TOKYO — TDK is known as a top supplier of components used in personal computers and smartphones, but the Japanese company has been aggressively courting the automotive industry of late.
The most avid salesperson is perhaps none other than President Takehiro Kamigama, who since April has been visiting major carmakers to push the company’s sensors featuring its magnetic head technology.
Magnetic heads, which can record and read digital signals, are essential in hard-disk drives. TDK has incorporated this high-performance part into its automotive sensor.
A typical application for such sensors includes electric power steering systems. The sensor helps minimize errors in detecting the angle at which a steering wheel is turned, precisely controlling the system’s movement. This in turn enhances the efficiency of the motor and reduces electricity consumption, improving fuel economy. TDK is actively marketing this component to Japanese and European automakers, which are focusing on enhancing fuel efficiency.
“Increasing business with the automotive industry is a key to our growth strategy through fiscal 2016,” says Kamigama. Demand tends to swing wildly for electric machinery parts, which had been a cash cow for the company. In particular, the computer market has matured and is unlikely to grow sharply. The outlook is bright for radio frequencyThe number of complete cycles or vibrations per unit of time. Rate of alternation in an AC current. Expressed in cycles per second or hertz (Hz). parts for smartphones, but because lower-cost products are spreading rapidly, prices are certain to drop.
To make up for such weakness, TDK shifted its attention to automotive parts. The global car market is projected to grow 4-5% annually over the next five years, so this business is seen as a steady earnings contributor in the medium term. TDK now generates close to 170 billion yen ($1.65 billion) a year through automotive parts, mainly capacitors. It seeks to boost this figure 25% to around 210 billion yen, with a particular focus on sensors starting this fiscal year. With this target, TDK aims to generate some 30% of total sales from automotive parts by fiscal 2016, up from 17% fiscal 2013.
The Tokyo-based company has reorganized its sales network, ending regional groups and instead classifying customers by industry. “This makes it easier to market our products to carmakers and autoparts companies around the world,” says Kamigama.
TDK has also secured a production site for magnetic sensors. Two factories for magnetic heads will be consolidated into one and the other will be used for sensors, with mass production to kick off as early as this fiscal year. The company plans to embed magnetic sensors into other car parts and aims to rake in tens of billions of yen from sensors alone by fiscal 2016.