TDK CORPORATION

Business Details

The Passive Components segment consists of (1) Capacitors, comprising ceramic capacitors, aluminum electrolytic capacitors, and film capacitors; (2) Inductive Devices, comprising coils, ferrite cores, transformers, and similar products; and (3) Others within passive components, comprising RF Components, Piezoelectric Material Components & Circuit Protection Components. Major customers are in the industrial equipment, automotive, and ICT markets, and the segment positions the GX/DX domain (renewable energy, EVs, Beyond 5G, etc.) as a mid-to-long-term growth opportunity. In FY2026 (ending March 2026), revenue increased year on year across all product categories, and segment profit margin also improved.

Recent Overview

In FY2026 (ending March 2026), revenue increased 6.0% year on year and profit margin improved to 7.1%, led by the industrial equipment and automotive markets.

In FY2026 (ending March 2026), Passive Components segment revenue was ¥593,201 million (versus ¥559,639 million in the prior period, up 6.0% year on year), and segment profit was ¥41,831 million (versus ¥34,072 million in the prior period, up 22.8% year on year), with profit margin improving to 7.1% (from 6.1% in the prior period). Capacitors benefited from higher sales to the industrial equipment market, and Inductive Devices from higher sales to the automotive market. Meanwhile, other passive components declined 1.3% year on year due to lower sales to the automotive market. Sluggish BEV demand continued to weigh on demand for automotive-related components.

Key Products

Growth Drivers

• Expanding demand for capacitors (ceramic, aluminum electrolytic, and film) for the industrial equipment market
• Increasing demand for Inductive Devices for the automotive market (supporting ADAS and electrification)
• Growing demand for aluminum electrolytic capacitors, film capacitors, and Inductive Devices driven by renewable energy adoption
• Expanding demand for RF components and Inductive Devices amid the transition to Beyond 5G
• Mid-to-long-term expansion in demand for passive components from the AI ecosystem market (data centers, edge AI devices, etc.)

Risks

• Risk of downside in component demand (particularly other passive components) due to continued sluggish BEV demand in the automotive market
• Risk of slower growth from delayed recovery in capital expenditure demand in the industrial equipment market
• Risk to the pace of segment profitability improvement relative to the mid-term management plan target (business ROA of 8% or higher by FY2027, ending March 2027)
• Risk of cost increases and demand volatility from US-China trade friction, additional tariff measures, and supply chain disruption
• Foreign exchange risk (profit pressure from yen appreciation)
• Geopolitical risk associated with high dependence on sales to China (approximately 55% of consolidated revenue is to China and Asia)

Business Details

The Sensor Application Products segment consists of three categories: Temperature & Pressure Sensors, Magnetic Sensors (TMR Sensors, Hall Sensors), and MEMS Sensors (Microphones, Motion Sensors). Key subsidiaries are TDK-Micronas GmbH (magnetic sensors) and InvenSense, Inc. (MEMS sensors). The segment's main customer base spans the ICT, automotive, and industrial equipment markets, and it positions the spread of ADAS and expansion of IoT accompanying GX/DX progress as mid-to-long-term growth opportunities. In FY2026 (ending March 2026), growth was led by higher sales to the ICT market, achieving substantial improvement in both revenue and profit.

Recent Overview

Higher sales to the ICT market drove an 18.6% increase in revenue and an over 316% surge in segment profit.

In FY2026 (ending March 2026), the Sensor Application Products segment achieved substantial growth in both revenue and profit, with revenue of ¥224,623 million (versus ¥189,472 million in the prior period, up 18.6% year on year) and segment profit of ¥20,748 million (versus ¥4,983 million in the prior period, up 316.4% year on year). The main driver of the revenue increase was higher sales to the ICT market, and segment profit margin also improved substantially, from 2.6% in the prior period to 9.2%. Profitability, which had remained at a low level in the prior period (business ROA of 0.2%), recovered markedly.

Key Products

Growth Drivers

• Expanding sensor demand for the ICT market (higher sales of TMR sensors and MEMS microphones driven by the launch of new smartphone models, etc.)
• Increasing demand for sensor application products accompanying expansion of the data center and AI ecosystem market
• Expanding demand for Hall sensors and MEMS motion sensors accompanying the spread of ADAS in the automotive market
• Increasing demand across sensor application products generally, driven by IoT products and AI adoption amid GX/DX progress
• Expanding automotive demand for temperature & pressure sensors and magnetic sensors accompanying EV adoption
• Advancing profitability improvement measures toward achieving the mid-term management plan target of business ROA of 8% or higher

Risks

• Risk of downside in automotive sensor sales due to continued sluggish BEV demand in the automotive market
• Risk to sensor sales for the ICT market, given that production of smartphones and other ICT products is expected to decline in FY2027 (ending March 2027) compared with FY2026 (ending March 2026)
• Risk of decreased sales of motion sensors and temperature & pressure sensors due to delayed recovery in demand from the industrial equipment market
• Risk of profit margin pressure from higher fixed costs associated with capacity expansion investment
• Risk of supply chain disruption from geopolitical risks such as US-China conflict and additional tariff measures
• Risk to revenue and profit from foreign exchange fluctuations (yen appreciation)

Business Details

This segment consists of three products: HDD Heads, HDD Suspensions, and Magnets. Major customers are nearline HDD manufacturers for data centers, resulting in high dependence on the ICT market. In FY2026 (ending March 2026), growth was led by higher sales of HDD Heads and HDD Suspensions to the ICT market, resulting in substantial increases in both revenue and segment profit. Magnets are mainly sold to the automotive market, and while affected by sluggish BEV demand, sales to the automotive market increased.

Recent Overview

A surge in sales of HDD components to the ICT market drove a sharp recovery, with segment profit up 698% year on year.

In FY2026 (ending March 2026), the Magnetic Application Products segment saw a substantial increase in sales of HDD Heads and HDD Suspensions to the ICT market, against a backdrop of continued high-level demand for nearline HDDs for data centers. Revenue was ¥263,231 million (up 17.7% year on year), and segment profit surged approximately eightfold to ¥26,951 million (from ¥3,377 million in the prior period), with segment profit margin improving substantially to 10.3% (from 1.5% in the prior period). Sales of magnets to the automotive market also increased.

Key Products

Growth Drivers

• Continued high-level demand for nearline HDDs for data centers (expanding storage demand driven by AI and cloud service adoption)
• Substantial profitability improvement from increased sales volume of HDD Heads and HDD Suspensions to the ICT market
• Improved profit margin from a lowered break-even point and higher utilization rates resulting from structural reform effects through the prior period
• Continued firm demand related to the AI data center market (expected to continue in the FY2027 (ending March 2027) outlook as well)
• Long-term demand for magnets from EV adoption and renewable energy applications (GX growth opportunity)

Risks

• Risk of demand volatility in the HDD market (high dependence on data center investment cycles)
• Impact on the magnets business from prolonged sluggish BEV demand
• Impact on the supply chain and sales from geopolitical risks (US-China conflict, export restrictions, restrictions on exports of critical minerals)
• Foreign exchange risk (impact of yen appreciation against the dollar on revenue and profit)
• Risk of spillover to HDD demand, given that production of smartphones and other ICT products is expected to decline in FY2027 (ending March 2027) compared with the prior period
• Risk of additional impairment losses and structural reform expenses (in FY2026 (ending March 2026), a total of ¥13.6 billion in impairment losses and structural reform expenses was recorded, mainly for businesses facing profitability challenges)

Business Details

This segment, comprising Energy Devices (Rechargeable Batteries) and Power Supplies, accounts for approximately 54.7% of consolidated revenue, making it TDK's core segment. It holds an overwhelming presence in small rechargeable batteries for smartphones, notebook PCs, and tablets, and also offers power supplies for industrial equipment and EV applications. In FY2026 (ending March 2026), higher sales to the ICT market were the main growth driver, and the segment recorded the largest revenue increase in absolute terms among all segments.

Recent Overview

Higher sales of rechargeable batteries to the ICT market drove a 16.5% year-on-year increase in revenue to ¥1,370,304 million.

In FY2026 (ending March 2026), the Energy Application Products segment saw higher sales of Energy Devices (Rechargeable Batteries) to the ICT market, with revenue increasing ¥193,805 million (+16.5%) year on year to ¥1,370,304 million. Meanwhile, segment profit rose to ¥246,682 million (+5.2% year on year), but profit margin declined from 19.9% to 18.0%. Continued sluggish BEV demand, resulting in component demand falling below initial expectations, appears to be one factor behind the decline in profit margin.

Key Products

Growth Drivers

• Continued firm demand for rechargeable batteries from the ICT market (smartphones, notebook PCs, tablets)
• Demand for related power supplies accompanying sustained high-level demand for nearline HDDs for data centers
• Mid-to-long-term growth in demand for power supplies and rechargeable batteries from expansion of the AI data center market
• Mid-to-long-term expansion in demand for rechargeable batteries and power supplies accompanying renewable energy adoption (GX)
• Expanding demand for rechargeable batteries accompanying the spread of Beyond 5G, IoT, and AI adoption
• Improved profitability from rationalization, cost reduction, and structural reform effects
• Increased sales volume and improved product mix for small rechargeable batteries driven by the launch of new smartphone models

Risks

• Risk of decreased revenue for EV power supplies and batteries due to continued sluggish demand for BEVs (electric vehicles)
• Risk of decreased demand for rechargeable batteries, given that production of smartphones and other ICT products is expected to decline in FY2027 (ending March 2027) compared with the prior period
• Continued pressure toward normalization of profitability, with segment profit margin having declined from 19.9% to 18.0%
• Risk of revenue concentration in a major customer (a single customer group accounting for over 10% of consolidated revenue)
• Risk of supply chain disruption from US-China conflict and additional tariff measures (impact on production bases in China)
• Downward pressure on selling prices (for rechargeable batteries) accompanying fluctuations in material prices
• Risk of continued sluggishness in the power supplies business due to delayed recovery in demand from the industrial equipment market
• Profit pressure from one-time expenses such as structural reform costs (approximately ¥6.0 billion expected in FY2027, ending March 2027)

Business Details

The "Others" segment consists of Mechatronics (Manufacturing Equipment) and Micro Actuators for Smartphone Camera Modules, among other items. Main customers are in the ICT market (for smartphones) and the industrial equipment market. Although it accounts for a small share (approximately 2.1%) of consolidated revenue, it also serves an internal support function by supplying manufacturing equipment within the Group. During the period, sales of Mechatronics to the industrial equipment market decreased, while sales of Micro Actuators to the ICT market increased.

Recent Overview

Revenue declined 3.2% year on year, while segment loss widened by ¥5,793 million year on year.

In FY2026 (ending March 2026), revenue from external customers in the "Others" segment was ¥53,789 million (versus ¥55,559 million in the prior period, down 3.2% year on year). Sales of Mechatronics decreased to the industrial equipment market, and while sales of Micro Actuators for Smartphone Camera Modules increased to the ICT market, the segment as a whole saw a revenue decline. Segment loss widened substantially to -¥10,230 million (from -¥4,437 million in the prior period), making profitability improvement a key challenge.

Key Products

Growth Drivers

• Increased sales of Micro Actuators for Smartphone Camera Modules to the ICT market accompanying the launch of new smartphone models
• Expanded sales of Mechatronics (Manufacturing Equipment) as demand recovers in the industrial equipment market
• Development of new areas such as edge AI devices and solutions against the backdrop of DX/GX trends (long-term vision)

Risks

• Risk of decreased Mechatronics sales due to continued sluggish capital expenditure demand in the industrial equipment market
• Impact on Micro Actuator sales from demand fluctuations in the smartphone market
• Uncertain outlook for profitability improvement, with segment loss having widened substantially from -¥4,437 million to -¥10,230 million in the prior period
• Possibility of additional structural reform expenses being recorded for challenged businesses, in light of stronger business portfolio management