TDK’s Innovation

1966 1994 2009 Recognition as IEEE Milestone: Innovation Innovation TDK’s efforts influenced the world’s Four Great World-Class Innovations by2 TDK Four Great World-Class Innovations by4 TDK Cultivating Technologies for technological history Magnetic Tape Technology Magnetic Head Technology The Institute of Electrical and Engineers (IEEE), an international academic society relating to Revolutionizes Music Opens the Way to Amazingly electricity and electronics, recognized the “Development From a desire of to easily store music, TDK devel- High Recording Density of Ferrite Materials and Their Applications” by the Tokyo oped the first made in . The Institute of Technology and TDK as a historical achieve- TDK’s magnetic heads business began in 1962 with combination of superior magnetic materials tech- ment that has contributed to the development of society the development of a ferrite head core piece for nology and coating technology later also proved its and industry. storage devices such as magnetic drums. Thanks to worth in the manufacture the development of magnetic heads utilizing thin-film of video tape products. process technology on the nanometer level, the Years recording density of hard disk drives (HDDs) took a Based on the corporate motto of “Contribute to culture giant leap forward in the 1990s. 80and industry through creativity,” TDK has been continuously pouring forth a stream of innovative products ever since its founding in 1935, using ferrite as a starting point and IEEE Milestone plaque harnessing superior magnetics and materials technology.

Equipment for manufacturing cassette tapes and video tapes HDD magnetic heads

MAGNETICS TECHNOLOGY

1935 1950 1980 2012 Ferrite or Ferrite cores from TDK used extensively ceramic sheet “Year Zero of the Magnet” Innovation in super heterodyne-type radio receivers Innovation —A new TDK challenge Four Great World-Class Innovations by1 TDK Four Great World-Class Innovations by3 TDK The super heterodyne principle, which enables high Conductor pattern TDK is forging ahead with the development (coil semicircle) Materials Technology performance in radio receivers, came into wide use Fine Multilayering Technology of new magnets that either reduce the use around the year 1950. This led to a drastic rise in of costly rare earth additions significantly or with Origins in Ferrite demand for ferrite from TDK, to be used as a core Drives Miniaturization and eliminate them altogether. To mark this new Via (for connecting material in intermediate frequency (IF) transformers. Weight Reduction of conductors between beginning, 2012 was designated as “Year The world’s first ferrite cores After the age of television began, ferrite also found wide sheets) Zero of the Magnet” and TDK is continuing application in the deflection yoke Electronic Equipment to work towards the realization of various cores of CRT tubes. TDK developed the first multilayer chip inductor, new magnets that do not rely on rare earth using original multilayering technology to form three- materials at all. A pioneering university-generated A super heterodyne-type radio receiver, and dimensional spiral coils inside the chip. Further refining of this technology ferrite cores for IF transformers (foreground) led to the introduction of multilayer ceramic chip capacitors and various venture company Neodymium magnets other multilayer electronic components which significantly contribute to (NEOREC series) from TDK Tokyo Denki Kagaku Kogyo K.K., the forerunner of the reduced size and weight of electronic devices. TDK, was founded in 1935 in order to commercialize ferrite, an epoch-making magnetic material that had Exploiting Strength in been invented in Japan by Dr. Yogoro Kato and Dr. Takeshi Takei of the Tokyo Institute of Technology. So TDK really was a pioneering university-generated venture company. m is the art of handling ultrafine materials to a precision of less than a millionth of a millimeter, to create new Dr. Yogoro Kato (left) Dr. Takeshi Takei (right) functionality and previously unattainable material properties. TDK has gained extensive nanotechnology experience through 0.00 0000001the development and manufacture of magnetic heads for HDDs and thin-film multilayer products. This enables TDK to offer electronic components and devices that meet highly advanced and sophisticated needs. Annual Report 2015 1 Business Model TDK’s Challenges for the Future

Passive Components Applied Products

Ferrite cores HDD heads Wireless Power Transfer Technology Spintronics Development of wireless power transfer Application of TMR element technology Transformers systems harnessing magnetic materials allows realization of ultra-sensitive Neodymium magnets technology and magnetic circuit technology magnetic sensor

This system is designed to allow wireless charging of the battery The science of controlling the charge of an electron and spin Inductors in a vehicle, thereby eliminating the need for cumbersome cable through nanotechnology is called spintronics. Application of Ferrite magnets connections. Coils utilizing high-performance ferrite, together TMR elements developed for HDD heads allows the realization with a proprietary automatic tuning technique, ensure optimized of an ultra-sensitive magnetic sensor. The technology is expected charging. We are also working on experimental systems for to lead to applications in the health care and medical fields. Aluminum electrolytic capacitors power transfer to moving vehicles.

Film products TDK Strong Core Customer Film capacitors

Technologies Base Power supplies MAGNETICS TECHNOLOGY Ceramic capacitors Infinite Materials Technology Rechargeable batteries Automotive Process Technology ICT Network Evaluation and Simulation Technology RF components and modules Industrial Equipment & Energy Device & Module Technology Consumers and others Production Technology Challenges MEMS applied products toward the Future

Sensors A major mission of TDK is contributing to the future of electronics. On the strength of our materials technology, Flash storage applied products we always take up new challenges and continue to innovate. EMC countermeasure products

Radio wave absorbers, anechoic chambers Piezoelectric material products

Circuit protection components Manufacturing equipment

Renewable Energy Wearable & Health Care TDK’s business model is based on strong and continuously continue to develop products that meet the most advanced advancing competence in core technologies and a solid needs of the age. Development of next-generation magnets Pursuing next-generation electronic customer base. We handle a wide range of products, from We also aim to provide high value added by responding and high-efficiency power supplies components and modules through passive components to applied products, and are expanding flexibly to various customization requests. This in turn has Renewable energy is becoming an ever more important topic as advanced substrate embedding techniques we move closer to the realization of a sustainable society. TDK is the scale of our business operations. helped us to grow as a company. With a view toward wearable devices and health care products, engaged in developing capacitors and reactors specially Our vast accumulated expertise in magnetics technology The world of electronics is in constant flux, marching TDK has developed a technology called SESUB for embedding designed for use in power conditioners of wind power and solar chips directly in the substrate, and is advancing state the art RF serves as a backbone, while we explore the properties of rapidly towards the future. As a global leader in the field of power installations, and also building extremely powerful and module technology and other sophisticated methods for incor- large magnets as well as other parts for wind power generators. materials down to the molecular level. All of our production electronic components, we operate at the leading edge of porating electronic components into modules. We have also processes have been developed and unified in-house, a fact development, creating and marketing numerous innovative developed an ultra-low-profile thin- (TFCP) that is that clearly sets us apart from our competitors, as we products of high value for our customers. flexible and allows embedding in the substrate.

2 TDK Corporation Annual Report 2015 3 TDK’s Core Technologies

1 2 3 4 5 Evaluation and Simulation Materials Technology Process Technology Device & Module Technology Production Technology Globally Cultivating Technology Leading Edge Shaping the characteristics of the mate- Super-advanced control techniques Activities range from material analysis This technology involves combining The TDK policy of QCD (Quality, Cost, rial at the molecular level enables the operating with nanometer level precision and examination, simulation of product various electronic components into high- Delivery) is being further strengthened, Technology creation of innovative electronic compo- result in products with outstanding structure, thermal conditions, and elec- performance, multi functional electronic to enable swift and effective adaptation nents and devices that meet even the performance and functionality. tromagnetic field to noise measurements devices and optimized modules. to changes in the marketplace. most advanced market needs. and design of noise solutions. TDK is making full use of its worldwide network linking Japan, China, other Asian countries, Europe, and the U.S. Specific priority operation fields has been defined for each region. This enables us to pursue R&D at the cutting edge of technology, utilizing our accumulated expertise in five core technologies, in order to anticipate and meet highly sophisticated demands. Materials Design Technology Forming Technology Evaluation and Analysis Technology Circuit Design Technology Production Technology Control of main raw material composition as well Achieving compact, low-profile, and complex Used for observation of microstructures and This comprises selecting optimum components Outstanding products come from outstanding We are actively engaged in further as micro-additives is an effective approach for shapes by adding a binder to the base powder. visualization of molecular distribution, etc. and designing the circuitry including the wiring manufacturing facilities. TDK not only develops deepening and nurturing these core achieving specific targeted properties. and thermal dissipation arrangement using innovative manufacturing techniques but realizes advanced simulation techniques. these by building much of the required equip- technologies, establishing unified and ment in-house. This comprehensive approach is consistently outstanding production the key to superior craftsmanship. processes that ensure superior reliability through next-generation technologies. By continuing to innovate, we create products that contribute to the realiza-

Powder Control Technology Sintering Technology Simulation Technology Packaging Technology tion of a sustainable society, while also Finer crystal grain and greater uniformity result in A firing process for solidification and hardening. Used to visualize the distribution of thermal Parts assembly, matching, sealing, as well as resulting in a sustained increase in cor- improved materials characteristics. Requires highly precise control of temperature energy emitted by circuits, or the electromag- structural design and shape design are optimized and atmospheric conditions (gas composition in netic field distribution of noise sources. to achieve compact dimensions and high porate value. sintering furnace). performance.

Microstructure Control Technology Thick-Film Process Technology EMC Countermeasure Technology Semiconductor Embedded Substrate By controlling the internal composition of the Printing of electrodes and similar in a multilayer EMC measures are aimed at ensuring that a (SESUB) Technology crystal grain as well as the boundary between laminated configuration, to produce multilayer device is not susceptible to interference from This technology involves embedding ICs and particles and other properties, various character- electronic components such as chip capacitors other devices and also does not become the other components as well as the wiring into the istics can be realized. and chip inductors. cause of interference in other devices. substrate itself, to achieve a modular product. Competitive Strength of

Thin-Film Process Technology LTCC Technology Film formation of electrodes, coils, head ele- Low temperature co-fired ceramic (LTCC) tech- Core ments, etc., to produce magnetic heads for nology allows the integration of a high number of HDDs and other thin-film electronic components. components such as capacitors and inductors on a dielectric sheet to create a printed multilayer module. Technologies 4 TDK Corporation 5 Annual Report 2015 5 How TDK Has Changed

Increased Sales Ratio of Automotive Products

Ever since TDK turned its attention to the increasing “electrification” of the automo- bile more than 40 years ago, we have been providing magnets, inductors, 12% Continue to Change Ourselves to Realize capacitors, and other parts to car manu- 30% facturers on a global basis. As the ratio of Sustainable Growth towards 2035 electric equipment in cars gets ever higher, and with the continuing advance of hybrid electric and electric vehicles, we have set 100th Anniversary a medium-term goal of increasing our 2010 2018 automotive sales to about 30 percent of In our quest to contribute to society and create value, we have pursued a range of different strategies and our total net sales. scenarios, to give concrete shape to abstract ideas. This year, 2015, marks the 80th anniversary of the com- pany’s founding, and we are taking this as a starting point for a new trajectory of growth. Going Global from Early On

One of the strengths of TDK is the speed Overseas Sales Ratio by which we globalized our operations. By strengthening and expanding our frame- work of overseas production and technical 57% 91% support, we expanded our customer base from the subsidiaries of Japanese compa- nies to deal with overseas manufacturers 1995 as well. Currently, about 90 % of TDK’s 2015 entire output is being manufactured and marketed overseas. Overseas Production to Ratio

42% 88%

1995 2015

Promoting Consolidation of Manufacturing Sites and In-House Production Ongoing Governance Reform How the Public Sees Us

Responding to major changes in the business TDK has implemented a broad array of measures to strengthen TDK has always been creating innovative products to contrib- environment for electronic products, TDK is in the its corporate governance backbone. In June 2002, we started a ute to society through original technology. This stance, in turn process of consolidating its manufacturing sites. system of having outside directors and corporate officers, has been rewarded outside recognition, earning us a place To further bolster our Monozukuri power of creating which since June 2004 also includes non-Japanese corporate among the “Top 100 global innovators” named by Thomson products with a strong craftsmanship ethos, we officers. This is part of our effort to ensure continued sound- Reuters for three years running. The award honors corpora- are establishing two new plants in , ness, compliance, and transparency of management. tions and research organizations with notable inventions on a which will also reflect many advances in next- Akita global scale. Prefecture generation technology. The new plant in Honjo will Number of Foreign Corporate Officers In addition, we are actively engaged in activities to support be handling high-frequency components, piezo- 2015 sustainability, such as environmental protection and compli- 2004 electric material components, ferrite cores, and other ance, and we are registered for key indicators of socially passive components, while the new plant at Inakura responsible investment. will be dedicated to ferrite materials. Both are Honjo 1 person 7 people expected to start production from the end of 2016. Inakura

Number of Outside Officers New plants 2015 in Akita Prefecture 2002 from 2016 3 people 6 people Member Ethibel Thomson Reuters MONODUKURI. Nippon. EXCELLENCE Top 100 Global Conference Nippon Brand Innovators Prize

6 TDK Corporation Annual Report 2015 7 A to Z

Sales by Segment High Level of Globalization

TDK is harnessing its proprietary core technologies and Monozukuri power, creating innovative products in areas such as passive The TDK Group is active in over 30 countries and regions all over the globe, selecting suitable bases for plants, research facilities, and components, magnetic application products, film application products, and other. sales offices under the viewpoints of marketability, product range, distribution etc. TDK has 117 consolidated subsidiaries overseas and employs a total work force of approximately 88,000 people.

(Outside) (Outside) Passive Magnetic Application Americas Japan Components Products Net Sales ¥89.9 billion Net Sales ¥93.2 billion (Inside) (Outside) (8.3%) (Inside) (Outside) (8.6%)

Employees 3,150 people Employees 8,984 people (Inside) (3.6%) (Inside) (10.2%)

Inductive device Net Sales (Outside) HDD head Net Sales (Outside)

Net Sales 50.0% ¥1,082.6 billion Net Sales 34.1% ¥1,082.6 billion (¥541.2 billion) (¥369.2 billion)

Operating Income (Inside) Consolidated Number of Employees (Inside) ¥ billion 88,076 people Film Application 72.5 Other Products Europe Asia and Others

Net Sales ¥146.0 billion Net Sales ¥753.5 billion (Outside) (13.5%) (Outside) (69.6%)

Employees 6,720 people Employees 69,222 people (Inside) (7.6%) (Inside) (78.6%) Energy device Load port

Net Sales 14.0% Net Sales 1.9% (¥151.3 billion) (¥20.9 billion)

Explanation of Key Terms

Passive Components Magnetic Application Products Film Application Products What are passive components? The passive components business is TDK’s TDK’s magnetic application products segment The film application products segment covers Sustaining the manifold functions of electronic equipment mainstay, generating about half of its total net is mainly comprised of HDD heads, a field energy devices such as rechargeable batteries sales. The segment includes the capacitor where we hold about 25% of the worldwide primarily for tablets, smartphones, and other Electronic components can be divided into two major groups: active business, comprising ceramic capacitors, market share. The segment is divided into the Information and Communication Technologies components such as chips and transistors that use the electrical power aluminum electrolytic capacitors, and film recording devices business comprising HDD (ICT) devices, as well as applied film products supplied to them to perform amplification, transmission, conversion, capacitors, the inductive devices business heads and HDD suspensions, and the other used for the touch panels of smartphones and many other tasks, and passive components such as capacitors that with coils, etc., and other passive compo- magnetic application products business and similar applications. consume, store, or release the supplied power. The passive components nents including high-frequency components, including power supplies and magnets. generally serve for driving the active components, and their efficiency piezoelectric material components, circuit Heads for HDDs handle the task of writing protection devices, and sensors. As mobile information to the magnetic media and in this task, along with the ability to supply current without generating devices become more powerful and incorpo- reading the recorded information. Our mas- unwanted noise*, has a major influence on enhancing the performance rate a variety of functions, and as automobiles tery of thin-film process technology on the of the end product. The market for passive components is further rely ever more heavily on electrical and nanometer level has brought about an amazing Other expanding, driven by developments such as the move towards higher electronic equipment, the demand for passive increase in storage capacity. High-efficiency Products that are not part of the three major performance of ICT equipment and the increasing “electrification” of components continues to expand, a trend power supplies incorporating outstanding segments, such as mechatronics (production automobiles. Further improved performance and higher productivity will that is expected to remain strong. ferrite and transformer technology, and equipment), anechoic chambers, and flash be crucial demands in the area of passive components as well. high-performance magnets also contribute memory applied devices, are grouped into * Noise is mainly defined as the unintended emission of electromagnetic radiation, significantly to the conservation of power this category. which can impede the correct propagation of desired signals, or cause malfunc- and resources. tion and other problems in equipment.

8 TDK Corporation Annual Report 2015 9