285
¥ 727,400
¥ 792,624
¥ 862,492
¥ 802,534
¥ 841,847
¥ 984,525
¥1,082,560
¥1,152,255
¥1,178,257
¥1,271,747
Breakdown of Operating Income Changes*3
Yen billions
Yen millions
714,172
635,529
143,581
87,175
91,505
71,461
84,312
71,297
57,387
610,944
605,943
175,762
(54,305)
(81,630)
(63,160)
98,425
89,567
57,645
704,874
604,454
158,727
29,443
25,576
13,520
64,370
83,788
53,942
764,807
645,514
149,114
67,864
64,519
45,264
78,638
77,594
52,973
702,469
624,271
157,724
20,539
14,668
(2,454)
99,653
80,197
52,551
747,062
668,258
151,535
22,054
19,765
1,195
85,606
77,938
53,943
890,520
763,572
184,337
36,616
39,772
16,288
68,606
83,109
63,385
207,876
227,718
72,459
74,517
93,414
91,839
49,440
102,525
80,249
70,644
64,828
160,674
83,224
84,920
113,649
208,660
211,717
145,099
167,631
87,491
91,254
255,598*3
85,633*3
89,811
63,463
178,612
92,171
103,457*3
989,348
1,061,203
1,073,024
1,158,004
802,225
831,123
855,948
930,516*3
Fiscal 2017
208.7
70.1
74.0
80.5
83.6
80.2
81.8
86.7
87.9
86.3
86.1
84.5
–144.4
Gain on transfer
+3.7
Changes in sales
–32.3
Sales price reduction
+34.0
Rationalization, cost reduction
+4.3
Benefits from restructuring
–3.7
SG&A expenses increase
–10.9
One-time expenses related to M&A
+20.1
Restructuring cost
+6.1
Exchange rate fluctuation
(U.S.$1.00 = ¥110.93)
Net cash used in investing activities
(141,892)
(275,410)
(105,963)
119,413
59,189
118,247
101,879
(61,341)
55,334
(29,898)
108,942
(90,156)
127,308
142,850
151,563
160,136
91,310
(55,438)
(127,312)
(140,585)
(71,111)
(246,099)
N et cash provided by (used in)
financing activities
C ash and cash equivalents at end
of period
Total assets
Stockholders’ equity
Working capital
Number of shares issued (thousands)
Per Share Data
N et 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 (%)
C O2 emissions in production
activities (t-CO2)
C O2 emissions reduction
in manufacturing (t-CO2)*2
(75,941)
223,637
(38,369)
(31,860)
12,929
4,395
(56,118)
(35,243)
29,305
(37,753)
110,088
Fiscal 2018
85.6
166,105
935,533
716,577
300,859
129,591
165,705
132,984
129,091
167,015
213,687
250,848
265,104
285,468
330,388
279,624
1,101,036
1,091,458
1,060,853
1,072,829
1,169,575
1,239,553
1,404,253
1,450,564
1,664,333
1,905,209
554,218
281,536
129,591
543,756
286,370
129,591
534,273
199,186
129,591
498,159
219,918
129,591
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
824,634
296,899
129,591
¥551.72
¥(489.71)
¥104.82
¥350.90
¥(19.06)
¥ 9.50
¥129.47
¥392.78
¥514.23
¥1,150.16
¥502.80
Yen
5,557
130.00
23.4
4,297
130.00
—
82.4
16.6
10.1
9.7
7.4
84.0
24.2
(7.5)
(9.9)
(6.2)
4,215
60.00
57.2
88.9
20.0
3.7
2.5
1.2
4,142
80.00
22.8
88.7
17.3
7.9
8.4
4.2
3,957
80.00
—
87.5
19.6
2.6
(0.5)
(0.2)
4,461
70.00
737.2
88.7
18.0
2.6
0.2
0.1
5,050
70.00
54.1
90.5
18.7
3.7
2.7
1.4
5,865
90.00
22.9
5,355
120.00
23.3
6,289
120.00
10.4
6,532
130.00
25.9
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
91.1
20.1
6.7
7.8
3.6
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
102,883
90.7
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
1,647,096
321,000
498,000
886,000
1,251,000
1,581,000
1,675,000
2,041,000
Breakdown of Free Cash Flow
Yen billions
Net cash provided by
operating activities
91.3
Capital
expenditures
–178.6
+9.1
Proceeds from sales
of tangible and
intangible assets
Proceeds from sale
and maturity of short-
term investments
Payment for pur-
chase of short-term
investments
Proceeds from
sale and matu-
rity of securities
+168.3
–156.6
+24.9
Payment for purchase
of securities
–1.2
Proceeds from sale
of business, net of
cash transferred
+30.4
–141.5
Acquisition of
subsidiaries, net
of cash acquired
Other–net
‒0.8
Free cash
flow
–154.8
*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 busi-
ness 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.
*3 To comply with the U.S. Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement
Benefit Cost, we are revising our business results for fiscal 2018, which were reported on April 27, 2018—operating income, research and development expenses, cost of sales, and selling, general
and administrative expenses (revised operating income: ¥85,633 million to ¥89,692 million; revised research and development expenses: ¥103,457 million to ¥102,641 million). The disclosure of
revised cost of sales and selling, general and administrative expenses will be made at the announcement of financial results for fiscal 2019. The figures before adjustment are shown.
56
57
TDK CorporationAnnual Report 2018 * To comply with the U.S. Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost, we are revising our business results for fiscal 2018, which were reported on April 27, 2018—operating income, research and development expenses, cost of sales, and
selling, general and administrative expenses (revised operating income: ¥85,633 million to ¥89,692 million; revised research and development expenses: ¥103,457 million to ¥102,641 million).
The disclosure of revised cost of sales and selling, general and administrative expenses will be made at the announcement of financial results for fiscal 2019. The figures before adjustment are shown.
Consolidated Business Results Highlights
Net Sales / Overseas Sales Ratio
Yen billions
1,400
1,200
1,000
800
600
400
200
0
1,271.7
91.1
%
100
75
50
25
0
Operating Income (Loss) / Operating Income Ratio*
Yen billions
240
200
160
120
80
40
0
−40
−80
85.6
6.7
%
24
20
16
12
8
4
0
–4
–8
ROE / ROA
%
Cash Flows
Yen billions
20
10
0
–10
–20
7.8
3.6
200
100
0
–100
–200
–300
91.3
–154.8
–246.1
18
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
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
Net cash provided by operating activities
Net cash used in investing activities
Free cash flow
As a result of increases in the number of parts used on automobiles in conjunction
with the electrification of vehicles and steady investment in semiconductors in the
industrial equipment market, net sales were ¥1,271.7 billion, a record high, in
fiscal 2018. Sales have increased over the past 11 years, particularly in the
United States and Asia, and in fiscal 2018, sales outside Japan accounted for
91.1% of total net sales.
As a result of the structural reforms that were initiated in fiscal 2012, an earnings
structure with a good balance among the different segments has been firmly
established. 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, and as a result, operating income in fiscal 2018 was down 59.0%
year on year, to ¥85.6 billion, but income was up in real terms due to higher
income from existing businesses.
ROE and ROA declined sharply in fiscal 2009 following the global economic
downturn, but after structural reforms were implemented from fiscal 2012, both
have improved as a result of higher net income and other factors. As a result of
the counteraction to special factors that resulted in reporting gains on the transfer
of business to Qualcomm in fiscal 2017, ROE was down 12.0 percentage points
year on year to 7.8%, and ROA fell 5.7 percentage points, to 3.6%, in fiscal 2018.
The business transfer to Qualcomm in fiscal 2017 resulted in a significant
improvement in free cash flow. 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. In fiscal 2018, net
cash used in investing activities increased substantially as we engaged in active
capital investment, R&D, and M&A, and as a result, free cash flow was negative
¥154.8 billion.
Net Income (Loss) Attributable to TDK
Yen billions
Capital Expenditures / Depreciation and Amortization
Yen billions
R&D Expenses / R&D Expenses to Net Sales Ratio*
Yen billions
150
100
50
0
−50
−100
63.5
200
150
100
50
0
178.6
92.2
120
100
80
60
40
20
0
103.5
8.1
Overseas Production Ratio
%
100
80
60
40
20
0
%
10
8
6
4
2
0
84.5
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
Capital expenditures
Depreciation and amortization
R&D expenses (left)
R&D expenses to net sales ratio (right)
Performance was sluggish from fiscal 2009 due in part to reduced demand for
electronic components resulting from the global economic slowdown and the
impact of the Great East Japan Earthquake. After structural reforms were imple-
mented beginning in fiscal 2012, however, results drastically improved. As a result
of effects from reporting gains from the transfer of business to Qualcomm in fiscal
2017, net income in fiscal 2018 fell 56.3% year on year, to ¥63.5 billion, but
income was up in real terms due to higher income from existing businesses.
Under the three-year Medium-Term Plan covering the period from fiscal 2016 to
fiscal 2018, TDK made ¥506.9 billion in capital investment. TDK continues to
actively pursue capital investments aimed at accelerating strategic growth product
expansion, strengthening its overseas R&D base, accelerating existing core busi-
ness expansion, and accelerating Monozukuri Innovation.
R&D expenses have continuously increased since fiscal 2012, and TDK invested
¥103.5 billion in R&D in fiscal 2018, a record high, so that it can respond to
rapid technological innovation in electronics markets and maintain high competi-
tiveness. Going forward, we will continue to actively invest in the development of
new technology and further reinforce our R&D structures.
Compared with fiscal 2009, the overseas production ratio in fiscal 2018 was up
10.5 percentage points, reaching 84.5%. 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.
Total Assets
Yen billions
Stockholders’ Equity / Stockholders’ Equity Ratio
Yen billions
2,000
1,600
1,200
800
400
0
1,905.2
900
600
300
0
824.6
43.3
%
80
60
40
20
0
Number of Employees / Overseas Employees Ratio
People
102,883
90.7
120,000
90,000
60,000
30,000
0
%
100
80
60
40
20
0
CO2 Emissions in Production Activities
Thousand t-CO2
2,000
1,500
1,000
500
0
1,647
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
09
10
11
12
13
14
15
16
17
18
Stockholders’ equity (left)
Stockholders’ equity ratio (right)
Number of employees (left)
Overseas employees ratio (right)
Total assets as of the end of fiscal 2018 increased ¥240.9 billion. Liquidity on
hand (cash and cash equivalents, short-term investments, and securities)
decreased ¥63.2 billion year on year, but goodwill increased ¥96.8 billion, tangi-
ble fixed assets increased ¥81.0 billion, inventories increased ¥53.0 billion, and
net trade receivables were up ¥49.1 billion. The primary cause of the increase in
goodwill was the acquisition of InvenSense.
Stockholders’ equity was up 3.9% year on year, to ¥824.6 billion, as of the end of
fiscal 2018. For active capital investment, R&D, and M&A, long-term debt was up
¥79.9 billion year on year, short-term debt increased ¥46.9 billion, and trade pay-
ables increased ¥50.1 billion, and as a result, the stockholders’ equity ratio
declined 4.4 percentage points year on year, to 43.3%.
58
TDK implemented personnel optimization measures as a part of the structural
reforms conducted since fiscal 2012, but has been increasing the number of
employees to raise competitiveness since fiscal 2016, the first year of the previous
Medium-Term Plan, and the number reached 102,883 as of the end of fiscal
2018. In addition, the overseas employees ratio has been increasing and was
90.7% as of the end of fiscal 2018.
TDK established the TDK Environmental Vision 2035 and is working to reduce
environmental load from a lifecycle perspective that covers all phases from the use
of raw materials to the use and disposal of final products. We are aware that CO2
emissions from energy consumption at production sites has a major environmental
impact within TDK, and we are reducing energy use by implementing energy-
saving measures through assessment at the time of capital investment and
creating energy management structures.
59
TDK CorporationAnnual Report 2018
Overview of Business Conditions by Segment
Note: Reporting segments were changed in fiscal 2019, but results for fiscal 2018 are reported based on the former segments.
Net Sales by Product Segment
¥1,271.7billion
Passive Components Segment
Capacitors 12%
Inductive Devices 12%
Other Passive Components 10%
Sensor Application Products Segment
Sensor Application Products 6%
Magnetic Application Products Segment
Recording Devices 19%
Other Magnetic Application Products 8%
Film Application Products Segment
Film Application Products 29%
Other 4%
Breakdown of Operating Income*
¥85.6billion
Yen billions
150
100
50
0
–50
Passive Components ¥46.3 billion
Sensor Application Products –¥19.4 billion
Magnetic Application Products ¥20.9 billion
Film Application Products ¥70.4 billion
Other – ¥2.4 billion
Corporate and Elimination –¥30.1 billion
* To comply with the U.S. Financial Accounting Standards Board’s Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost, we are revising our business results for fiscal 2018, which were reported on April 27, 2018—operating income, research and development expenses, cost of sales,
and selling, general and administrative expenses (revised operating income: ¥85,633 million to ¥89,692 million; revised research and development expenses: ¥103,457 million to ¥102,641
million). The disclosure of revised cost of sales and selling, general and administrative expenses will be made at the announcement of financial results for fiscal 2019. The figures before adjust-
ment are shown.
Passive Components Segment
Net Sales
Operating Income
¥437,639 million
(down 17.1% year on year
)
¥46,278 million
(down 76.9% year on year
)
In fiscal 2018, net sales were ¥437.6 billion, down 17.1% year on
year, operating income was ¥46.3 billion, down 76.9%, and the oper-
ating income ratio was 10.6%. Income fell due to effects in conjunc-
tion with the transfer of a portion of the high-frequency components
business and did not recover on an amount basis, but profitability
was nearly flat. Demand remains strong in the automotive market,
and sales of capacitors increased at a steady pace. Sales of MLCC
components grew in particular due to highly reliable products with
redundant features for automotive use, contributing significantly to
higher profitability in the Passive Components segment overall.
Net Sales
Yen billions
Operating Income /
Operating Income Ratio
Yen billions
600
400
200
0
FY
240
Includes ¥144.4 billion
in business transfer
gains associated with
the establishment of a
joint venture business
with Qualcomm.
180
437.6
120
60
0
FY
10.6
46.3
17
18
17
18
%
40
30
20
10
0
Operating income (left)
Operating income ratio (right)
Sensor Application Products Segment
Net Sales
Operating Loss
¥77,578 million
(up 81.0% year on year
)
–¥19,381 million
In fiscal 2018, net sales were ¥77.6 billion, up 1.8 times from the
previous fiscal year, in part due to effects from the acquisition of
InvenSense. Operating losses were ¥19.4 billion, which included
¥10.9 billion in expenses related to the InvenSense acquisition.
Sales in the automotive and ICT markets were up sharply, with auto-
motive sales accounting for a little under 50% of the total, the ICT
market slightly over 20%, and the industrial and energy market just
under 30%, achieving a well-balanced sales structure. Expansion of
the product portfolio and customer base is proceeding through
acquisitions.
Net Sales
Yen billions
Operating Loss
Yen billions
77.6
80
60
40
20
0
FY
17
18
0
–10
–20
–30
–40
–50
FY
–19.4
Includes ¥10.9 billion
in expenses related
to the InvenSense
acquisition.
17
18
60
Changes in Reporting Segments
The previous four segments—Passive Components, Sensor Application Products, Magnetic Application Products, and
Film Application Products—were changed into the following segments as of fiscal 2019: Passive Components, Sensor
Application Products, Magnetic Application Products, and Energy Application Products, as well as Other, which
includes products not included in these four reporting segments.
P.62–P.69 Business Strategies
Previous reporting segments (through fiscal 2018)
Passive Components
Sensor Application
Products
Magnetic Application
Products
Film Application
Products
+
New reporting segments (starting in fiscal 2019)
Passive Components
Sensor Application
Products
Magnetic Application
Products
Energy Application
Products
+
Other
Other
Power systems (from Magnetic Application Products)
Energy devices (from Film Application Products)
Energy systems (from Other)
Magnetic Application Products Segment
Net Sales
¥333,235 million
(up 1.0% year on year
)
Operating Income
¥20,877 million
(up 115.1% year on year
)
In fiscal 2018, net sales were ¥333.2 billion, up 1.0% year on year,
operating income increased 2.2 times to ¥20.9 billion, and the oper-
ating income ratio was 6.3%. When the structural reform expenses
reported in the prior fiscal year are taken into account, the effective
increase in income was ¥1.2 billion, or 6.1%. Average prices for
HDD magnetic heads increased as a result of a favorable product
mix, resulting in stable profitability even though the sales volume was
down. Power supplies were able to respond to robust demand in the
industrial equipment market, pushing both sales and income higher.
As for magnets, sales of HDD magnets were down, but sales of mag-
nets for industrial equipment and motors increased, resulting in a
substantial decrease in losses despite lower sales revenues.
Film Application Products Segment
Net Sales
¥370,953 million
(up 49.8% year on year
)
Operating Income
¥70,384 million
(up 70.8% year on year
)
In fiscal 2018, net sales were ¥371.0 billion, up 1.5 times year on
year, and operating income was ¥70.4 billion, up substantially by
1.7 times, and as a result, both net sales and operating income hit
new record highs for the third consecutive year. The operating income
ratio was 19.0%, and profitability was up sharply. In the smartphone
market, demand fluctuated substantially throughout the year, but as
a result of timely optimization of production capacity and reliable
responses to market needs, sales increased. In addition, sales of
products for applications other than smartphones increased steadily,
and synergistic effects between higher volumes and increased produc-
tivity pushed income up.
Net Sales
Yen billions
Operating Income /
Operating Income Ratio
Yen billions
%
400
300
200
100
0
FY
333.2
24
18
12
6
0
20.9
6.3
8
6
4
2
0
17
18
FY
17
18
Operating income (left)
Operating income ratio (right)
Net Sales
Yen billions
Operating Income /
Operating Income Ratio
Yen billions
400
300
200
100
0
FY
70.4
19.0
371
80
60
40
20
17
18
0
FY
17
18
%
25
20
15
10
5
0
Operating income (left)
Operating income ratio (right)
61
TDK CorporationAnnual Report 2018 Business Strategies
Passive Components Segment
Passive components support electronics society
Electronic components include ICs, LSIs, and other active components, as well as capacitors,
inductors, and other passive components that store, discharge, and consume electric power.
Active components only function with help from passive components. On the circuit boards of
mobile devices, electrical home appliances, office equipment, automobiles, robots, industrial
equipment, and other devices, a wide variety of passive components are installed together with
memories and CPUs consisting of an aggregation of many semiconductor devices.
TDK’s passive components have their roots in a material called ferrite, originally invented in
1930 and certified as an IEEE Milestone in 2009. Ever since its beginnings, the Company has
consistently blazed a path of innovation, making products smaller, lighter, and thinner and
integrating them into modules, thereby contributing to the progress of electronic devices.
The business strategy in Value Creation 2020
As electronic components are being incorporated in more and more equipment and
devices, TDK is expanding its client base beyond the automotive and ICT markets, as
well as widening the scope of applications, thereby creating a solid earnings base.
P.42 Monozukuri
We are also engaged in a program of Monozukuri Innovation (
Innovation), which implements forward-looking measures to meet the quality require-
ments of today’s and tomorrow’s industry.
In fiscal 2019, we expect net sales to grow by 3%–6%. Trends in the automotive
market, such as the progress of xEVs, advanced driving assistance systems (ADAS), and
autonomous driving, are expected to result in further expansion of the already strong
demand for capacitors and inductors, which will be drivers of growth.
Net Sales Target
CAGR 7%
Commercial Value
Achieve steady and sustainable growth by
expanding target markets and applications
Refine automotive
components
Capture communications
demand for 5G & Beyond
Product development
matched to automotive
needs
Develop optimal milli-
meter-wave ceramic
materials
Reference activities for
automotive ECUs
Develop various LTCC-
based products
Monozukuri to enhance
quality and reliability
Upgrade and expand
power-related components
and propose new solutions
High-reliability power
inductors
Wireless power transfer
μPOL TM
Develop all-solid-state
rechargeable batteries
Develop PZT applications
PiezoHaptTM &
PowerHapTM
Medical &
Hygienic Application
Mount timely production
responses to growing
demand
Invest in ramping up
production
Continue to drive
Monozukuri Innovation
Resin electrode terminal
multilayer ceramic capacitors
Ferrite—the origin of TDK
and its passive components
The magnetic material ferrite was
invented in 1930 by Dr. Yogoro
Kato and Dr. Takeshi Takei at the
Tokyo Institute of Technology.
TDK’s first president, Kenzo Saito,
founded the Company in 1935 with
the aim of pioneering the industrial
application of ferrite, which is still
an indispensable material in our
modern age of electronics.
Passive components for
automotive applications
Passive components intended for
use in xEVs (HEVs/PHEVs/EVs) must
be able to withstand extreme levels
of vibrations, heat, shock, among
other operating conditions, while
maintaining complete reliability to
guard against malfunction. TDK is
continuing the development of such
passive components that offer out-
standing performance and meet the
needs of automotive electrical
equipment.
Expanding applications of automotive components
As cars increasingly rely on electric and electronic systems and xEVs
become more widespread, the formation of eco-systems centered on semi-
conductors is progressing. We will continue to strengthen reference activi-
ties for automotive ECUs, whose numbers are expected to grow further.
Furthermore, we will promote the development of products that meet auto-
motive needs by offering customization and ensuring excellent reliability
also under harsh operating conditions with vibrations, shocks, and high
temperatures. Our portfolio of automotive-grade MLCCs is being further
expanded, including resin electrode products with high vibration and
bending stress resistance, and redundancy design products such as Mega
Caps, as well as large-capacitance MLCCs that meet the needs of smaller
size, higher voltage, and larger capacity in connection with higher func-
tionality of ECUs for drive applications.
Upgrading and expanding power-related components
and devise new solutions
Faraday Semi LLC (USA), which we acquired in May 2018, is a fast-grow-
ing semiconductor developer specializing in power management solutions,
including point-of-load (POL) type DC-DC converters. By combining
Faraday Semi’s high-performance semiconductors with TDK’s advanced
packaging technology SESUB and latest component technology using 3D
mounting technology, we have created a POL product (μPOL™) that leads
the industry in terms of small dimensions and high power density. This will
enable us to offer ultra-compact power solutions for which demand is
increasing in the global ICT, industrial equipment, and automotive markets.
Mega Caps CA series realizes larger capacitance through
horizontal linking
SESUB module
62
63
A brief guide to passive componentsPassive Components19352018 TDK CorporationAnnual Report 2018
Business Strategies
Sensor Application Products Segment
Key IoT devices
Sensors detect information and convert it into electric signals. There are sensors that concern our
five senses, such as sight, hearing, and touch, as well as sensors for physical conditions, includ-
ing temperature, humidity, barometric pressure, acceleration, and inertia. Other sensors can
quantify such properties as magnetism and ultrasound that cannot be detected by human senses.
Sensors fulfill crucial tasks in a myriad of electrical and electronic equipment including mobile
devices, cars, and other products that we use in our daily life, providing unseen support for society.
Further stimulated by the explosive growth of IoT devices, the annual production of sensors is
expected to exceed one trillion units by the 2020s, with various sensor combinations being
mounted from now. Harnessing its advanced technology to offer a vast and impressive lineup of
non-optical sensors, TDK will play a leading role in the age of IoT.
The business strategy in Value Creation 2020
The Sensor Systems Business Company was established by consolidating the sen-
sor-related business activities of the TDK Group. We are cooperating with IC manu-
facturers to develop modular products that integrate a combination of sensors. With
the industry’s best non-optical sensor lineup, we are poised to capture the growing
sensing needs. Our steadily expanding range of automotive sensors is centered on
Hall sensors and TMR sensors, and we are also expanding MEMS sensor applica-
tions for consumer use.
In fiscal 2019 we expect an increase in net sales of 29%–32%, mainly in the
areas of MEMS sensors, which are positioned as growth drivers, and magnetic sen-
sors for the ICT market.
Net Sales Target
CAGR 35%
Commercial Value
Appropriately capture diversifying and growing sensing needs and
expand this field into one of TDK’s future core businesses
Steady expansion of automotive sensors
Expansion of sensors for consumer applications
Commence mass production of various TMR sensor projects
(including redundancy design products)
Develop higher-performance 6-axis sensors and
expand customer base
Develop higher-performance Hall sensors
(2-axis/3-axis sensors)
Develop new applications for
temperature and pressure sensors
Expand automotive applications
of MEMS sensors (acceleration,
gyroscope, ToF sensors)
Expand consumer applications
of TMR sensors (camera module
actuators, e-Compass)
Expand applications of MEMS
sensors (microphones, fingerprint
recognition, gas detection)
Application of TMR elements as
highly sensitive reading elements
from HDD magnetic heads
In 2015 we began full-scale production
and market introduction of high-accuracy,
high-sensitivity TMR sensors benefiting
from HDD magnetic head technology.
TMR sensor
Toward a well-balanced
customer portfolio
Through a policy of strategic M&As
implemented by TDK since 2016,
we have created a world-leading
lineup of non-optical sensors. Such
steps as the acquisition of
InvenSense have also given us
access to the consumer market.
Industrial and
energy market
Slightly under 30%
Automotive
market
Slightly under
50%
Net sales ratio by
market (concept)
ICT market
Slightly over 20%
Imaging
Game consoles
Wearables
Drones
Smart devices
Home appliances
Automotive products
Expand customer base and applications
in the automotive market through
development of MEMS sensors, includ-
ing 6-axis sensors from InvenSense
Steadily expanding automotive sensors
In the area of TMR sensors, where mass production began in 2015, we are engaged
in projects for various applications, including electric power steering systems, wipers,
clutch and gearbox positioning devices, and pedal and throttle valve opening detection.
TMR sensors are combined with Hall sensors from Micronas to enhance redundancy,
and Application Specific Integrated Circuits (ASICs) from ICsense serve to improve
accuracy. By differentiating ourselves through such products, we are further expand-
ing our customer base and range of applications.
A large potential for growth exists for MEMS sensors, including gyroscope sensors,
acceleration sensors, and microphones, as well as temperature and pressure sensors.
As such concepts as ADAS and autonomous driving become a reality, the number of
required sensors is bound to increase. Development of 6-axis sensors from InvenSense
and other MEMS sensors that fully meet customer needs is making progress.
Cultivating and expanding markets through Group synergies
We are in a position to offer high-level solutions, creating products with high redun-
dancy by integrating Micronas Hall sensors and TMR sensors, or fusing MEMS tech-
nology and software expertise from Tronics and InvenSense with materials technology
and thin-film technology from TDK. TDK’s long-standing relationships with customers
are creating new opportunities for InvenSense products, moving beyond the con-
sumer sector to the automotive and industrial equipment markets.
The acquisition of ICsense, which develops ASICs for signal processing of sensing
data, has enabled the vertical integration of our value chain from materials technology
to sensor elements, signal processing, and software design. In 2018 we acquired
Chirp, a pioneering company in the field of ultrasonic 3D sensing technology that
holds high promise for a wide range of applications, including augmented reality (AR)
and virtual reality (VR) devices. Our Sensor Systems Business Company brings
together these companies under a single umbrella for offering Kotozukuri solutions.
64
65
A brief guide to sensorsSensor Application Products20152018 TDK CorporationAnnual Report 2018
Business Strategies
Magnetic Application Products Segment
Modern people would be helpless without them
Magnets, which retain their magnetic force without any 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, includ-
ing magnets for industrial equipment, robot motors, and power generators used in wind power
generating systems. Since its founding, TDK has spent more than 80 years refining the magnetic
materials technology that is part of its DNA and will contribute to society by continuing to refine
that technology.
The business strategy in Value Creation 2020
Net Sales Target
CAGR 2%
Although the use of HDDs in PCs is declining, data centers are expected to stimu-
late further growth in demand for HDD magnetic heads. In this sector, TDK will con-
tinue to enhance cost competitiveness and introduce leading-edge products with
large capacity. By developing advanced technologies, such as thermal assisted mag-
netic recording (TAMR), microwave assisted magnetic recording (MAMR), and dual
stage actuators, TDK is contributing to the industry as the world’s only specialized
magnetic head manufacturer. While continuing to reform our profit structure, we will
pioneer needs for automotive applications by tackling new technological developments.
In fiscal 2019 we expect net sales to decline by about 4%–7%. While sales
quantities of HDD magnetic heads are seen to decline by about 6%, the application
of HDD suspension technology developed by Hutchinson to new market sectors is
expected to grow. We also anticipate sales of magnets to the automotive and indus-
trial equipment and energy markets to remain firm.
Commercial Value (HDD magnetic heads & HDD suspensions)
Survive as the world’s only specialized magnetic head manufacturer by introducing
technologies catering to the needs of the era of large-capacity storage
Contribution to attaining higher density of HDDs
Application of suspension technology
TAMR
MAMR
Dual stage actuator
Additive metal deposition components
Commercial Value (Magnets)
Restore growth and profitability by steadily capturing growing demand for motors and generators
Achieve the design, prototyping, and mass production
of magnets that optimize the efficiency of motors and
generators (shape, magnetization, material)
Implement Monozukuri Innovation to realize TDK’s
Arubeki Sugata (ideal process) that will minimize losses
Entering the magnetics
business through ferrite
application
The ferrite magnet material FB1A,
developed in 1959, set TDK on the
path to refining magnetic technology
for many years.
TDK’s early
ferrite magnet
Pioneering the evolution of
magnets for half a century
TDK has been pursuing the evolution of
magnets for over half a century, right up
to the latest neodymium magnets and
lanthanum- and cobalt-free ferrite
magnets. Through the application
of technology, we have produced various
innovations, such as HDD magnetic heads.
Contributing to further increasing storage
density of HDDs
Thermal assisted magnetic recording (TAMR) heads
The evolution of HDDs toward higher storage densities was
made possible by sophisticated miniaturization of the mag-
netic heads. Conventional technology in this area has its
limits, but a solution to the problem lies in TAMR heads. The
thermal fluctuation of magnetic particles increases as the
temperature rises, making magnetization reversal (rewriting)
easier even with a weak magnetic field at the head. The
TAMR technology utilizes this effect by irradiating the record-
ing layer with a laser spot to instantly heat it up while per-
forming magnetic recording.
Microwave assisted magnetic recording (MAMR) heads
A spin-torque oscillator (STO) incorporated in the head gen-
erates a microwave field that is directed at the magnetic par-
ticles on the recording layer of the hard disk platter while
recording. This intensifies the magnetic fluctuation of mag-
netic particles, which resembles the swinging motion of a
spinning top, thereby facilitating magnetization reversal
(rewriting) even with a weak magnetic field at the head. The
advantage of this method lies in the fact that, unlike TAMR,
there is no heating up of the recording layer.
Dual stage actuator
In addition to a swing scan around a pivot, the dual stage
actuator uses a second swing structure located for instance
on the suspension of the magnetic head. This greatly
increases the positioning accuracy of the head. While the
main actuator is driven as usual with a magnet and coil, the
second swing structure employs a piezoelectric element that
expands and contracts in response to a voltage.
Innovation in HDD magnetic heads and suspension
TAMR head and MAMR head
TAMR head
Reader
Laser
Writer
Conventional
perpendicular magnetic
recording (PMR) head
Reader
Writer
MAMR head
Reader
Writer
Laser
spot
STO
Dual stage actuator
Conventional single stage actuator
Milli dual stage actuator
Micro dual stage actuator
66
67
A brief guide to magnetsMagnetic Application Products19592018 TDK CorporationAnnual Report 2018
Business Strategies
Energy Application Products Segment
TDK energy application products have great potential
Lithium-ion rechargeable batteries are widely used in mobile devices. A special type of this kind
of battery is the rechargeable lithium polymer battery, which uses a polymer electrolyte in gel
form. In addition to offering compact dimensions and light weight, such batteries also provide
a high degree of shape flexibility, which is advantageous for replacing the formerly rectangular
batteries in notebook computers and smartphones. Another area where surging demand for such
batteries is expected are IoT devices, which need to combine small size with high capacity.
Furthermore, amid the progress of power saving in various fields, power supplies with smaller
size, lighter weight, and higher efficiency will be required. TDK’s lineup covers a broad range of
applications, including AC-DC and DC-DC converters, automotive inverters, and wireless power
transfer systems.
The business strategy in Value Creation 2020
With regard to batteries for mobile devices in the ICT market, we are further bolster-
ing our position and stepping up development of products for wearable devices and
drones by adapting successful models, and we are also exploring high-power markets,
including e-scooters and automated guided vehicles (AGVs).
As for power supply products, we will provide custom solutions with high added
value through vertical integration extending from materials to in-house products,
and we will strengthen our development efforts in the market for automotive and
industrial equipment.
Shifting focus from conventional stand-alone products to units that combine
hardware and software gives TDK a unique advantage in delivering integrated power
solutions with high added value.
In fiscal 2019, we expect net sales to grow by about 8%–11%. We plan to
expand production volume by about 15%, including production capacities for mini
cell and high-power battery products. This will allow us to reliably meet demand in
the smartphone market, and we are also actively pursuing new application venues.
Net Sales Target
CAGR 8%
Commercial Value
Provide high-efficiency, high-reliability power storage and power supply
solutions through vertical integration of materials and components
Batteries
Power supply solutions
Develop the mini cell market based on successes in the ICT
market
Address high-quality power supply solutions such as medical
devices and robotics
Apply materials technology and develop the power cell market
based on collaboration with a strategic partner
Expand programmable power supply and bidirectional power
supply solutions
Launch the EV power supply business targeting full-fledged
expansion of the xEV market
Pursue smaller, lighter, and higher-efficiency automotive power
supplies
Acquisition of ATL
opened the way into
the battery market
In 2005 TDK acquired ATL, a
Hong Kong-based manufacturer
of rechargeable lithium polymer
batteries. This paved the way for
our full-scale entry into the
energy sector.
Moving toward power solutions
ATL currently is one of the leading play-
ers in the consumer-use battery market.
The wide lineup of TDK products, from
materials to energy devices and power
supplies, enables vertical integration and
provides a solid base for comprehensive
power solutions.
Solid-state battery CeraChargeTM allows charge/discharge
CeraCharge™ is the world’s first SMD type all-ceramic solid-state battery that supports
charging/discharging cycles. By harnessing layering technology gained in the area of
multilayer ceramic chip capacitors (MLCCs), we have realized high energy density and
small dimensions. Taking advantage of the high degree of safety, we will concentrate on
developing dedicated products for IoT devices, wearable devices, energy harvesting sys-
tems, and similar consumer equipment with low capacity requirements.
Other Segment
Main Product Portfolio
Mechatronics
(production equipment)
TDK is supplying the market with the most
advanced factory automation equipment,
including flip-chip bonders that make use of
mechatronics technology.
Radio wave anechoic chamber
Flash memory application devices
High-performance antennas and automated
measurement systems with dedicated soft-
ware improve the efficiency of EMC mea-
surements. TDK offers EMC solutions
comprising highly accurate EMC measurement
services to support effective noise counter-
measures in electronic devices.
TDK supplies solid state drives (SSDs) with
proprietary memory control chips and
CompactFlash cards for industrial use.
68
69
A brief guide to batteries and power suppliesEnergy Application Products20052018Others TDK CorporationAnnual Report 2018
Corporate Governance
D I A L O G U E
TDK from Outside Perspectives
In June 2018, Makoto Sumita, whose former position was Outside Director and Chairman of the Board,
assumed the post of Chairman & Director; at the same time, Kazunori Yagi, whose former position was
Outside Audit & Supervisory Board Member, was named Outside Director and Chairman of the Board.
We asked them to discuss openly and honestly about corporate governance.
(Note that Mr. Sumita shared his thoughts from the position of a director with an outside perspective.)
The governance reform trend
Yagi: I also think it preferable that companies should
avoid getting caught up with form in an attempt to
Sumita: For many years, the management style at
reach for unrealistic goals. It is better that they take one
Japanese companies has focused on maintaining long-
year at a time, remaining constantly aware of questions
term employment and stable business growth. Looking
of substance as they focus on business structure and
back over the past quarter century, however, one comes
fitness, and on responding to the posture of investors.
across cases in which the failure of companies to let go
From that standpoint, I think the revisions to the corpo-
of unprofitable units had an impact on business.
rate governance code made in June of 2018 are designed
Companies are now introducing corporate governance
to expose those companies whose efforts fail to involve
codes with the goal of more clearly aiming management
matters of substance and that make only a formal
in the direction of profit growth, and I think develop-
response. The problem of so-called “short-termism”
ments in corporate initiatives that align with this objec-
was one of the factors behind the current governance
tive are a good thing. That said, I also believe that more
reforms. While a long-term approach to management is
discussion is needed about a concept for governance
the ideal, talking only of far-off dreams can hardly be
that takes individual corporate characteristics into
called management, and even investors focused on
account, rather than trying to identify a single, uniform
long-term holdings expect some kind of results over the
vision for governance practices.
medium term. Corporate management also needs to
E
U
G
O
L
A
I
D
Yagi: Corporate leaders are responsible for taking the
long before the discussion about governance reached its
wheel and applying the gas and the brakes. The role of
current heights, and I think the Company has made
outside directors is to monitor the suitability of manage-
solid progress in improving its effectiveness. My under-
ment’s driving, for example, when they may be going
standing of the outstanding issues is similar to that of
dangerously fast for a particular stretch of road.
Mr. Sumita.
Companies naturally take risks, so excessive braking
at the threat of just any risk does not make sense. The
question is how much risk the company should take; the
business execution side has the experience and exper-
tise to know how much risk is acceptable. My approach,
Mr. Sumita’s appointment to
Chairman & Director
except in cases where an action could put the survival
Yagi: It is extremely rare for an outside director to join a
of the company at risk, is to try to understand the intent
company as its chairman. I can imagine having a watch-
of the action and advise them to give it a try if they insist.
dog appointed to the business execution side must have
Corporate governance at TDK
come in for some criticism. But if one defines that out-
sider status as someone having the perspective of exter-
nal stakeholders, I believe that instead of delineating
the role in terms of form, all directors should have that
Sumita: TDK has implemented a number of forward-
perspective. I think Mr. Sumita’s appointment as chair-
thinking efforts to date, introducing a system of Outside
man will, in terms of substance, effectively strengthen
Directors in 2002 and increasing their number to three
governance at TDK. He has extensive management
in 2009. We continue to maintain a strong awareness of
experience and knowledge of the Company’s business,
the importance of governance.
and he has observed TDK from an objective viewpoint
At the same time, there are issues. On the Board,
as an outside director. This appointment will free him of
Outside Directors and Outside Audit & Supervisory Board
the restrictions of being an “outsider” and allow him to
Members participate in discussions, but the business
work toward improving TDK’s corporate value. Still,
execution side trends to spend a considerable amount of
I think this was only possible because someone like
time explaining things to us. This is reflective of a cor-
Mr. Sumita happened to be available for the role just as
porate culture that tolerates a diversity of opinion, and
his predecessor Mr. Kamigama was resigning.
careful explanations are always welcome. Still, some-
Continuing in a similar vein going forward will likely be
D
I
A
L
O
G
U
E
keep this middle term in mind.
times the message can be conveyed more effectively
more difficult.
The role of outside directors
Sumita: Efforts to strengthen governance in Japan are
sometimes criticized as taking a biased interpretation
that primarily centers on the use of outside directors to
apply the brakes on corporate actions. I think this obser-
vation is right on the mark. The true role of outside
directors is in designating corporate leaders who have
the mindset and character to take on bold challenges
aimed at improving corporate value. If the outside direc-
tors are able to recognize a certain amount of rationality
in policies on the business execution side, they can pro-
vide their full support without insisting on an excessive
degree of certainty regarding future forecasts. Just as
venture companies require supporters more than they
need monitors, the role of outside directors will change
according to the stage of a company’s development. And
because objectives vary from one company to another,
that role varies as well.
Makoto Sumita
Chairman & Director
when the business execution side can say with confi-
dence, “we know there are a variety of opinions, but you
can leave this up to us.” This also makes for more effi-
cient Board meetings. For a company to grow, it requires
momentum, too.
Yagi: TDK fostered a consensus around the importance
of governance at a fairly early stage, and I think it can
be considered on the forefront of governance in terms of
both form and substance.
How effective that governance is depends on whether
a company’s nomination and compensation advisory
committees are functioning substantively. The compen-
sation advisory committee has contributed to raising the
level of management remuneration in Japan, which was
low by international standards, and in many cases has
functioned substantively. At the same time, I suspect
that many business leaders are resistant to the function
of the nomination advisory committee, which may pre-
vent them from appointing the successor they intended.
TDK introduced its Compensation Advisory Committee
(2002) and Nomination Advisory Committee (2008)
Kazunori Yagi
Outside Director,
Chairman of the Board
70
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TDK CorporationAnnual Report 2018 Corporate Governance
Value Creation 2020
resources are limited, and I hope to convey my view that
TDK needs to narrow its focus as much as possible to
Sumita: A considerable amount of time was apparently
avoid getting involved in a war of attrition.
spent on working out the details of this Medium-Term
To offer a more unsparing opinion, looking at operating
Plan. When it was first explained to me, I could sense
cash flow growth and the balance between liabilities,
the strength of the president’s aspirations.
dividends, investments, and other factors indicates to
The plan focuses not on top-line growth, but on simul-
me that, to date, capital efficiency has been less than
taneously developing Commercial Value, Asset Value, and
stellar. TDK is one of the industry’s most diversified
Social Value. Of these, the sensor business will be key to
companies, with many possibilities for growth.
achieving the plan for Commercial Value.
Combining those possibilities will allow the Company to
The inclusion of Asset Value is a statement of TDK’s
offer customers a variety of solutions. Because the busi-
intent to maintain financial discipline, balance its
ness is not structured solely around specific products,
investment of management resources, and narrow its
fields, or customers, you have also been able to reduce
focus where necessary. Business opportunities are
risk. While this diversification makes more than enough
expanding, not just in batteries and sensors but in all
sense, it inevitably results in lower efficiency. Looking
of our businesses. Commensurate investment is
back at the past 10 years, in fact, the Company has con-
required, so I think the skills of our financial executives
sistently seen its asset turnover ratio fall. I believe that
will be put to the test. At the same time, my honest
for TDK, Asset Value is a particularly important issue.
impression is that since the plan touches little on divi-
dend policy, we will need to provide a little more expla-
nation of our specific approach to shareholder returns.
Hopes for TDK in the future
Social Value is an indicator of our emphasis on ESG.
Since our business now extends globally, and particu-
Sumita: As a free and open collective of individual busi-
larly since we now have locations in Europe, it is impor-
ness companies and regional groups, TDK is working to
tant that we bring this perspective to management. That
improve and grow. Still, investors will not support us
said, the use of the ESG framework is still in its infancy,
unless we deliver results. I hope to see us become even
and this represents a three-year issue.
more fixated on delivering results.
Yagi: I think communicating a corporate message
Yagi: To date, TDK has succeeded by giving Group com-
around ESG and the SDGs represents a step forward. I
panies a great deal of discretionary power and allowing
think their real effectiveness will come by taking them
them to manage themselves. Still, because of the volume
down to the business strategy and operational level, for
of acquisitions in recent years, and the Company’s aim
example, by clarifying a policy of ensuring components
of establishing them as drivers of future growth, TDK is
contribute to energy savings and by measuring results
also at the stage where the emphasis needs to be on
through KPIs.
Group governance. The important challenge going for-
In terms of management targets, you have set out an
ward will be how well the Company can maintain its
ambitious number, looking to double income within
free-wheeling culture while creating a new management
three years. In general, medium-term management
approach. That is truly vital to the success of the
plans have a term of about three years, but of course
Medium-Term Plan. I hope to continue supporting that
actual management does not end after three years—
effort, offering the occasional “give it a try.”
E
U
G
O
L
A
I
D
it continues as before. Since it is rare to start work on
a business in a plan’s initial year and have it deliver
results three years later, normally one would work toward
achieving the current plan while also making prepara-
tions for the next. While TDK also failed to meet its pre-
vious Medium-Term Plan, it did lay a foundation for the
future in anticipation of the current plan, centered on
the sensor business. This is why the current plan is
being launched with adequate preparation. Still, the
sensor market is by no means a blue ocean and, as an
Outside Director, it is something I would like to pay par-
ticularly close attention to. Further, while I understand
that possibilities are opening up in all directions,
Strengthening 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 systems. 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
• Particularly in consumer-use 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 long 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 globalization at the officer level.
History of corporate governance reforms
Evaluation of effectiveness
2002/6
Number of Directors reduced from 12 to 7
First Outside Director invited to join the Board
Compensation Advisory Committee launched
(chaired by an Outside Director)
Funding of Directors’ retirement bonuses suspended
2004/6
First non-Japanese Corporate Officer appointed
2008/8
2009/6
2015/5
2016/6
2018/6
Nomination Advisory Committee launched (chaired
by an Outside Director)
2 non-Japanese Corporate Officers appointed; one
Outside Director added for a total of 3
First analysis and evaluation conducted of Board
of Directors’ effectiveness, and an outline of the
results publicized
TDK Basic Policy on Corporate Governance
established
Makoto Sumita, formerly an Outside Director
and Chairman of the Board, appointed Chairman
& Director
Outstanding issues following the June
2017 evaluation of effectiveness
• Ongoing validation of TDK’s medium- to long-
term growth strategy
• Management that balances the dynamism and
governance of Group companies
June 2018 evaluation of effectiveness
The medium- to long-term growth strategy, which
was considered the issue to be addressed on a
continuous basis in the Board of Directors’ evalu-
ation for fiscal 2017, was intensively deliberated
and verified on several occasions at Meetings of
the Board of Directors and the results of the dis-
cussions were reflected in the final Medium-
Term Plan.
With respect to issues to be addressed in the
future, the Board of Directors recognized that, in
order to steadily implement the new Medium-
Term Plan, it would be important to properly
demonstrate the supervisory and advisory func-
tions on a continuous basis, further strengthen
the corporate governance and compliance sys-
tems, including sharing in a timely manner
important matters with the Board of Directors as
well as responding to global business deploy-
ment, and further enhance the operational effi-
ciency of the Board of Directors.
72
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TDK CorporationAnnual Report 2018
Corporate Governance
Sustained Improvements Stressing Effectiveness
Outside officers appointed with an emphasis on effectiveness
Designing structures that emphasize increases in corporate value over the long term
P O I N T S
• TDK has pursued an optimal balance between monitoring-type governance (separation of management execution and
supervisory functions) and management-type governance (Directors also serve as Corporate Officers).
• TDK appointed an Outside Director as Chairman & Director.
Emphasis on effectiveness over form
TDK has put inside directors in charge of non-business divisions and is working to increase the pace of decision-making and reinforce
both monitoring and supervisory functions while designing structures that place greater emphasis on raising corporate value than form in
all areas, including the processes related to nomination and compensation and policies on the appointment of outside officers. The
appointment of an Outside Director as Chairman & Director is one part of these efforts.
From Outside Director to Chairman & Director of the Company
Mr. Sumita was appointed an Outside Audit & Supervisory Board Member in June
2011, served as an Outside Director starting in June 2013, and was recently
appointed Chairman & Director. He has become well acquainted with the Company’s
management, business details, and so on through performance of his duties and was
appointed with the expectation that he will reinforce decision-making on material
matters, supervision of the performance of duties, and corporate governance from the
perspective of an outside stakeholder.
Makoto Sumita
Chairman & Director (present post)
INNOTECH CORPORATION
Highly transparent nominating system
P O I N T S
• TDK established the Nomination Advisory Committee, chaired by an Outside Director and comprising a majority 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 advi-
sory 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 securing transparency in the
decision-making process and reasonableness in the appointment
of Directors, Audit & 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 executive and con-
ducted deliberations that also covered such issues as systems
and the term of office. An outside expert organization was also
utilized, and efforts were made to ensure objectivity.
P O I N T S
• TDK has established “items to be verified regarding independence” to ensure the independence of Outside Directors and Outside
Audit & Supervisory Board Members.
• 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.
One-third or more of the Directors is independent Outside Directors
The Board of Directors, comprising Directors and Audit &
Supervisory Board Members, has a total of 11 members, of
whom five are outside officers. To secure the independence of
the Outside Directors and Outside Audit & Supervisory Board
Members recruited to the board, TDK established “items to be
verified regarding independence” by making reference to Article
436-2 (Securing Independent Director(s)/Auditor(s)) of the
Securities Listing Regulations and Section III, 5(3)-2 of the
Guidelines Concerning Listed Company Compliance, etc., estab-
lished by the Tokyo Stock Exchange, Inc.
The basic policy is that one-third or more of the Directors shall
be independent Outside Directors. Currently, three of seven
directors are independent Outside Directors, and an independent
Outside Director is chairman of the Board. To reinforce the inde-
pendence, objectivity, and accountability functions of the Board
of Directors in relation to the nomination and compensation of
officers, majorities of the Nominating Advisory Committee and
Outside Officers
5people
the Compensation Advisory Committee, which are advisory orga-
nizations to the Board of Directors, are independent Outside
Directors and both committees are chaired by independent
Outside Directors.
Actively inviting Outside Officers
Directors and
Audit & Supervisory
Board Members
(As of the end of
June 2018)
Inside Officers
6people
Reasons for nomination of Outside Directors and Outside Audit & Supervisory Board Members
Outside Directors
Reasons for nomination
Kazumasa Yoshida
Kazuhiko Ishimura
Kazunori Yagi
Mr. Yoshida has an abundance of experience and knowledge concerning the management of companies related to the electronics
industry, global business, 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.
Mr. Yagi has extensive knowledge related to finance and accounting, as well as an abundance of experience and knowledge con-
cerning corporate management in the electronics industry.
Outside Audit & Supervisory
Board Members
Reasons for nomination
Toru Ishiguro
Kiyoshi Fujimura
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.
Outside Directors with extensive practical experience
Persons recruited as independent Outside Directors have extensive practical experience relating to corporate management or a high level
of financial knowledge and are able to provide advice from an independent perspective with regard to general management for enhancing
the Company’s corporate value.
Kazumasa Yoshida
Former Representative Director and
President
Intel K.K.
Kazuhiko Ishimura
Chairman & Director (present post)
AGC Inc.
Kazunori Yagi
Former Director, Executive Vice President
and General Manager of Management
Administration Headquarters
Yokogawa Electric Corporation
74
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TDK CorporationAnnual Report 2018 Corporate Governance
Remuneration system linked to medium- to long-term corporate value
P O I N T S
Diversity in response to globalization
P O I N T S
• The system was designed with an emphasis on linkage with short-term as well as medium- to long-term results.
• Six of 17 Corporate Officers (35%) are non-Japanese*.
• TDK constantly pursues the formulation of a competitive remuneration system to secure diverse and excellent human resources.
• Human Resources HQ was established in Germany to promote further globalization.
• TDK aims to set remuneration at levels enabling the maintenance of competitiveness compared with other companies of similar
scale, mainly in the same business category.
Design and determination process of the remuneration for Directors and Audit & Supervisory Board Members
the determination of individual compensation, the Compensation
TDK designs its remuneration system for Directors and Audit &
Advisory Committee, which is chaired by an independent Outside
Supervisory Board Members with an emphasis on linkage with
Director and of which more than half of the members are indepen-
short-term as well as medium- to long-term results, and is also
dent Outside Directors, examines the remuneration system and the
continuously pursuing the formulation of a competitive remunera-
level of remuneration pertaining to Directors and Corporate Officers
tion system so that it can recruit diverse and exceptional human
and reports to the Board of Directors in order to preserve the trans-
resources, for the purpose of promoting as much as possible
parency of the remuneration decision-making process and help
behavior on the part of Directors and Corporate Officers geared
ensure that individual remuneration is reasonable.
toward enhancing corporate results and stock value. With regard to
Results Linkage System
Factor
Type of compensation
Strategic purpose of compensation
Method of calculation
Short-term
results
linkage
system
Medium- to
long-term
results
linkage
system
Results-linked bonus Intended to clarify the responsibility of Directors
Stock-linked
compensation stock
options
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.
In addition to consolidated financial results (operating income,
ROE) in the relevant fiscal year, indicators are set for each divi-
sion, and bonuses vary from 0% to 200% of base salary depend-
ing on the degree of attainment of targets.
The exercise of a portion of stock options (stock-linked compen-
sation) is conditioned on achieving certain financial results. 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
Compensation
structure
Linked indicators
Fluctuation range
Basic remuneration
＋
Short-term incentive
(Results-linked bonuses)
＋
Medium- to long-term incentive
(Stock-linked compensation stock options)
Operating income, ROE,
target of each division
Depending on the degree of achieve-
ment of operating income and ROE,
department objectives, vary from 0% to
200% with respect to the standard
allowance
Operating income, ROE
Depending on the degree of achievement of
operating income and ROE, for the grant
number, an exercisable percentage fluctu-
ates within the range from 0% to 100%
Changes in total amount of remuneration for Directors and Audit & Supervisory Board Members
Yen millions
Operating
income
ROE
¥36.6 billion
¥72.5 billion
¥93.4 billion
¥208.7 billion*
¥85.6 billion
2.7%
7.2%
9.2%
19.8%*
7.8%
27
58
42
311
27
58
40
335
27
58
51
367
27
58
45
377
29
58
42
477
Outside Audit & Supervisory
Board Members
Inside Audit & Supervisory
Board Members
Outside Directors
Inside Directors
700
600
500
400
300
200
100
0
* Including ¥144.4 billion in business transfer gains associated with the establishment of the joint venture business with Qualcomm.
FY2014
FY2015
FY2016
FY2017
FY2018
Promoting diversity in management systems
TDK began encouraging globalization at an early stage, appointing
a non-Japanese as Corporate Officer in 2004 and promoting the
globalization of management by increasing the number of non-
Japanese Corporate Officers since then. Today, more than 90% of
sales and employees are overseas, while 35% of the Company’s
Corporate Officers are non-Japanese. In recent years, globalization
has advanced as TDK implemented a number of mergers and
acquisitions, and the globalization and diversification of manage-
ment structures is an important issue. We will continue to recruit
outstanding human resources from around the world under the
Human Resources HQ established in Germany in 2017.
* As of the end of June 2018
Promoting diversity
Non-Japanese
Corporate Officers
6people
2018
Japanese Corporate
Officers
11people
(As of the end of June
2018)
Executive Vice President
Joachim Zichlarz
Chief Financial Officer of Electronic
Components Business Company, and
General Manager of Europe HQ
Corporate Officer
Joachim Thiele
Deputy General Manager of Electronic
Components Sales & Marketing Group,
and General Manager of Industrial & HA
Group of Electronic Components Sales &
Marketing Group
Corporate Officer
Michael Pocsatko
Deputy General Manager of Electronic
Components Sales & Marketing Group,
and General Manager of ICT Group of
Electronic Components Sales &
Marketing Group
Corporate Officer
Hong Tian
General Manager of Micro-actuator
Solutions Business Group
Corporate Officer
Albert Ong
Chief Executive Officer of Magnetic
Heads Business Company, and General
Manager of HDD Components Business
Group of Magnetic Heads Business
Company
Corporate Officer
Andreas Keller
General Manager of Human Resources HQ
76
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TDK CorporationAnnual Report 2018
Corporate Governance
Directors, Audit & Supervisory Board Members, and Corporate Officers
(As of the end of June 2018)
Directors
Audit & Supervisory Board Members
Corporate Officers
Shigenao Ishiguro
Representative Director
President and CEO
General Manager of Humidifier
Countermeasures HQ
Tetsuji Yamanishi
Representative Director
General Manager of Finance &
Accounting HQ
Makoto Sumita
Director
Chairman
Seiji Osaka
Director
General Manager of Corporate
Strategy HQ
In charge of Human Resources
Junji Yoneyama
Full-Time Audit & Supervisory
Board Member
Osamu Yotsui
Full-Time Audit & Supervisory
Board Member
Kazumasa Yoshida
Outside Director
Chairman of Compensation
Advisory Committee
Member of Nomination Advisory
Committee
Kazuhiko Ishimura
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 AGC Inc.
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.
Jan. 2006 Executive Officer and GM of
Kansai Plant 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
Jun. 2015 Outside Director of the
Company (present post)
Jun. 2017 Outside Director of IHI
Corporation (present post)
Jun. 2013 Outside Director of CYBERDYNE
Inc. (present post)
Jan. 2018 Chairman & Director of AGC 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)
Jun. 2018 Outside Director of Nomura
Holdings, Inc. (present post)
Kazunori Yagi
Outside Director
Chairman of the Board
Chairman of Nomination Advisory
Committee
Member of Compensation
Advisory Committee
Summary of career
Born on Apr. 1, 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
Mar. 2014 Outside Director of OYO
Corporation (present post)
Jun. 2017 Outside Audit & Supervisory
Board Member of Sojitz Corporation
(present post)
Jun. 2018 Outside Director of the
Company (present post)
Toru Ishiguro
Outside Audit & Supervisory
Board Member
Kiyoshi Fujimura
Outside Audit & Supervisory
Board Member
Summary of career
Born on Jun. 19, 1954
Summary of career
Born on Nov. 3, 1949
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)
Jun. 2018 Outside Director of Takasago
Thermal Engineering Co., Ltd.
(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
Mitsuru Nagata
Corporate Officers
Takakazu Momozuka
Joachim Thiele
Satoru Sueki
Michael Pocsatko
Hong Tian
Albert Ong
Dai Matsuoka
Osamu Hikita
Andreas Keller
78
79
TDK CorporationAnnual Report 2018 Corporate Information
TDK Corporation and Consolidated Subsidiaries (U.S. GAAP)
As of March 31, 2018
Corporate Name
TDK Corporation
Corporate Headquarters
Nihonbashi Takashimaya Mitsui Building,
2-5-1 Nihonbashi, Chuo-ku, Tokyo 103-6128
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
21,565
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)
102,883
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)
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
The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
Trust & Custody Services Bank, Ltd. (Securities investment trust account)
STATE STREET BANK WEST CLIENT - TREATY 505234
Japan Trustee Services Bank, Ltd. (Trust account 5)
JPMC OPPENHEIMER JASDEC LENDING ACCOUNT
STATE STREET BANK AND TRUST COMPANY 505001
Nippon Life Insurance Company
Japan Trustee Services Bank, Ltd. (Trust account 7)
Japan Trustee Services Bank, Ltd. (Trust account 9)
Number of shares held
(thousands of shares)
Percentage of number of
shares held in the total
number of issued shares (%)
24,086
14,404
3,437
2,355
1,999
1,839
1,797
1,640
1,634
1,626
19.08
11.41
2.72
1.87
1.58
1.46
1.42
1.30
1.29
1.29
Total
54,817
43.42
Note: Other than the above, the Company holds 3,346 thousand shares of treasury stock.
Status by Ownership
TDK Stock Price and Volume
Yen
Millions of shares
Japanese Financial Institutions
48.56%
Foreign Institutions and Individuals
38.58%
6.72%
2.73%
2.58%
0.82%
Japanese Individuals, etc.
Japanese Securities Firms
Treasury Stock
Japanese Corporations
12,000
9,000
6,000
3,000
0
80
60
40
20
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
2016
2017
1 2 3
2018
Stock price (left)
Volume (right)
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Financial Information
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http://www.global.tdk.com/corp/en/csr/index.htm
Product Information and Services
https://product.tdk.com/info/en/index.html
Investor Relations (IR)
Securities Reports
Quarterly Financial Statements
Operational Risks
CSR REPORT 2018
CSR Activities
TDK Product Center
80
81
TDK CorporationAnnual Report 2018