Integrated Report 2024

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Contents
About TDK
02 About Integrated Report 2024
03 TDK at a Glance
04 Founding Story

Chapter 2

Chapter 3

TDK’s

TDK’s

Growth Strategies

Governance

05 Changes in TDK’s Business

About the cover design

Message fromthe President & CEO
Noboru Saito

23 New Medium-term Plan

71 Changes in TDK’s Governance/
TDK’s Board Culture

Representative Director
President & CEO

30 Message from the CFO

72 A Talk by Outside Directors

34 TDK’s Current Businesses

76 Corporate Governance Structure

35 Strategy by Segment (Passive Components,
Sensor Application Products,
Magnetic Application Products andEnergy Application Products)

77 Strengthening of the Board of Directors’
Monitoring Function

43 Pre-financial Capital that backs
TDK’s Value Creation

79 Activities of Advisory Committees andOther Similar Meetings

44 Message from the CTO

80 Succession Plan

47 IP Strategy

81 Skills Matrix

48 Development of New Business and
New Products

82 Remuneration for Executives

the organizational culture toward

84 Effectiveness Evaluation of
the Board of Directorsof abundant individual characteristics,

22 Review of the previous Medium-term Plan

06 As we head into a new growth stage, we willtransform ourselves, enhance our own
capabilities in order to contribute to Social
Transformation exemplified by GX and DX

Chapter 1

TDK’s

Long-term Vision

49 Design and Production (Monozukuri)

78 Operational Policy and Yearly Agenda of
the Board of Directors Meeting

51 Marketing

86 Directors, Audit & Supervisory Board
Members, and Corporate Officers

52 Message from the CPSO andGeneral Manager, Human Resources HQ

Data Section

50 Quality Assurance

67 DX Promotion
13 Long-term Vision

68 Advance Group Governance

17 Key Issues (Materiality)

69 Risk Management

the words “TDK United.”
TDK United is intended to represent
which TDK aspires, namely: A fusion
which promotes mutual understanding
while developing the strengths andcapacities of individual team

56 People Strategy
58 Sustainability (Response to Climate Change,
Response to TCFD, Other Environmental
Initiatives, Respect for Human Rights)

The motif of the cover design are

members and companies andcreates value through teamwork.

87 Key Financial Data for the past 10 years
88 Consolidated Business Results Highlights
89 IR Activities
90 Corporate Information

01

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

About Integrated Report 2024
Editorial Policy• Starting in FY March 2025, the report is intended to convey how TDK is making
company-wide efforts to accelerate transformation and enhance corporate value from along-term perspective based on “TDK Transformation,” our new Long-term Vision, as wellas key issues (materiality) and new Medium-term Plan so that we can continue tocontributing to the transformation of society through our business.
• As a follow-up to the 2023 edition, we maintained the format whereby division heads
discuss in their own words the initiatives that will lead to enhance corporate value.
• The report conveys our stance on how highly-diverse TDK United team members(employees) are accelerating the transformation of TDK itself and continuously
contributing to the transformation of society.

Integrated Reports• Sustainability Website• Securities Reports*• Corporate Governance
Reports*• Financial Results*

Financial

Key Points of Integrated Report 2024

Narrative

Pre-financial

Starting with the 2021 edition, TDK change the title of its Annual Report
to Integrated Report as a dialogue tool to gain a more accurate
understanding of our comprehensive growth story including financial
and pre-financial aspects on the part of stakeholders and enhance
stakeholder engagement.
Starting with the 2024 edition, the structure of each page has
been organized by making reference to the Guidance for Collaborative
Value Creation formulated by the Ministry of Economy, Trade andIndustry of Japan.

Positioning of the Integrated Report• Medium-term Plan
• Performance Briefings• Notice of convocation ofgeneral meeting of
Shareholders*• Shareholder Newsletters• Investors’ Guide*Statutory and Timely Disclosure Documents

Comprehensiveness
Reporting Scope
Covered period: FY March 2024 (April 1, 2023–March 31, 2024)(Information on some activities in and after April 2024 is also included.)
Covered organizations: TDK Corporation and the TDK GroupAccounting standard: Unless otherwise noted, US-GAAP until FY March 2020 and IFRS fromFY March 2021.
Cautionary statements with respect to forward-looking statements
TDK’s plans, strategies, and future business prospects set forth in this Integrated Report are judged tobe reasonable by TDK at the present point in time based on information available at present. They are
subject to risks and uncertainties. Please be aware of the possibility that depending on various factors,
actual business results may differ from the contents of this Integrated Report.

Since FY March 2025, the Integrated Report has also been positioned as the highest-level
disclosure document within our information disclosure structure. We reviewed production
systems, and following deliberation by the Disclosure Committee, our internal organization,
we made the integrated report subject to reporting at Executive Committee meetings andBoard of Directors meetings.
Highly comprehensive information that could not be included in this Integrated Report
is reported in various disclosure documents and posted on the TDK website as indicated in
the positioning diagram above.

02

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

TDK at a Glance (FY March 2024)
A global electronics technology company and a world leader in electronic solutions for the smart society
TDK has over 250 locations across more than 30 countries and regions. We lead the world in magnetic technology and operates in the four business segments of Passive Components,
Sensor Application Products, Magnetic Application Products, and Energy Application Products, as well as Other business. We focus on three markets: automotive, ICT, and industrial equipment.

Percentage ofoverseas employees

Established

1935

Approx.

Number of employees

100,000

Approx.

2,103.9billion172.9

billion218.6(FY March 2024)

22.0%
90%

8.2%

2.5% / ¥ 51.8 billion

Passive
Components

26.9% / 565.6 billion

Sensor
Application
Products

8.6% / 180.5 billion

Magnetic
Application
Products

8.7% / 184.2 billion

EnergyApplication
Products

53.3% / 1,121.7 billion

Sales
composition*TDK Group

Approx.

Other¥•Capacitors (Ceramic, Aluminum electrolytic
and film capacitors)•Inductive devices •Other passive components¥•Temperature and pressure sensors /Magnetic sensors / MEMS sensors¥•HDD magnetic heads•HDD suspension assemblies •Magnets¥•Energy devices (rechargeable batteries)•Power supplies

Main high market share products
EnergyMagnetic

Passive

Passive

SensorSmall capacity
batteries

HDD
suspension
assemblies

Signal
EMC filters

Ceramic
capacitors forautomobiles

Temperature
sensors(40%–45%)(45%–50%)(35%–40%)(35%–40%)No.1(50%–60%)

No.1

No.1

No. 2

No.1

Research anddevelopment expenses

Capex

¥

Female manager ratio

Operating profit margin

Operating profit¥

90%

Overseas sales ratio

Net sales¥

Business Overview(% to net sales)billion

9.0%

Sales by market
Other 3.8%
ICT 56.7%

Industrial
Automotive 22.0% equipment 17.5%

03About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Founding Story
The origins of TDK’s founding story go back to 1930, whenfounder Kenzo Saito encountered ferrite, the world’s firstoxide magnetic material, invented by Dr. Yogoro Kato and Dr.
Takeshi Takei of the Tokyo Institute of Technology. Saito wasborn in an isolated village where people survived mainly byfarming rice and fishing during the winters, and he had anambition to create a new industry in his impoverishedhometown and enrich people’s lives. However, he faced aseries of challenges and failures, and later when looking backon his life, he said he had “two successes and 98 failures.”
An Angora fur business was one of Saito’s many early
endeavors. However, this business did not go smoothly andhe was unable to find any customers.
Saito asked Shingo Tsuda, president of Kanegafuchi
Boseki, Japan’s largest company at the time, whom he had
met through the Angora rabbit wool business, one of his 98
failures, to provide the startup capital. Tsuda was unable to

TDK Value Structure“Contribute to culture and industry throughcreativity” is TDK’s Corporate Motto, and“Vision, Courage, Trust” are the Corporate
Principles. Based on this unchanging spirit,
we revised the existing TDK Value Structure
in FY March 2025 and formulated a new
Long-term Vision, key issues (materiality),
and Medium-term Plan.

use company capital for a purpose outside Kanegafuchi
Boseki’s business, so he provided his personal funds to Saito.
In the midst of these repeated failures, Saito had afortuitous encounter with Dr. Kato and Dr. Takei through aconnection. Dr. Kato showed him ferrite, a previously
unknown magnetic material. Dr Kato’s statement that
“innovative work is the source of true industry,” inspired Kenzo
Saito to found TDK Corporation (originally known as Tokyo
Denki Kagaku Kogyo K.K.) on December 7, 1935, with the
purpose of marketing this original material invented in Japan.
At the time, as it was yet unclear whether “ferrite” would
have a future or not, this act demanded “courage” and thewill to pursue a “vision.” As a result of joint research by the
Tokyo Institute of Technology and TDK, a product called“ferrite core” was produced and applied for the first timeworldwide in 1937 in a number of Japanese wirelesscommunication units and radios. By the end of the World

Contribute to culture andindustry through creativity“Vision, Courage, Trust”

TDK Transformation
Accelerating transformation
for a sustainable future
Key issues (materiality) whichshould be addressed toward
the realization of Long-term Vision
Action plan for the next 3 years
to realize the Long-term Vision
Values/codes/rules that serve as the baseof TDK Group’s Value Creation

War II, as many as 5 million units had been shipped by TDK,
thereby creating a foundation of trust in the company. The
two major wins that Saito staked his career on were thefounding of TDK and the creation of the Science andTechnology Agency. Saito’s spirit of creativity from the time of
TDK’s founding, expressed as “creating values that do not
yet exist in the world from the level of materials,” wasadopted as the Corporate Motto in 1967.

Founder Kenzo Saito

Dr. Yogoro Kato (left) and Dr. Takeshi A coil that uses
Takei (right) facing each other with a a ferrite core
ferrite core04

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Changes in TDK’s Business
TDK has grown by evolving its electronic materials technologies, which began with ferrite, while alsochanging its business portfolio. To supply products that meet the needs of society, we have beenpromoting technological innovations which we achieve through the application of our coretechnologies, including materials rooted in ferrite as well as process technology, while also activelytransitioning our main business portfolio while maintaining our view of the changing times.

What we have changed

What we will not change

Product and business portfolio

Our unique corporate culture

Global expansion andglobal market share• TDK’s founding spirit• Open corporate culture• Venture spirit

Increased
performance of AI
Accelerated electrification of
automobiles

Diffusion of cloud computing

Expansion of the Ferrite Tree

Diffusion of smartphones andcontinued upgrading of functions

Human resources-oriented
management

Diversity in management
Governance structure(Net sales)

Materials × process technology

Quality First

Diffusion of personal computers andcontinued expansion of memory capacity

Diffusion of cassette tapes

Diffusion ofelectric products

Ferrites
Inductors
Magnets

Capacitors

Batteries Others

RF components
HDD heads
PowermodulesSensors &actuators

Magnetic tapes

1935

1970

1980

1990

2000

2003

2010

2020

2023

05

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the President & CEO

As we head into a new growth stage,
we will transform ourselves, enhance
our own capabilities in order tocontribute to Social Transformation
exemplified by GX and DX
Noboru Saito
Representative Director, President & CEO

06

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the President & CEO

The past two years have reinforced a sense ofunlimited potential
It has been exactly two years since I became president.
Looking back at those two years has really reinforced mysense that TDK is a company with unlimited potential. One
major reason I feel this way lies in our embracement ofdiversity, in all its many forms.
Today, the TDK Group has over 250 locations operatingin more than 30 countries and regions worldwide. We have inexcess of 100,000 employees, about 90% of whom are
non-Japanese. This global company has many teammembers (employees) working all over the world who haveoutstanding abilities and unique personalities, and new value
is generated every day as each of these individuals fully
demonstrates their capabilities.
I personally spent more than 20 years of my 30 years
with TDK working overseas, and have experienced for myself
the power of diversity in multiple countries. Particularly
significant were the approximately five years I spent, justbefore becoming president, in charge of the sensor
application products business (as business company CEO).
The sensor business is comprised of seven Group
companies, and is a global business with operations in 13
countries and regions—something of a “mini TDK.” Intending
to rebuild the business, which was struggling at the time, I
moved its business division to the United States and relocatedthere myself, spending about four years engaged in a series oftrial-and-error efforts with different local team members.
Eventually, we succeeded in bringing the business into theblack, a result I think we accomplished thanks to our bringing
together the collective abilities of our diverse members. Thatexperience has given me a great deal of confidence as I
undertake my duties today as leader of the Group.
The strength of diversity lies not simply in having a lot of
individuals with different personalities and abilities. It requires
a connection, harmony, a fusion. In that sense, I believe
TDK’s true strength as an enterprise is an organizational
culture that allows our diverse human resources to maximize
their individuality, motivation, and abilities. Having people
from different backgrounds and cultures understand one
another through close communication, freely exchanging
their individual ideas and sharing technology andinformation—that is what enables us to discover new
technologies, business ideas, and even solutions to
intractable issues.
Since becoming president, I have visited a wide range ofour business sites, both in and outside of Japan, and haveengaged in dialogue with team members at each of thoselocations. This has also allowed me to reaffirm that, nomatter where I go, a strong culture is being nurtured thatallows those team members to exert their individuality. Those
visits have also convinced me that if we can manifest thepower latent in TDK, we can continue to generate new value
for society.

A product portfolio essential to transformationin the era of GX and DX
Another reason I sense such enormous potential in TDK is
the long-term growth prospects for the business. Looking
back over the past two years, while we have seen an
economic recovery associated with a normalization following
the COVID-19 pandemic, we also saw conditions
surrounding our business change dramatically, fromincreased geopolitical risks raised by Russia’s invasion of
Ukraine, soaring energy prices driven by that invasion, and asudden, progressive drop in the value of the yen. Many ofthese factors also represented headwinds for the company.
That said, seen from a more expansive, long-term view,
we believe the world has continued to transform in line withtwo major trends. One is the Green Transformation (GX), a
fundamental reevaluation of the role of energy as part ofefforts to realize a decarbonized society. The other is the
Digital Transformation (DX), in which information andcommunication technologies and AI will greatly alter thenature of our society, industries, and daily lives.
TDK has a firm grip on core fields in GX, such as ourrechargeable battery business. We have established thelargest share of the global small capacity battery market, andthrough our joint ventures with CATL, aim to expand ourshare of the medium capacity battery market as well.
Meanwhile, taking the sensor business I mentioned
earlier as an example, sensors are among the most importantdevices in the advancement of DX. This is because to
analyze and explicate various physical phenomena in thereal world using computers, it is necessary to first convert
those phenomena into digital data through the use of
sensors. Focusing on this field, with its presumed long-term
growth potential, we began several years ago to makeaggressive investments, including M&A, that today haveresulted in our sensor business growing to become one of
TDK’s pillar businesses.

07About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the President & CEO

Going forward, we can look forward to an even greater
expansion of the areas in which sensors play a role. Edge
computing, in which data is processed at the applications
closer to data sources, is expanding across a variety offields in order to reduce the processing burden on data
centers, and TDK is moving to launch a new business in
response to this trend.
These two trends will, without a doubt, accelerate evenfurther going forward. In response, TDK can continue tocontribute by providing a diverse range of technologies,
products, and solutions built on its accumulated technology.
While there is no end to the TDK products we might list as
assisting in the advancement of GX and DX, in addition toexisting products, we continue to research and develop new
products and technologies in response to the new needs ofsociety, and I believe that going forward, TDK can continue
to maintain and expand its competitive advantage in each ofthese markets.

Summary of Value Creation 2023,
the previous Medium-term PlanIn FY March 2022, the TDK Group began advancing Value
Creation 2023, the previous Medium-term Plan, whichreached its final fiscal year in FY March 2024.
When I first assumed the post of president in April 2022,
the company was highly reliant on profit from small capacity
batteries. For TDK to achieve a new growth stage (a “second
chapter” of growth), I believed we needed to try to diversify
our revenue sources, and we have thus focused on growth in
three priority businesses: Strengthening our business inmedium capacity batteries; growth of the sensor business;and regrowth of the passive components business. In myassessment, we have made a certain amount of progress inall three of these areas over the three years of the previous
Medium-term Plan.
In the medium capacity battery business, the joint

ventures we launched two years ago with CATL has now
begun full-scale operations, and has begun solidifying thefoundations for dramatic growth in the near future. Similarly,
the passive components business has seen growth inmultilayer ceramic chip capacitors (MLCCs) and inductors as
new revenue sources. In the sensor business, TMR and
MEMS sensors are beginning to take shape as contributors
to overall profit.
With efforts to diversify revenue source progressing, wewere also able to more flexibly allocate capital in responseto changing conditions in each business. In terms of cash
flow, we were able to achieve one of our financial targets—
positive free cash flow (FCF) after shareholder returns forthe cumulative three-year period—despite a ¥110.0 billion
advance payment to ensure the long-term stable supply ofcobalt and other battery materials in the first fiscal year of
the previous Medium-term Plan. This was in part due to an
improvement in working capital and increased cash inflow
from the sale of equipment to our joint ventures in mediumcapacity batteries. With regards to capital investment, weended up slightly above our cumulative three-year plan of¥750.0 billion, at ¥785.6 billion, but in my estimation, thisTargets and results in KPIs of the previous
Medium-term Plan
Targets for
FY3/24

Results for
FY3/24¥2,000.0 billion¥2,103.9 billion

Operating profit margin

12.0%

8.2%

ROE

14.0%

7.9%

FCF after shareholder
returns

Positive¥52.9 billion

Capex(cumulative 3 year)¥750.0 billion¥785.6 billion

Net sales

allowed us to make solid advance investments inbusinesses where growth can be expected.
While we have thus been able to advance restructuring
in our business structure and continue to invest for the
future, a number of issues (challenges) remain to be
overcome if TDK is to become a more resilient enterprise. I
think the most significant issues is improving profitability.
Unfortunately, we failed to reach either of the two targets
set out in the previous Medium-term Plan—operating profitof 12% and ROE of 14%. This was in part due to the rapid
stagnation of the HDD market resulting in a decline inprofitability for related businesses, but another major factor
was that, over the three years of the plan, we did not makeas much progress as expected in transforming magnets
and other turnaround businesses. This is something wehave reflected on in our new Medium-term Plan started in
FY March 2025, under which our policy will be to focus on
executing proactive business portfolio management.

Defining a Long-term Vision for what
we want to be 10 years from now
Before describing the new Medium-term Plan, I would like totalk about the background and intent behind our Long-term
Vision, which was announced at the same time. In a word,
our objective in formulating this Long-term Vision was topresent to those both in and outside the company a concrete
image of our vision for TDK over the next 10 years.
Over the past two years, the social and economic
environment in which TDK does business has undergone
dizzying changes that might best be described as an
upheaval. These changes in conditions, taking place overshort-term cycles, are likely to arise in the future as well,across a variety of fields. For TDK as a global company totarget sustained growth in the midst of those changes, it is ofcourse crucial that we work to develop and implement
detailed, three-year Medium-term Plan. I have come to08About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the President & CEOstrongly believe that doing so is premised on taking a longterm view to determine what sort of future we should aim toachieve for ourselves, which in turn will require thinking abouta roadmap for getting there for the company as a whole.
This is an issue that we have frequently discussed at ourmonthly Board of Directors meetings. Naturally, verifying andclosely examining quarterly progress with our Medium-term
Plan is an important management responsibility. Encouraged
by our outside directors, however, who insisted the board
should also spend time discussing how the entire Group will
move ahead going forward, and set goals from a longer-term
perspective, myself and the rest of management worked
together through numerous discussions to clarify a vision for
TDK. That became the Long-term Vision presented here.
Transformation, the word that forms the core of thatvision, incorporates two meanings. One represents our desire
to continue contributing to society as society itself continues
to transform into the future. The other represents ourcommitment to continuing to transform ourselves to maintainthose contributions. In the sense that we will continue toLong-term Vision TDK Transformation• Contribute to the transition towards a sustainable
future by accelerating the transformation ofsociety and advancements in technology enabled
by electronic devices developed through leveraging
cutting-edge innovation in materials, processes,
and software technology.
• Become the No.1 partner growing alongside ourworldwide customers by pursuing continuous“transformation”.

transform ourselves in order to contribute to society over thelong term, this Long-term Vision might be seen as a resettingof our founder’s aspiration to “contribute to culture andindustry through creativity,” as presented in our Corporate
Motto, as a goal for the future.

Overview of the new Medium-term Plan
The new Medium-term Plan, launched this spring, wasformulated based on the question of what we need toaccomplish now, backcasting from “TDK Transformation,” theLong-term Vision. The period of the new Medium-term Plan,as part of a ten-year span going forward, is positioned as atime to strengthen our business foundations as we movetoward our envisioned future. I believe the new Medium-term
Plan can be divided broadly into three key points.
The first is strengthening management focusing on
cash flows. This is based on increasing operating cash flow
captured from business activities, or “earning capability.” Todate, the Group has responded to changes in businessenvironment by making use of M&A opportunities while also
flexibly rearranging its business portfolio to increase theearning capability of the Group as a whole. Our operating
cash flow, which maintained a level of ¥100.0 billion on amoving average basis over the past three years, has
improved to a current level of about ¥200.0 billion. Our goal
under the new Medium-term Plan is to raise this level
further, to ¥340.0 billion.
The second key point is to enhance business portfolio
management (emphasizing ROIC). For about the past 20
years, TDK has engaged in financial management with anemphasis on cost of capital, using a proprietary index we call
TDK Value Added (TVA). In FY March 2022, we introduced
the matrix for inclined allocation of capex, and have worked
to optimize investment allocations by stratifying ourapproximately 80 cash-flow business units (CBUs) along two
axes: BizROA (ROIC) and business potential. Further, startingwith the term of the new Medium-term Plan, we will apply
this two-axis map of investment allocation to our businessportfolio management as well. For businesses falling below

09About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the President & CEO

the minimum hurdle rate of 10%, we will move to quickly
conduct appropriate monitoring, and swiftly executemeasures aimed at a turnaround. At the same time, we plan
to strengthen investment allocation in growth areas.
These measures are based on our reflecting on the factthat improvements to turnaround businesses did not
progress as expected during the period of the previous
Medium-term Plan, and I refer to them collectively as
proactive business portfolio management. By engaging inproactive business portfolio management, including thetransfer of individual business units to the best owner, we aim
to achieve a company-wide ROIC of 8% or more andoperating profit of 11% or more in FY March 2027, the final
fiscal year of the new Medium-term Plan.

Greater focus on strengthening
pre-financial capital
The third theme of the new Medium-term Plan isstrengthening “pre-financial capital.” Pre-financial capital is

New Medium-term Plan: Key points

Maximize FCF generation

Corporate value− Expected growth rate

Cost of capital (WACC)

Key points

1

Strengthen management
focusing on cash flows

P.26

2

3

Enhance businessportfolio management(Emphasizing ROIC)

P.27

High

Evolve the Ferrite Tree
(Pre-financial capital)

P.29
SAW filter

OCF supported by rechargeable battery business

Earning source trends
OCF supported by HDD-related business2023
ML automation(Software)
AcquiredQeexo(¥ billion)

2008
Electronic components
Acquired EPCOS

300

2015
2017
SensorSensorAcquired
Acquired
MICRONAS InvenSense and
ICSenseThe small capacity battery business grew

2005
Lithium-ion batteries
Acquired ATL

2024–
Active growth investment

200

100

2002
Deterioration of businessenvironment due to burstof IT bubble

50

0

2017
The SAW device
business sold to
Qualcomm

2009
Deterioration ofbusiness environment
due to the global
financial crisis

150

FY3/2000

From FY3/2000
Introduction of TVA (EVA)

FY3/052007
The recording
media business
sold

2022
Established the joint ventures(JVs) with CATL for medium
capacity batteries

Plasma application

Minimum
hurdle rateover 10%¥340 bn
Level

BizROA (ROIC)

250

Three-year average
FY3/25–FY3/27

FY3/10From FY3/11
Introduction of BizROA (ROIC)

58%

14%

NTC sensor
Multilayer NTC
thermistor

5%

From FY3/22
Introduction of thematrix for inclined
allocation of capex

13%

Low
profitability

FY3/25

Low

Thin-film
magnetic
Head

Bidirectional Converter
Wire wound EMC filter

Businesses tobe intensively
monitored
Low

Film capacitor

Lithium-ion battery
Noise suppressing sheetPowersupplyTransformer

Camera module actuator

SuspensionCorememoryFerritecore

Audio
cassette
tape

Tx coil unit (Plating)

VHS
Radio wave
absorber

Wire wound inductor

Next generation

Strategic restructuring

From FY3/25
Introduction of business portfolio
management

Multilayer
ceramic
capacitor

Disc type ceramic capacitor
DCDC converter (μPOL)

Profit enhancement

Profitability

Challenging

FY3/20Flash memory applied device

Multilayer
inductor

Piezo actuator

Edge AITMR sensor

Multi-layer
integrated
devicePowerHap
PiezoHapt

Ring varistor

components
business
improved

FY3/15Growing

NTC thermistor

Profitability of thepassive
Profitability of thepassivecomponents
businessdeteriorated

Profit base

MotionsensorThin-film
inductor

Cera Charge
Revenue sources tobe diversified

Thin-film RF
component

Multilayer RFcomponent

Sales proportion (%)

Optical disk
EMC test
systemFerrite5%

4%Group’scultureBusiness potential

High

Materials × Processes technology
Human capital

Organizational
capability

Customer base

TDK’s unique name for what is called non-financial capital.
We view all initiatives related to technological capability,
human capital, our customer base, organizational capability
and so on as leading to the creation of financial value in the
future, and thus I decided to refer to these as “pre-financial”
rather than “non-financial.”
TDK’s founding began with ferrite, and thus we call the
expanded range of products and technologies that havegrown from that single element the Ferrite Tree (see page 29).
In that sense, the pre-financial activities as noted earlier can besaid as equivalent to the roots of this tree. With these roots
planted firmly in the ground, the tree can spread its branches
and grow to even greater heights. To achieve the Long-term
Vision we have established, we intend to further strengthen
sharing within the company of an awareness of the importanceof pre-financial capital, which forms the roots of our businessactivity, connecting that in turn to a new value creation process.
Of the various types of pre-financial capital, I place thegreatest emphasis on people, because people are the root ofvalue creation that supports sustained corporate growth. As I
noted at the beginning, TDK’s strength lies not only in thediversity of its human resources, but in an organizational
culture that allows us to maximize the hidden power of thatdiversity. Of our current workforce of approximately 100,000
team members, about 80% have joined us through M&A,
and even in the case of an acquired company, we respect
the culture they have developed. Our approach of proactively
learning whatever we can from the other party now
permeates our entire Group.
Underlying this approach is a culture of “functional
equality” that has been handed down at TDK over the years.
Based on the belief that there are no hierarchies among thefunctions and roles of the individual divisions, everyone,
regardless of position, can respect one another on an equal
footing, and can say what needs to be said. TDK has longvalued this kind of organizational culture. We believe that thefusion that grows out of the meeting of different cultures and10

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the President & CEO

personalities is, in fact, what drives the creation of innovativetechnologies and products.
We have worked rigorously to create systems for taking
full advantage of diversity in terms of Group governance as
well. As of June 2024, half of our corporate officers consist of
non-Japanese nationals. In addition, viewing Empowerment
and Transparency as a basic policy, we have established
Global Common Regulations as rules that every team memberof the Group must follow and apply them to effective
governance. At the same time, we have actively promoted
empowerment to regional headquarters and core subsidiaries
to ensure individuals can maximize their own personalities andabilities. By giving regional headquarters not only management
functions but also marketing and R&D capabilities, we areworking to evolve into an autonomous, decentralizedorganization capable of developing more dynamic strategies.
Among our initiatives aimed at further strengthening
corporate governance, beginning in June 2024 our directors
will be structured with a majority of outside directors. To
ensure management has an even stronger understanding of
the importance of pre-financial capital, we have added
pre-financial indices, including CO2 emissions reductions andTeam Member Engagement Survey scores to the indiceslinked to corporate officer remuneration.
One other factor I emphasize in pre-financial capital is“quality.” This is one reason why, since becoming
president, I have continued to call on the entire group to
put “Quality First.”
Quality in this case refers not only to product quality, but
quality in a much broader sense, encompassing, for example,
streamlining production or improving yield rates, strengthening
marketing, or improving working environments and enhancing
employee motivation. Since this “quality” is something thatcan be improved and enhanced through our own individual
efforts, regardless of changes in external conditions, we canrefer to it as our “own capabilities.” I treat these “owncapabilities” as one more area of potential for growth.

For example, in FY March 2024, the energy application
products business saw net sales decline 4.4% year-on-year
due to lower smartphone production and intensifying pricecompetition, yet also saw a significant improvement in
operating profit, which was up 32.7% year-on-year. This wasdue the automation of production at each site and the resultof improved yield rates through the use of DX (animprovement in quality costs)—in short, achievements basedon these “own capabilities.” Going forward, I think that if all ofour business around the world were to reassess their own
positions, they might discover any number of things they canor should do to improve their “own capabilities.”
To respond to the global rise in geopolitical risks, theGroup is moving quickly to optimize its manufacturing sites
and reform its supply chain, but those efforts come with adilemma in the form of rising costs. I hope that by seeking tostrengthen our “own capabilities,” we will be better able toabsorb those cost increase, and maintain and improve our
global cost competitiveness.

To our stakeholders
TDK, born about 90 years ago as a venture company,
continues to hand down its legacy spirit of taking onchallenges without fear of failure or risk, a spirit that is sharedthroughout the entire company. In that sense, myunderstanding of TDK is as a giant venture company withover ¥2 trillion in sales and 100,000 employees.
As I noted in the previous Integrated Report, if we wereto liken ourselves to a group of musicians, I think a big jazzband, and not an orchestra, would be a better metaphor for
TDK, which brings together players with diverse and varied
skills, technologies, and personalities. As the CEO of TDK
United, I am not the conductor of this big band, but its leader
and manager. Each team member must be personallyinvested in doing what they can and should do as their own
business, which we call “Jibungoto” in Japanese, while myjob is to work to ensure they can demonstrate their creativity,
motivation, and aspirations in the best way possible.
Business environment will continue to change going
forward, including unpredictable upheavals such as the
COVID-19 pandemic. We will continue moving forward
steadily even as we respond flexibly to such changes, stepby-step in accordance with our current Medium-term Plan,
while keeping our eyes firmly on what we want to be in the
future as set out in our Long-term Vision. To repeat, I believethat TDK has unlimited potential.
Finally, I would like to say one more thing to ourshareholders and investors: I feel the enormous potential I
sense in TDK has not yet been adequately shared with eachof you. I think a reason for this is also a lack ofcommunication between ourselves and all of you.
Therefore, going forward we will expand the range ofand opportunities for dialogue with our shareholders andinvestors, which I hope will ensure that as many of you as
possible can come to understand the unlimited potential of
TDK that I myself sense. We look forward to your continued
warm support. Thank you.

11

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

12

Chapter 1

TDK’s

Long-term Vision
13 Long-term Vision
17 Key Issues (Materiality)

TDK Transformation

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Long-term Vision“TDK Transformation,” Our Long-term Vision
TDK formulated the Long-term Vision “TDK Transformation,”based on the Corporate Motto "Contribute to culture andindustry through creativity" and Corporate Principles "Vision,
Courage, Trust,” as an expression of our aspirations for the
next 10 years. This Long-term Vision incorporates
transformation in the sense of contributing to thetransformation of society as well as the sense of internaltransformation, that is, the continuous transformation of
TDK itself. TDK Transformation incorporates our desire toaccelerate these two cycles and contribute to the realizationof a sustainable future.
Until now, TDK has contributed to social transformationby providing products that are essential to the applications
that drive industry in each era including audio and video
devices, PCs, and smartphones.
The transformation of society, including green
transformation (GX) and digital transformation (DX), is
expected to accelerate even more in the future. In conjunction
with this, TDK will continue to expand the areas in which it isable to make contributions.
In accordance with this Long-term Vision, we will
accelerate the transformation of society and advancements
in technology enabled by electronic devices developed
through leveraging cutting-edge innovation in materials,
processes, and software technology, contributing to thetransition toward a sustainable future. We will also continue
our own transformation to become the No. 1 partner
growing alongside our worldwide customers.

• Contribute to the transition towards asustainable future by accelerating thetransformation of society andadvancements in technology enabled byelectronic devices developed throughleveraging cutting-edge innovation inmaterials, processes, and software
technology.
• Become the No.1 partner growing
alongside our worldwide customers by
pursuing continuous “transformation”.

Contents

TDK Integrated Report 202413

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Long-term Vision

Social Transformation
TDK has focused on applications that can impact on socialtransformation as the “Seven Seas.”*Moving forward, in a society equipped with 6G
networks, the Metaverse, smart cities, clean energy,
electrified vehicles, and various devices will become

terminals that are connected to networks. This means thatdata transmission volume will increase dramatically. In sucha society, the global electricity supply will be outpaced by
the power consumption of data centers, creating demand
for the improved energy efficiency of various electronic

components. We expect we will see the continued growth of
domains that can benefit from high value-added electronic
components and materials that contribute to increased
energy efficiency by achieving low power consumption, size
reductions, and low CO2 emissions.

Image of social transformation TDK projects

Realize a circular
economyImprove efficiency indata processing
Industrial robots helping
labor-saving

TDKTransformation

Advancement ofTechnology

SocialTransformation

Ultra-high accuracy sensors
that back safety operation

Wearable
devices

Predictive
maintenancepreventing
anomalies

Renewableenergy + Energy
storage systems

xEVs
connected withsmart grids

Autonomous driving
helping a sustainable
traveling

Green
Transformation

AI-powered
smartphones

Metaverse
implemented
in a society

Power supplies for
LED displays improve
conversion efficiency

DigitalTransformation

Decarbonization, energy saving,energy storageAI, automation & labor-saving

Capability ofmanagementtransformation

Strategic
position*Seven Seas The focal areas where TDK’s applications are dominantly present. Please see the website for more information. https://www.tdk.com/en/about_tdk/seven-seas/index.html

Magnetocardiograph (MCG)

14

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Long-term Vision

TDK’s Transformation
We believe that it is important to accelerate transformation
for TDK as a whole for continuous contributing to socialtransformation. Over the years, we have used both organic
growth and M&A to refresh our business portfolio and achievebusiness growth. We will contribute to the transition towards asustainable society as the No.1 partner based on establishingleading position by electronic devices developed throughleveraging cutting-edge innovation in materials, processes andsoftware technology in organic growth and M&A. This shows

our Company’s business model, which consists of two key
drivers: The capability of management transformation—how
to win, shown on the left, and the strategic position—whereto play, shown on the right. With strengthening both thecapability to envision the future to identify long-term trends ofsociety and technology, and the capability to execute ourvision, on the foundation of transforming human capability by
diversity, we will constantly secure investment capacity andimplement optimal investment, which enable us to enhancecapability of management transformation. We will contributeto the realization of a sustainable society to elevate ourpositioning. We will accomplish this by evolving andaccelerating the cycle of rapidly identifying customer needs
and providing broad-based solutions, from unique materials
to systems. We believe that TDK’s unique values andcorporate culture, which we have developed for a long time,
will support the growth of “capability of managementtransformation” and “strategic position.”

TDK’s business model

Capability of management transformation—How to win

Strategic position—Where to play

Constant securing of investment capacityand optimal investment

Capture needs of market/customer torealize First-to-Market

Capability to envision
the future
Capability to foresight fromthe long-term(Tech. x Market)

Market-in

Capability to execute
Proactive businessportfolio management
High level of quality
Optimization of production technology

Earning
capability&
Investment
capability

Human resource transformation

Ensuring empowerment
and transparency

Functional
equality*

Explorenew strengths

Technologies ofthermal management,
EMC, andmodularization

TDK

Miniaturization,lightweight,
and flexibility
Improved reliability,
innovation in new
raw materials andprocesses

SystemSoftware
HMI

ModuleEnvironmental
adaptability,
ultra-low power
consumption
and decarbonization

Parts

Material

Customers
First-to-Market

Dialogues withcustomers

Concept-out

Transformation through promoting and cultivating diverse pool of humanresources to further enhance competitive advantage

TDK Venture Spirit

Deepen existing
strengths

Provide solution from conceptual base

Respect for
acquired companies*Functional equality - is one of our values to encourage discussions in an open and equal atmosphere, based on functions (roles) rather than hierarchy.

Cultures learning fromeach other on a global baseIntegrating top-down
and bottom-up approaches

15About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Long-term Vision

Value Creation Process to Realize the Long-term Vision

TDK Transformation
Accelerating transformation for a sustainable future

OutputOutcome

Products and services

ImpactNew BusinessRF devices forquantum computer

InCellSense

SAW filter

VOC multi gas sensor

PowerHap
PiezoHapt

CO2 gas sensor

SpinPD

Thin-film
inductor

Multi-layer
integrated
devicePiezo actuator

Multilayer
inductor

Multilayer NTC thermistor
NTC thermistor

Neuromorphic device

Motion sensor

Edge AI
Bio magnetic sensor

TMR sensor

Cera Charge

NTC sensor

Thin-film
magnetic
Head

Camera module actuator
Suspension

Flash memory applied device

Film capacitorCorememoryMultilayer
ceramic capacitor

Bidirectional Converter

NH3 fuel cell

Disc type
ceramic capacitor
Power supply
Transformer

Wire wound inductor

Ferritecore

Noise suppressing sheet
Audio
cassette
tape

Tx coil unit (Plating)VHS
Optical disk

Radio wave
absorber

EMC test
systemFerriteActivity
Business model

ESS

Lithium-ion battery

Ring varistor

WPT
DCDC converter (μPOL)

Wire wound EMC filter

Thin-film RF
component

Multilayer RFcomponent

Cardiovascularmonitoring

Plasma application

FCLM

LN thin-film

Photo acoustic
glucosemonitoring

Capability ofmanagementtransformation

Strategic
position

Green
Transformation

DigitalTransformation

Decarbonization,energy saving,energy storageAI, automation &labor-saving• Realize a zero-carbon society• Improve energy efficiency• Realize a circular economy• Industrial revolution of the skies

INPUT
Pre-financial
capitalMaterials x Processes technology x Software technology
Human capital

Organizational
capability

Customer base

• Close the digital divide• New experiences throughthe social implementation of
metaverse• Predictive maintenancepreventing anomalies• Improve data efficiency fora wealthy life
• Extension of healthy life
expectancy

16About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Key Issues (Materiality)
Key issues (materiality) of TDK
From the perspective of achieving our long-term vision
based on our Corporate Motto and Corporate Principles, wetook into consideration our long-term strategies as well as
risks and opportunities and reviewed the key issues(materiality) that have a real impact on the value creation

capability of the TDK Group.
In the past, materiality was positioned and selected as
CSR key issues, but the new materiality was extracted fromour long-term strategy for improving corporate value, andthe action strategy is reflected in our new Medium-term
Plan, which started in FY March 2025.

The materiality of the TDK Group is premised on thelong-term creation of value for not only investors, but all
stakeholders including customers, suppliers, and teammembers (employees) and focuses on issues that help
maximize TDK’s corporate value.

Key issues (materiality) of TDK

Value creation and establishment of competitive advantage through business activities
Create customer value andbuild strong relationships

Contribute to social
Transformation through R&D

Stabilize supply of high-quality products andincrease production efficiency• Build, maintain and deepen trustwith customers• Access in-depth sources ofcustomer needs• Continue commercialization ofadvanced technology• Realize intellectual property
investment and utilization that
contributes to business• Maintain the capability to introduce products into market quickly
and to ramp up mass production• Improve predictability by sharing know-how• Pursue zero defect and promote in-house production• Maintain diversity in products, technologies and involved markets

Strengthening of the management foundation that envisions and realizes the future
Transformation through promoting and cultivating diverse pool ofhuman resources to further enhance competitive advantage• Promote diversity, equity and inclusion driven by inclusive leadership practices• Develop organizational capability to enhance innovation and efficiency• Improve team member (employee) health and engagement

Summary of previous materiality are posted on the sustainability website.

https://www.tdk.com/en/sustainability/tdk_sustainability/tdk-materiality/updates/

Advance group governance• Improve the business portfolio
continuously• Empowerment & Transparency

Address environmental andsocial issues• Respect human rights• Address climate change

17About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Key Issues (Materiality)

Key Issues (Materiality) List
The following have been set as KPIs for materiality.
Area

Theme

Background of materiality setting and vision

Main KGIs/KPIs*for long/mid- term

Promote diversity, equity and inclusion Ensure the diversity of the TDK Group’s human resources and promote leadershipdriven by inclusive leadership practices practices that enable each individual to fully develop their abilities and strengths.

Human
Resources

Governance

Environmental
and Social
IssuesCustomer

R&D

DesignProduction

Transformation
through promoting
and cultivating
Develop organizational capability todiverse pool ofenhance innovation and efficiency
human resources
to further enhancecompetitive
Improve team member (employee)advantage
health and engagement

Advance group
governance

Address
environmental andsocial issues

Stabilize supply ofhigh-quality
products andincreaseproduction
efficiency

Promote an environment in which team members (employees) can work
enthusiastically to ensure the diversity of the TDK Group’s human resources byenhancing team members (employees) engagement and health so that eachindividual can fully demonstrate their abilities.

Improve the business portfolio
continuously

Optimize the corporate-wide business portfolio by identifying “areas that to be put
in place.”

Empowerment & Transparency

Strengthen risk management by strengthening group governance and introducing a
new ERM system, which TDK’s governance is based on a policy of Empowerment &Transparency.

Respect human rights

Respect the human rights of our stakeholders based on the values of the Code of
Conduct, recognize the potential impact of all corporate activities on human rights,
and promote activities to mitigate such impact.

Address climate change

Strengthen our activities to reduce greenhouse gas emissions and promotemeasures to address climate change in order to realize a net-zero CO2 emissions
society by 2050.

Build, maintain and deepen trust withcustomers
Create customer
value and build
strong relationships Access in-depth sources of customer
needs

Contribute tosocialTransformation
through R&D

Develop business entrepreneurs who can identify market needs and propose value
to our customers to maximize the use of the TDK Group’s assets and enhance theorganization’s ability to create new businesses.

Continue commercialization ofadvanced technology

Aim to increase customer satisfaction and expand our market share by building,maintaining, and deepening relationships of trust with our customers, taking
advantage of our extensive track record of business with industry-leading customers.
Through strengthening our ability to envision the future, enhance our ability to createbusinesses from both technology and market perspectives, and expand sales in new
applications.
Create future core businesses through collaboration with related divisions to search
for technological seeds that will create new markets and cultivate new customers forthe realization of social transformation.

Realize intellectual property investment
Create value by linking our intellectual property investment strategy to the goals ofand utilization that contributes toour business and R&D strategies: “business success” and “R&D strategy success”.
business
Maintain the capability to introduce
products into market quickly and toramp up mass production

Maintain and improve the ability to bring products to market quickly and increase ourcompetitive advantage by creating innovative ideas and ramping up mass production
system based on an aggressive culture.

Improve predictability by sharing
know-howContinuously improve predictability up to mass production to enhance manufacturing
capabilities for launching new products and improve the new product launch rate.

Pursue zero defect and promote
in-house production

Improve our competitive advantage by making it difficult for other companies to enter
the market and imitate us, through improvement activities aimed at achieving a zero
defect rate and thorough in-house production of production tools and jigs, as well as
in-house production of product components.

Maintain diversity in products,
technologies and involved markets

Aim to expand the range of our proposals by maintaining a wide variety of markets
and product lineups, as well as the diversity of process technologies. Further
promotes collaboration strategically and proactively.

* KGIs for L =Long-term, KPIs for M =Mid-term, Unless otherwise specified, long-term is assumed to for approx. 10 years and mid-term approx. 3 years.

L Improve diversity in management team
M Female ratio of participants in Global Management Development Programs
L No. of business entrepreneurs developed **M Number of overall participants in Global Management Development Programs
L Improve Engagement survey scoreM 1) Engagement survey measurement (communication)2) Participant rate of engagement survey
L Weighted average score of business portfolio
M Amount of loss reduction in businesses with operating losses
L No. of significant Global Common Rule (GCR) violations
M No. of follow-ups for significant GCR violation
L Mitigated/corrected significant risks from supplier audits
M Ratio of progress in planning annual onsite audits
L CO2 net emissions
M 1) Scope 1+2 emissions reduction2) Basic unit for energy reduction
L Customer satisfaction survey score**
M Resolved and feedbacked rate for issues identified from the survey**

Target* for mid-term KPI
30%500 participants or more

1) 75pts. or more
2) 80% or more

Target achieved: 100%

100%

100%
1) 42% (Term FY March 2031 goalcompared to FY March 2022)2) 15.7% (Term FY March 2027
goal compared to FY March 2021)

100%

L No. of future pillar businesses to be created through collaboration withrelated divisions

Target achieved: 100%

M Launch of new business divisions
L No. of themes transferred for the creation of future pillar businesses bypromoting collaboration with related divisions

4

M No. of theme selected and started
L Percentage of intellectual assets (patents) tied to IP strategy for businessand R&D themes

Target achieved: 100%

M Elaborating IP strategy
L Success rate for new product introduction**
M Completion rate of quality improvement activities of new product samples**L Percentage of new products launches achieved**
M Progress on new product development plan**
L Total failure cost ratio
M No. of completed various types of quality compliance training

L Market share of specific business**
M Score of customer satisfaction survey**** A certain business company only

100%

Plan progress rate: 100%

3 per fiscal year

Target achieved: 100%18

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Key Issues (Materiality)

Identification Process/Comments of the Experts
Materiality identification process
TDK’s key issues (materiality), which plot the enhancementof corporate value and adopt the concept of synchronizing
the sustainability of both society and company, comprisefinancial materiality (important items for TDK) and impact
materiality (important items for stakeholders). After deriving
financial materiality and impact materiality, we closely
examined the two and selected our materiality.
Process of identifying financial materiality
Financial materiality was derived using a backcasting
perspective based on our Long-term Vision by taking into
consideration the sources of long-term competitiveness thatwere discussed and identified by top management,
corporate officers, and next-generation candidates for
director positions as well as the items derived fromindicators that were recognized as being significant with
PBR through model analysis of the quantitative relationshipbetween general ESG indicators and PBR, andmanagement risks that should be emphasized in enterpriserisk management (ERM).
Process of identifying impact materiality
Impact materiality was derived by creating a long list basedon the European Sustainability Reporting Standard (ESRS)
and narrowing down the items.

Comments of the experts
To confirm the appropriateness of and any shortages in
the new materiality from the perspective of stakeholders,
we conducted dialogues with three experts in February
and March 2024 to obtain theirwide-ranging opinions of themateriality draft underconsideration by TDK.

The three experts engaged in dialogue with Shuichi Hashiyama,
TDK Corporate Officer and General Manager of the Corporate Strategy HQ.
Excellent framework takes shape but also important to review flexibly in the light of practicePreviously TDK’s materiality was set from a perspective emphasizing CSR. Through the latest revision, aimed atenhancing corporate value in the medium to long term, TDK has made its materiality easier to understand forstakeholders by positioning materiality as an important domain toward the realization of its Long-term Visionembodying its Corporate Motto and Corporate Principles. In the process of compilation, TDK has narrowed down
its salient points to reflect the views of stakeholders both inside and outside the company. Going forward, it may
perhaps be necessary to add materiality if there are shortages, prioritize issues, and change and respond. In
practice on the ground, it is the job of management to clarify what “to do” and what “not to do” in efforts toaddress materiality and sort out what is feasible. In the sense that TDK has begun its evolution toward corporate
value management, the latest systemic uplift deserves positive evaluation. I hope that it yields results and rises tothe level of being a model for other companies.

Koji Nitto
Nitto Koji Office (Former
Director, Senior Managing
Executive Officer, CFO, andSenior General Manager of
Global Strategy HQ ofOMRON Corporation)

Hoping for the capability to link KPIs and sustained earning power and to realize long-term strategy
Regarding the composition of TDK’s newly set materiality, it is well arranged and easy to understand. At the top
they place “Establishment of value creation and competitive advantage through business activities,” and at thebottom they have “Strengthening of the management base to envision and realize the future.” Investors no
doubt will be watching closely how future cash flow will be created through materiality. While incorporating the
TDK style, it will be important to clarify the relationship between overall strategy and KPIs. In addition, if the KPIs
do not function as expected, TDK will be required to verify what has caused the bottleneck and utilize theresults in the next plan. Furthermore, to bridge the gap between corporate executives and the capital markets, itwill be necessary to engage in appropriate communication while cleverly explaining impact materiality in an
integrated manner.

Minoru Matsubara
Executive Officer in chargeof the Responsible
Investment Division,
Resona Asset Management
Co., Ltd.

Looking forward to steady efforts based on strong commitment and specific indicators andmanagement techniques
TDK’s newly set materiality were derived by integrating financial and impact factors, and as a result, I feel that they
were carefully analyzed and well arranged. I have no objection to a company setting materiality by focusing on thelong-term maintenance of competitiveness. However, the viewpoint that creating a positive impact on theenvironment and society, which is the foundation of economic activity, is important too. It would be even better if
TDK showed its commitment to the issues of climate change and human rights as well. To incorporate DE&I intomateriality, it is important to consider what indicators should be set and by what methods they should bemanaged. On the business side, the supply of products capable of contributing to the reduction of CO2 isconsidered to be the source of TDK’s competitiveness, and there is a possibility of entry into such fields as green
transformation (GX). I look forward to seeing TDK make appeals socially by putting forth qualitative stories and also
take active steps to tackle such challenges as human rights issues in the supply chain.

Takeshi Mizuguchi
President, Takasaki City
University of Economics

19About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Key Issues (Materiality)

Relationship between Materiality and Corporate Value
In endeavoring to maximize long-term corporate value, TDK
emphasizes PBR as an indicator of corporate value.
Following this approach, we studied and formulated a tree
showing how activities linked to each materiality theme
impact corporate value. The tree also indicates which of thesix capitals defined by the International Integrated Reporting
Council (IIRC) corporate activities linked to each theme
contribute to. (These six types of capital are financial,manufactured, intellectual, human, social and relationship,and natural.) In addition, we monitor the degree ofachievement of KPIs set for each materiality theme bycontrasting planned figures and achieved figures with a tool
called a management dashboard that analyzes andvisualizes data.

TDK’s materiality
Financial capital

Relationship to financial results

Corporate value
Financial results

PBR

Pre-financial results

ROE [%]

Maximization of
long-term
corporate value

PER

ROIC [%]

Financial leverage

Operating profit margin[%]

Cash conversion cycle[month]Capital cost [%]Social andrelationshipcapitalMateriality
Maintain diversity in products, technologies and involved markets

Intellectual
capitalContinue commercialization ofadvanced technology
Realize intellectual property investment
and utilization that contributes to business

Human capital
Improve the businessportfolio continuously

Improve predictability by
sharing know-how
Pursue zero defect and promote
in-house production
Access in-depth sources ofcustomer needs

Respect human rights

Natural capital

Manufactured capital

Maintain the capability to introduce products into
market quickly and to ramp up mass production

Business model

Build, maintain anddeepen trustwith customers

Latent growth rate [%]Fixed asset turnover ratio[times]Pre-financial
capitalSocial value
creation

Relationship to pre-financial results

Develop organizational
capability to enhanceinnovation and efficiency

Empowerment &Transparency

Promote diversity, equity andinclusion driven by inclusive
leadership practices

Improve team member(employee) healthand engagement

Address climate change* The relationship to financial results is set for the short and medium-term (for approx. 3 years), and the relationship to pre-financial results is set for the long-term (for over 3 years).

20

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Chapter 2

TDK’s

Growth Strategies
22 Review of the previous Medium-term Plan
23 New Medium-term Plan
30 Message from the CFO
34 TDK’s Current Businesses
35 Strategy by Segment(Passive Components, Sensor Application
Products, Magnetic Application Products andEnergy Application Products)
43 Pre-financial Capital that backs
TDK’s Value Creation
44 Message from the CTO
47 IP Strategy
48 Development of New Business and
New Products
49 Design and Production (Monozukuri)
50 Quality Assurance
51 Marketing
52 Message from the CPSO andGeneral Manager, Human Resources HQ
56 People Strategy
58 Sustainability(Response to Climate Change,
Response to TCFD,
Other Environmental Initiatives,
Respect for Human Rights)
67 DX Promotion
68 Advance Group Governance
69 Risk Management

How will we
Transform?

21

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Review of the previous Medium-term Plan—Value Creation 2023
When drafting the previous Medium-term Plan, from FY
March 2022 to 2024, TDK was promoting growth strategy
focused on the diversification of revenue sources to follow
small capacity batteries as a profit contributor. In otherwords, the plan focused on propelling the Company towards
a new growth stage. As a result, the Company diversified its
revenue sources, made progress in cash management, andwas successful in recording positive free cash flow after
shareholder returns for the cumulative three-year period.
On the other hand, issues remained as operating profit
margin and ROE fell short of targets. This was due to therapid stagnation of the HDD market resulting in a decline inprofitability for related businesses, and efforts to improve theprofitability of other turnaround businesses did not proceed
as planned.

Capital allocation in the previous Medium-term Plan(¥ billion)(¥ billion)

FCF after
Shareholder shareholder returns
returns

Operatingcash flow
(OCF)
900.0

Energy
450.0

Capex
750.0
EBITDA
65%

Passive
150.0
Magnetic
120.0

Targets and results in KPIs of the previous
Medium-term Plan

Net sales

Cash-IN

Targetsfor FY3/24

Resultsfor FY3/24¥2,000.0 billion¥2,103.9 billion

Disposal ofequipment
107.3

Operatingcash flow
(OCF)
888.8

Capex
785.6
Passive
191.7
Magnetic
126.6

Other
10.0

Sensor
65.2
Other
22.0

Cash-IN

Cash-OUT

ResultInitial plan

Achievement and issues by segment
Issues• Accelerate developing new products• Optimization of manufacturing sites

Sensor Application
Products• Improved profitability, established positive profit• Profit of TMR sensors improved due to expansion of usage andinvestment in increased production has been decided to expand more•P
 rofitability improvement of the MEMS microphonebusiness has been delayed¥52.9 billion

Magnetic Application
Products• Commenced mass production of next-generation technology MAMR
• Developing HAMR has progressed• Withdrawal from the suspension application products business has
been decided• Profitability of the HDD-related business deteriorated•P rofitability improvement of the magnet businesshas been delayed¥785.6 billion

Energy Application
Products• Market share of small capacity batteries increased, andprofitability improved• Manufacturing sites in India commenced cell productions• JVs in medium capacity batteries commenced full-scale operations
and achieved positive profit• Accelerate developing new products• Optimization of manufacturing sites

8.2%

ROE

14.0%

7.9%

¥750.0 billion

Energy380.1

Sensor
20.0

Cash-OUT

CVC
37.8
Investment
in CJV andothers 16.4

Passive Components

12.0%

Capex
(cumulative 3 year)

Other
investments
54.2• Significantly increased production capacity of products forautomobiles, such as MLCCs• Continuous developing high value-added products• Productivity improved

Operating profit margin

Positive

Shareholder
returns
103.4

EBITDA
74%

Achievement

FCF after shareholder returns

FCF after shareholder returns
+52.9

22

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Positioning of the new Medium-term Plan
This new Medium-term Plan from the FY March 2025 wasformulated by outlining what we want to be and future visionin light of the long-term social transformation ahead, andbask-casting from that point.
As we work towards achieving our Long-term Vision,
we view the period of this Medium-term Plan as a time tostrengthen our business foundation. We believe that issues
that need to be addressed during this period include
strengthening profitability of core businesses and addressing
turnaround businesses.

TDK Transformation
Accelerating transformation for a sustainable future• Contribute to the transition toward a sustainable future by accelerating the transformation of society andadvancements in technology enabled by electronic devices developed through leveraging cutting-edge
innovation in materials, processes, and software technology.
• Become the No. 1 partner growing alongside our worldwide customers by pursuing continuous “transformation.”Back-casted

Back-casted from the Long-term Vision
FY3/22

FY3/25Previous Medium-term Plan

FY3/28

New Medium-term Planof evolution and growth
stage
new
a
ard
Tow

siness foundation
ing bu
then
g
n
tre

S
of FCF
Positive enue sources
g rev
n
i
y
f
i
s
r
Dive

Strengthening profitabilityof core business
Addressing turnaroundbusiness

Organic & inorganic growthBalance of centripetal andcentrifugal forces• Management that emphasizes cash flows and Biz ROA (ROIC)• Implementation of growth strategies through business portfolio management

Pre-financial capital

Technologicalcapability

Human capital

Organizational
capability

Customer baseLong-term Vision23

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

New Medium-term Plan: Key points
It is vital for enhancing our corporate value to maximize free
cash flow (FCF) generation, reduce the cost of capital, andincrease the expected growth rate.
Based on this thinking, the new Medium-term Plan,
which is positioned as a period for strengthen businessfoundations, has three pillars.
1. Strengthen management focusing on cash flows
2. Enhance business portfolio management(Emphasizing ROIC)
3. Evolve the Ferrite Tree (Pre-financial capital)

Maximize FCF generation

Corporate =value

Cost of capital(WACC)

Expected
growth rate

Key points

1

2

Strengthen management
focusing on cash flows

P.26

Enhance business portfolio management(Emphasizing ROIC)

P.27

High

3

Evolve the Ferrite Tree
(Pre-financial capital)

P.29

Sales proportion (%)

Revenue sources tobe diversified
OCF supported by rechargeable battery business

Earning source trends
OCF supported by HDD-related business2023
ML automation(Software)
AcquiredQeexo(¥ billion)

2008
Electronic components
Acquired EPCOS300

The small capacity battery business grew

2005
Lithium-ion batteries
Acquired ATL

2024–
Active growth investment

200

150

100

2002
Deterioration of businessenvironment due to burstof IT bubble

50

0

2017
The SAW device
business sold to
Qualcomm

2009
Deterioration ofbusiness environment
due to the global
financial crisis

FY3/2000

From FY3/2000
Introduction of TVA (EVA)

FY3/052007
The recording
media businesssoldProfitability of thepassivecomponents
businessdeteriorated
FY3/102022
Established the joint ventures(JVs) with CATL for medium
capacity batteries

BizROA (ROIC)

250

2017
2015
SensorSensorAcquired
Acquired
MICRONAS InvenSense and
ICSenseMinimum
hurdle rateover 10%¥340 bn
Level

FY3/15Growing

58%

14%

NTC sensor
Multilayer NTC
thermistor

From FY3/25
Introduction of business portfolio
management

Low

Multilayer
ceramic
capacitorThin-film
magnetic
Head

DCDC converter (μPOL)

5%

Bidirectional Converter
Wire wound EMC filter

Lithium-ion battery

Low

Tx coil unit (Plating)

VHS
Radio wave
absorber

Next generation

Strategic restructuring

Businesses tobe intensively
monitored

Ferritecore

Audio
cassette
tape

Wire wound inductor

13%

Film capacitor

Noise suppressing sheetPowersupplyTransformer

Camera module actuator

SuspensionCorememoryDisc type ceramic capacitor

Low
profitability

FY3/25

From FY3/22
Introduction of thematrix for inclined
allocation of capex

Flash memory applied device

Multilayer
inductor

Piezo actuator

Ring varistor

Profit enhancement

Profitability

Challenging

FY3/20PowerHap
PiezoHapt

Edge AITMR sensor

Multi-layer
integrated
device

NTC thermistor

Profitability of thepassivecomponents
business
improved

From FY3/11
Introduction of BizROA (ROIC)

Profit base

Plasma application

MotionsensorThin-film
inductor

Cera Charge

Three-year average
FY3/25–FY3/27

Thin-film RF
component

Multilayer RFcomponent
SAW filter

Optical disk
EMC test
systemFerrite5%

4%Group’scultureBusiness potential

High

Materials × Processes technology
Human capital

Organizational
capability

Customer base24

About TDK

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Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

New Medium-term Plan

Financial/Pre-financial KPIs
The new Medium-term Plan has set the pre-financial KPIs in
addition to the conventional financial KPIs; it is based on theways of thinking to enhance our corporate value throughpursuing not only the financial value but the pre-financial value,
the source of future financial value, and balancing between theachievement of the short to medium-term target and theactivities to continuously generate value in the long-term.
We aim to achieve beyond these KPIs by strengthening
the business portfolio transformation, including addressing
turnaround businesses, and the pre-financial capital, in
addition to ensuring the growth strategies of core businesses.

Our company-wide performance indicators will be
operating profit margin and ROE, unchanged from before,
and ROIC with the aim of improving profitability.
To achieve these targets, we will continue to invest
aggressively in priority growth businesses to improve ourearning capability and accelerate the implementation of
appropriate measures for businesses in need of turnaroundand reinforcement, thereby improving capital efficiency further
and engaging in proactive business portfolio managementwith a heightened awareness of the cost of capital.

FY3/24
Net sales [¥ billion] (CAGR)
ROE
Financial
indicator

Efficiency

Financialsoundness

How we want to be in
the medium-to long-term

FY3/272,103.9

2,500.0 (approx. 5%)(10% or more)

7.9%

10% or more

15% or more

5.3% (<7.0%)

8% or more

12% or more

Operating profit margin

8.2%

11% or more

15% or more

Shareholders’ equity ratio

50%

50% level

D/E ratio

0.4x

0.3–0.4x

BizROA (ROIC) (>WACC)

15

12.0
10

8.0
WACC 7%55.3
0
FY3/24

KPIs in the new Medium-term Plan

GrowthBizROA (ROIC)(%)

FY3/27

How we want to beOperating profit margin
(%)

15.0

15

11.0
10

8.2

5

0
FY3/24

FY3/27

How we want to be

Team member engagement survey
Pre-financial
indicator

Communication score
KPIs

Response rate
CO2 emission reductions*(vs. FY3/22)

67 pts.

75 pts. or more

80%

80% or more

42.9%

23.3%

ROE
(%)

15.0

15

42.0%
10.0

10

Exchange rate assumptions¥144/US$¥135/US$

7.9¥135/US$* SBTi is an initiative that supports companies in setting scientifically based environmental goals. In order to achieve the goal stated in the Paris Agreement of limiting the rise in global averagetemperature to within 1.5˚C compared to pre-industrial levels, SBTi provides companies with criteria that can be used in goal setting. We have set the gradually required CO2 emission reduction
rate calculated based on these criteria as the target for FY March 2027 Plan. However, it is expected that this target will be achieved ahead of schedule in FY March 2024. This is because of
the proactive introduction and promotion of renewable energy (Scope 2). We are currently planning significant production increases and expansion of sites in our Medium-term Plan, and at thispoint, we consider the target to be reasonable. Please note that FY March 2024 Result is estimate amount. Furthermore, TDK has submitted a commitment letter to SBTi and is currently working towards obtaining certification for our reduction targets.

50
FY3/24

FY3/27

How we want to be25

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

New Medium-term Plan

Strengthen Management focusing on Cash Flows
Three-year average operating cash flow target level of ¥340.0 billion
Thus far, we have transformed our business portfolio and increased our earning capability by utilizing organic growth and M&A.
This graph shows our three-year moving average operating cash flow. In the past, this was around 100.0 billion yen, improved to around 200.0 billion yen, and will aim for roughly 340.0 billion yen
during the term of the new Medium-term Plan.
Operating cash flow (OCF) history on a three-year moving average
Revenue sources tobe diversified
OCF supported by rechargeable battery business

Earning source trends
OCF supported by HDD-related business2023
ML automation(Software)
AcquiredQeexo(¥ billion)

2008
Electronic components
Acquired EPCOS

300

250

2015
SensorAcquired
MICRONAS¥340 bnLevel

The small capacity battery business grew

2005
Lithium-ion batteries
Acquired ATL

2024–
Active growth investment

200

2017
The SAW device
business sold to
Qualcomm

2009
Deterioration ofbusiness environment
due to the global
financial crisis

150

100

2002
Deterioration of businessenvironment due to burstof IT bubble

50

0

2017
SensorAcquired
InvenSense and
ICSenseThree-year average
FY3/25–FY3/27

FY3/2000

From FY3/2000
Introduction of TVA (EVA)

FY3/052007
The recording
media businesssoldProfitability of thepassivecomponents
businessdeteriorated
FY3/102022
Established the joint ventures(JVs) with CATL for medium
capacity batteriesProfitability of thepassivecomponents
business
improved

FY3/15

From FY3/11
Introduction of BizROA (ROIC)

FY3/20FY3/25

From FY3/22
Introduction of thematrix for inclined
allocation of capex

From FY3/25
Introduction of business portfolio
management26

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

New Medium-term Plan

Enhancing Business Portfolio Management
Implementing proactive business portfolio
management
Starting in FY March 2022, TDK has stratified approximately
80 cash-flow business units (CBUs) in four segments into six
levels based on two axes—Biz ROA (ROIC) and businesspotential—and has clarified the strengths of investment
allocation to transform and optimize the business portfolio.
With respect to Biz ROA (ROIC), we set a minimum hurdle
rate of 10%, and we invest with priority businesses that clear
this hurdle and have high future potential.
Starting with the period of the new Medium-term Plan(from FY March 2025), we evolved from a two-axis map ofinvestment allocation to a two-axis map of our businessportfolio. We will invest management resources with a focus
on businesses that clear the minimum hurdle rate and are
expected to grow in the future while appropriately monitoringbusinesses that fall below the minimum hurdle rate andregarding which there are concerns about future growth(“Businesses to be intensively monitored” in the businessportfolio map below) and implement prompt measures toachieve a turnaround. We will also investigate the competitive
advantages and sustainability of businesses from a best

Business portfolio map

Proactive business portfolio management

High

Sales proportion (%)

Minimum
hurdle rateover 10%owner perspective and reinforce proactive portfolio
management, even for those businesses with operating profit
margins in the black.
By implementing these measures, we will improve thecorporate BizROA (ROIC), secure permanent surplus
capacity for investment in order to allocate management
resources to growth areas, and improve opportunities for
optimal investment in growth businesses, thereby
reinforcing the balance of the business portfolio throughout
the company.

Profit base

Growing

58%

14%BizROA (ROIC)At the Executive
Committee and the BoD
meetings, discuss
response policy andtimeframe for turnaroundbusinesses based on
10% minimum hurdle rate
and business potential

Implement measures forearly turnaround

Discussion

Implement

Restartinvesting

Improve
BizROA (ROIC)

Profit enhancement

Profitability

5%
Retry
Challenging
13%

Low
profitability

Low

Next generation

Strategic restructuring

Businesses tobe intensively
monitoredLow

No signs ofimprovement

5%

4%

Business potential∙ Biz ROA (ROIC) = Business OP after tax and before distribution of corporate expenses / business assets.
∙ The 10% minimum hurdle rate is calculated, considering the 7% corporate WACC and corporate expenses.

High

Transfer
the business tothe best owner, etc.

Discuss direction ofbusiness at Executive
Committee Meetings

27

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Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

New Medium-term Plan

Enhancing Business Portfolio Management

Audio tape business

Passive components(SAW devices) business

High

High

Sensor application products
business
Divestment

High

2017–
2022–

BizROA (ROIC)

BizROA (ROIC)‘80s

BizROA (ROIC)

Past example
Until now, we have been working to transform and strengthen
our business portfolio through M&A and divestment, taking
into consideration the competitive advantages of ourmanagement resources and industry lifecycles.
For example, we divested our audio tape business in the
2000s. We also achieved a turnaround for SAW devices byintroducing TDK process technologies into EPCOS andincreasing added value. Later, we sold the business to
Qualcomm for about ¥300.0 billion in 2017 from theperspective of the best owner. We then used the proceedsfrom that sale to acquire InvenSense with the aim ofreinforcing the sensor business, and we have expanded andenhanced our sensor product portfolio.

2007–
SAW
devices

‘90s

2022–

2025– 2022–
2015–

TMR
sensors‘00s
Low

Withdrawal Low

Business potential

Low

High

Low

Business potential

Low

High

Low

2017–

Micronas

MEMS
microphone

2017–

MEMS
motionsensors

Business potential

High

Strengthen business portfolio

BizROA (ROIC) by segment
FY3/21Company-wide

Passive Components

5.2%—

Chart for growth and capital efficiency by segment
FY3/24

5.3%
7.7%

15.0%

—

1.2%

8.0%

Magnetic Application
Products—-12.2%

4.0%

FY3/24
EnergyFY3/27
Energy20.0

8.0%

Sensor Application
Products

Energy Application
Products(%)
30.0

FY3/27(target)BizROA (ROIC)

Emphasis on asset profitability
Going forward, we will strive to promote and reinforce
business portfolio management in each of the 80 CBUs withthe objective of improving ROIC in each segment as
indicated in the diagram. Starting in the new Medium-term
Plan period, we will place greater emphasis on asset
profitability by disclosing ROIC target and actual values ineach segment, and in our dialogue with investors, we plan toengage in more specific discussions based on the asset
profitability of each business.
Over the medium to long term, we will implement
measures to enhance profitability relating to magnetic
application products and sensor application products withthe objective of clearing the minimum hurdle rates.

FY3/27
Passive

10.0
FY3/27
Sensor0.0

Minimum hurdle rate
FY3/24
SensorFY3/24
Passive

FY3/27
Magnetic
-10.0

-20.0

—

21.5%

18.0%

FY3/24Magnetic
-5.0

5.0

15.0

25.0

Sales growth (Three-year CAGR)

35.0
(%)

28

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Evolution of the Ferrite Tree
The Ferrite Tree is a concept that expresses the history andtransitions that TDK’s business has continuously undergone
since its establishment with ferrite as its founding business,in other words, the Ferrite Tree represents TDK’s growthtrajectory. TDK’s generations of products are shown linked
by the technology connections of its four majorinnovations—ferrite, audio cassette tapes, fine multilayering
technology, and thin-film head technology. Since thecommercialization of ferrite, TDK’s founding business, theFerrite Tree has grown technology branches and leaves
through the development of materials, processes, andderivative technologies and the expansion of TDK’s businessportfolio through M&A.
By conducting R&D and refining our core technologies,
we will grow the Ferrite Tree even larger.

What is the Ferrite Tree?
• We have gained competitive advantage through the materials and processes technology we have cultivatedsince our founding.
• In addition to R&D, we have strengthened our technologies in sensors and software through M&A.
• Even if we divest or withdraw from businesses, the technologies are accumulated at TDK and applied tocurrent products.

Present

FutureFerrite Tree

Ferrite Tree

New Business

1970s

SAW filter

Ferrite Tree

NTC sensor
Multilayer NTC
thermistor

PowerHap
PiezoHapt

Ring varistor
DCDC converter (μPOL)

Ring varistor

Thin-film
magnetic
Head

Noise suppressing sheet

Wire wound EMC filter
Wire woundinductor

Transformer

Lithium-ion battery
Noise suppressing sheet

Ferritecore

Radio wave
absorber

Tx coil unit (Plating)VHS

Optical disk
EMC test
systemMulti-layer
integrated
devicePiezo actuator

NTC sensor

Human capital

Organizational
capability

Customer base

Bio magnetic sensor
Camera module actuator

Suspension

Flash memory applied device

Film capacitorCorememoryTransformer
Wire wound inductor

Ferritecore

NH3 fuel cell
Noise suppressing sheet
Audio
cassette
tape

Tx coil unit (Plating)VHS
Optical disk

Radio wave
absorber

EMC test
systemFerriteMaterials × Processes technology × Software technology
Human capital

ESS

Lithium-ion battery

Disc type
ceramic capacitor
Power supply

FerriteMaterials × Processes technology

Edge AI

Ring varistor

WPT
DCDC converter (μPOL)

FerriteGroup’scultureThin-film
magnetic
Head

Multilayer
ceramic capacitor

NTC thermistor

Neuromorphic device

Motion sensor

TMR sensor

Multilayer
inductor

Multilayer NTC thermistor

Wire wound EMC filter

Thin-film RF
component
Thin-film
inductor

Cera Charge

Bidirectional Converter

Radio wave
absorber

Wire wound inductor
Transformer

CO2 gas sensor

Film capacitor

Audio
cassette
tapePowerHap
PiezoHapt

Camera module actuator

SuspensionCorememoryPowersupplyBidirectional Converter
Disc type ceramic
capacitor

Multilayer
ceramic
capacitor

VOC multi gas sensor

SpinPD

Multilayer RFcomponent

Cardiovascularmonitoring

Plasma application

Disc type ceramic capacitor

Core memory

SAW filter

Flash memory applied device

Multilayer
inductor

Piezo actuator

InCellSense

FCLM

LN thin-film

Photo acoustic
glucosemonitoring

Edge AITMR sensor

Multi-layer
integrated
device

NTC thermistor
NTC thermistor

MotionsensorThin-film
inductor

Cera Charge
Plasma application

RF devices forquantum computerThin-film RF
component

Multilayer RFcomponent

Organizational
capability

Customer base29

About TDK

Message from the President & CEO

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Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CFO
sites, I intend to strengthen the capability of the entire TDKGroup to create cash flow.

Aiming to further enhance corporate
value by promoting cash-flow
management and business portfolio
management toward realization of ourLong-term Vision

Failure to achieve ROE target due to such factors as
unexpected macro-environmental changes and lagging
improvement of turnaround businesses

Tetsuji Yamanishi
Representative Director,
Senior Executive Vice President,
and Chief Financial Officer

Review of the previous Medium-term Plan

Achieved positive free cash flow after shareholder
returns for the cumulative three-year period
Among the financial targets advocated in the previous
Medium-term Plan, Value Creation 2023, I placed special
importance on achieving a positive free cash flow (FCF) after
shareholder returns for the cumulative three-year period.
Although the achievement of this target looked in danger fora while due to some unplanned expenditures, such as anadvance payment of ¥110.0 billion to ensure the long-term
stable supply of cobalt and other battery materials, we aimed
to maximize the free cash flow through the rigorous selectionof investments and improvement of working capital. As aresult, our cumulative free cash flow after shareholder returns
substantially exceeded ¥50.0 billion, and we were able tomeet the target. The Finance & Accounting HQ greatly
contributed to this serial process of improvement too. In thebattery business especially, the accounting department took
the lead in tackling restructuring, including reduction of
inventory and other assets. These efforts are contributing to
the maintenance and strengthening of stable earning
capability and competitive advantage not impacted bychanges in the business environment. By sharing thesesuccess stories globally with accounting managers at ourOn the flipside, issues remained on the side of profit levels
and capital efficiency. In particular, ROE reached only around
8%, against a target of 14%. I see this outcome as a major
issue. To explain the causes in terms of external factors andinternal factors, the biggest external factor was the sharpchange in the market environment. Because of the COVID-19
pandemic, the supply-demand environment for eachbusiness changed considerably. In particular, the HDD headmarket entered an adjustment phase that was way beyond
our anticipation. Demand in the market as a whole fell a lot,and income deteriorated so much that the HDD headbusiness had to record a deficit.
As for internal factors, it must be said that our capability
to forecast future demand was far from adequate. Regarding
the passive components business in particular, there was aconsiderable downturn compared with initial demand
forecasts, and downward revisions were unavoidable rightfrom the first quarter of the FY March 2024. Furthermore, thefailure of the improvement of turnaround businesses toadvance according to plan was also a major factor. In theprevious Medium-term Plan, we managed investment
allocation by mapping around 80 cash-flow business units(CBUs) in six categories along the two axes of BizROA(ROIC) and business potential. As a result, among the CBUs
identified as turnaround businesses, we were able to decideon our speedy withdrawal from deficit businesses, such as
the suspension application products business. Regarding
such deficit businesses as magnets and MEMS
microphones, however, investment in the update ofequipment and so on was necessary to an extent to meetthe quality requirements of customers, so we were unable to30

About TDK

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Long-term Vision

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Data Section

Contents

TDK Integrated Report 2024

Message from the CFO

achieve an improvement in profitability.

cash flow was achieved, we implemented dividend payout
according to schedule.

Capital allocation in response to environmental
changes and implementation of shareholder returns
as planned
In these circumstances, regarding capital allocation, I thinkwe were able to implement investment appropriately inresponse to changes in the business environment. For
example, actual capital expenditure (capex) amounted to¥785.6 billion, only slightly higher than the initial plan of¥750.0 billion. If the increased portion due to the weak yen is
excluded, it was efficient capex made in response to the
supply-demand environment.
Regarding shareholder returns, the target for cumulative
dividend payout ratio over the three-year period was 30%.
Although profits did not reach the goals set out in theMedium-term Plan, in view of the fact that the target for freeFinancial policy in the new Medium-term Plan

Setting a new target for ROIC and promoting
improvements in capital efficiency
The new Medium-term Plan, which got off to a start in FY
March 2025, uses BizROA (ROIC) as a key financial
indicator; the policy is to disclose it for each businesssegment. TDK has been using this indicator previously to
manage investment allocation to each CBU, but we judgedthat using ROIC also as an indicator to measure theprofitability of businesses and the results of efforts toenhance corporate value was more consistent.
We have set an ROIC target of 8% or more for the final
fiscal year of the three-year Medium-term Plan and 12% ormore as our medium- to long-term aim. The corresponding

Financial KPIs for the new Medium-term Plan
Strengthen business portfolio management
BizROA (ROIC)
FY3/27 target

How we want to be in
the medium to long term

8% or more

12% or more

Free cash flow before shareholder returns
for the cumulative three-year period
Results for the cumulative
period from FY3/22 to
FY3/24

New Medium-term
Plan target

156.0 billion¥¥

260.0 billion

Shareholder returns
Balance sheet structure

Dividend payout ratio

D/E ratio

Maintain

0.3–0.4 times*

1

Shareholders’ equity ratio

30%

50% level

Share buyback*1 If a demand for funds arises due to large-scale investment and lending, etc.,
the utilization of loans exceeding this scope will be considered too.

35%

(5% up)Consideration and implementation offlexible utilization of surplus funds

ROE will be 10% or more in the final fiscal year of the planand 15% or more as our medium- to long-term aim. To
achieve these targets, we will promote the following two
measures. First, we will actively invest in growth businesses
and grow the top line. Second, we will exit from deficit
businesses and endeavor to turn around businesses whose
BizROA (ROIC) falls below the minimum hurdle rate eventhough they are yielding a profit.
Maintaining a D/E ratio of 0.3–0.4 times and securing
surplus capability for flexible funding
In the new Medium-term Plan we assume that the debt-toequity (D/E) ratio will continue to be 0.3–0.4 times. If weassume that the ratio of equity attributable to owners of theparent company is 50% or more and liquidity on hand needsfor 2.5-3 months, I think this level of interest-bearing debts isreasonable. However, if funding becomes necessary forlarge-scale M&A or growth investment, in the future we mayneed to raise the level of interest-bearing debts. Accordingly,
in the sense also of adequately securing funding capability, I
think it is necessary to maintain a level of 0.3–0.4 times.
Promoting proactive business portfolio management
based on two-axis map of ROIC and businessgrowth potential
One major point of regret about the previous Medium-term
Plan is the fact that improvement of the profitability ofturnaround businesses did not proceed as we would have
liked. Among them, there were also not a few cases in which
effective steps toward improvement were not taken becauseof delayed response. In the light of this reflection, our policy inthe new Medium-term Plan is to promote proactive businessportfolio management aimed at taking the necessary steps
and achieving a quick turnaround in the case of not only
deficit businesses, obviously, but also businesses that, even if
they are profitable, do not meet the rules in terms of capitalefficiency and business potential.

31About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CFO

The minimum hurdle rate for capital efficiency, which
incorporates corporate expenses into TDK’s WACC (7%),
has been set at 10%. CBUs that do not meet these rules of
10% ROIC and business potential will be positioned asbusinesses to be intensively monitored. Among them, we
will hold discussions with the responsible personnel in
especially high-priority CBUs and business groups (BGs)
and business companies (BCs) and have them submit
improvement plans. Countermeasures will be implemented
after gaining the approval of the Executive Committee
Meetings (ECMs). Time limits will be set. If improvementtargets are not met within the time limit, we will consider anexit strategy, including transferring best owner. As the CFO,
my important mission is to navigate this process ofbusiness portfolio management, in other words, the series
of initiatives from discussions with CBUs to the careful
examination and approval of their improvement plans,monitoring of the state of implementation, and evaluation, in
a responsible manner.

Business portfolio map

Capital allocation plan (FY3/25 to FY3/27 accumulated)

Focusing on the creation of new growth businesses
and the development of future executives
The improvement of turnaround business alone will lead only
to diminished equilibrium. It is also important to strengthen
the earning capability of current main businesses, create new
growth businesses through backcasting from our Long-term
Vision of “TDK Transformation,” and optimize our businessportfolio. In the new Medium-term Plan we estimate free
cash flow after shareholder returns for the cumulative threeyear period to be about ¥110.0 billion, which is more thandouble the amount actually achieved in the period of theprevious Medium-term Plan. Our policy is to give priority to
the allocation of these funds to growth investment. At thepresent point in time, M&A are not included in the new plan.

(¥ billion)

Sales proportion (%)

High
Minimum
hurdle rateover 10%

Profit base

Growing58%

14%

But if we receive a promising new business plan orinvestment proposal from a business company, we want toimplement it if warranted after careful examination of theplan’s feasibility, potential, profitability estimates, and so on.
Through the implementation of such business portfolio
management, TDK endeavors to strengthen human capital,
which is one of our important pre-financial capitals. For
example, it is the general managers of BCs and BGs whomake presentations to the ECM and so on to explain theirbusiness plans, report on the progress of businessachievements, and communicate important matters, such as
capital investment. But in the case of business portfolio
management, it is mainly the responsible personnel at CBUs
that are the targets of proactive business portfolio
management who are made to explain improvement
measures and the state of progress. Thus, we hope topromote changes in the way of thinking and improved skills

Appropriate capital
policies

Shareholder returns

150.0 (103.4)
Strategic investments

BizROA (ROIC)

5%
Challenging

13%
Low
profitability

Low

Profit enhancement

Profitability

Businesses
to beintensively
monitored

Low

OCF

Enhancement ofcorporate value

150.0 (54.2)

1,000.0

BizROA (ROIC)
8% or more
(WACC7%)Capex(888.8)
Next generation

Strategic restructuring

Passive

5%

4%

Business potentialHigh320.0 (380.1)
200.0 (191.7)
Sensor80.0 (65.2)
Magnetic
60.0 (126.6)
Other
40.0 (22.0)
Total
700.0 (785.6)
EnergyProactive businessportfolio
management*Figures noted in brackets come from the previous Medium-term Plan

Strengthen dialogue withcapital markets• Dividends based on a target payout
ratio of 35%• Consider/implement a return policy if
surplus funds are expected after
considering growth investment needs• When considering strategic
investments, give top priority toinvestments for long-term growth(expansion of existing businesses,
inorganic growth through M&A, etc.)• Acquire long-term growth opportunities
through venture investments• Strengthen investments in corebusinesses• Limit investment in turnaroundbusinesses to renewal projects

32About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Message from the CFO

among CBU personnel and nurture human resources
capable to taking part in management in the future.
Creating about ¥1 trillion in operating cash flow andallocating ¥700.0 billion to capex
Under the new Medium-term Plan, we are scheduled tocreate a three-year cumulative operating cash flow of about¥1 trillion and, of that, allocate ¥700.0 billion to capex.
Specifically, the plan is to invest about 40% of that sum inenergy application products. This means mainly investment
in small capacity batteries for smartphones. The smartphonemarket is not in a situation where the number ofmanufactured units is going to increase greatly, but battery
performance is evolving at a rapid pace, so investment isnecessary for the development and production of new
products. Incidentally, no major investment has beenscheduled for medium capacity batteries, for whichinvestment was finished in the previous Medium-term Plan. In
addition, about 30% is scheduled to be allocated to passive
components, about 15% to sensor application products, andthe rest to HDD-related business and other products.

In the period of the previous Medium-term Plan, themarket environment for HDD-related products deteriorated
considerably. From a long-term perspective, however, thevolume of data generation worldwide is certain to expand
as a result of the increased use of AI and other factors. The
use of flash memory is progressing as a means of
temporarily storing data, but in the long term I think
excellent cost-performance HDDs will continue to be themainstream in the storage of large amounts of data. Goingforward, shipments of magnetic heads for nearline storage
are expected to increase toward a full-scale recovery of
demand during the period of the next Medium-term Plan
and beyond. TDK’s policy is to promote a mass-production
setup targeting demand from leading hyperscalersadvancing investment in AI servers and to actively
implement investment toward HDD-related productinnovations with an eye on the market launch of HDD heads
using heat-assisted magnetic recording (HAMR) technology,
which enables the further high densification of HDDs.

In the market, although our stock price has remained
firm, I think it is still at a low level. Our price-to-book ratio(PBR) is showing signs of improvement too, but it has notreached a point of maintaining a level of 2.0 or more. I think
the main causes, unsurprisingly, are the fact that
improvements in turnaround businesses are not advancing
according to plan and that there are still many businesses
with BizROA (ROIC) falling below the desired level.
In the period of the new Medium-term Plan, we willdefinitely achieve proactive business portfolio management
and steadily raise BizROA (ROIC). As the social
implementation of AI and other state-of-the-art technologies
accelerates, the business opportunities for the TDK Groupshould further expand in the future. To clearly perceive such
trends of the times, and to achieve sustained business growth
and the enhancement of corporate value in the medium tolong term, we will always implement measures looking aheadto the future. I ask for the continued and further support ofour shareholders and investors in this endeavor.

To shareholders and investors

Strengthening shareholder returns by raising dividend
payout ratio from 30% to 35%
In accordance with our recognition that the medium- to longterm enhancement of corporate value will lead to the higher
shareholder value, TDK’s basic policy is to strive toward thestable increase of dividends through the growth of earnings
per share (EPS). As a result of the previous Medium-term Plan,
improvement of our financial condition progressed to a certain
extent. For example, cumulative free cash flow after
shareholder returns turned positive. In view of this trend, inthe new Medium-term Plan we have decided to strengthenshareholder returns with the aim of raising the dividend
payout ratio from the existing level of 30% to 35%. Regarding
cash that remains in surplus even then, while taking the stock
market situation and other factors into consideration, we willconsider further return measures, such as the share buybacks.

Shareholder returns
Annual dividends

Dividend payout ratio

Period of the previous
Medium-term Plan

Period of the new
Medium-term Plan

Dividend payout ratio 30%

Dividend payout ratio 35%

(JPY)

120

106.0

100
80

78.3

35.2

116.0

120.0

60
50

35.3

35.6

60
40

(%)

40
30
20

22.6

20

10

0

0
FY3/22

FY3/23

FY3/24

FY3/25(Projection)

33

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

TDK’s Current Businesses (FY March 2024)

Passive Components
Net sales(¥ billion) /OP margin(%) /ROIC (%)

Net sales

OP margin

ROIC

578.8

507.8

17.0

15.1

16.3
FY3/23Capex (¥ billion)

79.7

Net sales

9.5
7.7

ROIC

180.5

OP margin

248.4

6.3

-0.2
FY3/22

FY3/23Capex (¥ billion)

Number of employees

34.3

34,218 34,522 33,678

FY3/24

FY3/22

FY3/23

FY3/24

Inductive devices
SMD power supply inductors, signal EMC filters,
transformers, ferrite cores, etc.

ROIC

965.3

7,783

7,274 7,567

FY3/22

FY3/23

FY3/23Capex (¥ billion)

52.5

53.8

-28.1

FY3/24

FY3/23

FY3/24

Sensors
Temperature sensors, pressure sensors andmagnetic sensors (Hall sensors and TMR sensors)
MEMS sensors (MEMS motion sensors andMEMS microphones)

FY3/22

FY3/23

FY3/24

Inductive devices
Murata Manufacturing, TAIYO YUDEN,
SEMCO (Korea), Cyntec (Taiwan), etc.

FY3/23

FY3/24

Number of employees

Capex (¥ billion)

Number of employees

13,580175.7

54,288

11,683

41,945 43,198

114.0

23.0

FY3/22

21.5
17.4

12.6

FY3/22

9,297

FY3/24

1,121.7

15.6

12.8

-12.2
-19.3

70.4

FY3/22

FY3/23

FY3/24

HDD-related devices
HDD heads, HDD suspension applications, etc.
Magnets
Ferrite magnets for small motors, neodymium
magnets for xEV drive motors, neodymium
magnets for industrial equipment motors, etc.

Other passive components
High-frequency components (high-frequency
filters, etc.), Piezoelectric material products andcircuit protection components (varistors,
arresters, etc.), anechoic chambers, etc.

Other passive components
Murata Manufacturing, Panasonic,
SUNLORD (China), etc.

OP margin

1,173.4

184.2

-22.0

FY3/22

10.9

FY3/24

200.6

1.8

17.1

FY3/23

ROIC

3.3
3.3
1.2

3.5

-1.2

FY3/24

Capacitors
Murata Manufacturing, TAIYO YUDEN,
SEMCO (Korea), Yageo (Taiwan), etc.

Competitors

Net sales

OP margin

15.1

Capacitors
Multilayer ceramic chip capacitors, aluminumelectrolytic capacitors, film capacitors, etc.

Products

Net sales

169.5

41.6

FY3/22

Energy Application Products

130.8

Number of employees

81.4

Magnetic Application Products

565.6

16.4

FY3/22

Sensor Application Products

FY3/22

FY3/23

FY3/24

FY3/22

FY3/23

FY3/24

Energy devices
Small capacity batteries (for smartphones, tablet
devices, notebook computers, wearable devices,
game consoles, etc.), medium capacity batteries(for residential energy storage systems,commercial energy storage systems, electricmotorcycles, drones, power tools, etc.)
Power supplies
Programmable power supplies (for inspecting),
POL converters, switching power supplies (AC-DC,
DC-DC), automotive DC-DC converters, etc.

Sensors
Bosch Sensortec (Germany),
STMicroelectronics (Switzerland),
Infineon (Germany), Allegro (USA),
Melexis (Belgium), Asahi Kasei Microdevices,
Shibaura Electronics,
Amphenol Corporation (USA),
Sensata Technologies (USA),
Murata Manufacturing, etc.

HDD magnetic heads*1
Seagate Technology (USA),
Western Digital Technologies (USA)HDD suspension applications
NHK SPRING, etc.
Magnets
Shin-Etsu Chemical, Proterial,
ZHONG KE SAN HUAN (China), etc.

*1 TDK is the world’s only specialized manufacturer of HDD magnetic heads. HDD magnetic head production is currently concentrated at three companies: TDK, Seagate, and Western Digital.

Energy devices
Samsung SDI (Korea),
LG Energy Solution (Korea),
Murata Manufacturing, Panasonic,
BYD (China), etc.
Power supplies
Delta Electronics (Taiwan),
Advanced Energy (USA), XP Power (Singapore),
MEAN WELL (Taiwan), Cosel, etc.

34

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Strategy by Segment
functions in Europe and Japan to reinforce quality andmanufacturing and raise production efficiency.

Passive Components
Taro Ikushima
CEO, Electronic
Components
Business Company

Net sales and Biz ROA (ROIC) targets
Net sales (¥ billion)
OP margin (%)

CAGR

Biz ROA (ROIC) (%)

578.8

507.8
16.4

5–8%

565.6
17.0

15.1

15.0

To-be in the long-term

9.5

16.3

7.7
FY3/22

FY3/23Growth strategies• Further strengthen high-reliability products for powertrains• Launch new products for ADAS use• Optimize investments and manufacturing sites in line withmarket growth• Improve quality and productivity• Combine materials and optimal production methods, e.g.,
winding, layering, and thin-film technologies

FY3/24

FY3/25

FY3/26

FY3/27

Measures to improve net sales and Biz ROA (ROIC)Net sales• Expand sales due to advances in xEVs and ADAS• Expand sales due to the recovery of demand inindustrial equipment markets

Biz ROA(ROIC)• Increase profits by expanding the capacity andincreasing sales of high-value-added products• Investment amounts to remain flat from the previous
Medium-term Plan

Priority products and estimated market share
Ceramic capacitors
for automobiles
Film capacitors
Inductors EMC filters

35–40%
15–20%
45–50%

Varistors

55–60%PTC Thermistors

50–55%

2
Share No. 2
Share No. 1
Share No. 1
Share No. 1
Share No.

The electronic components business environment is in the
midst of a period of great change. As the social transformation
including GX and DX undergoes, the electrification of
automobiles will advance and generative AI, which is rapidly
proliferating, will be introduced to smartphones and PCs in
the future, making these devices even smarter. In addition,
robots and renewable energy will likely become morecommon. We will take this time of change as an opportunity
to provide to the world products that can contribute to theautomobiles and devices of a new era.
Our core competencies are electronic materials
technologies and production process technologies, andwe will maximize our strengths by integrating these withdigital technologies. To do this, we must transform
ourselves. We will reorganize our development
organizations for new technology and establish adevelopment structure that spans departments so that we
can anticipate customer needs and seeds and quickly
develop and product while sharing information globally. In
addition, we will optimize operations by introducing new
supply chain management systems and reorganizing
production sites while taking into consideration responses
to geopolitical risks. We will also establish data analysis

Competitive advantage• Combination of materials and processes technology• Long-standing quality track record in the automotive market• High-reliability eco-friendly technologies, e.g., high-temperatureand high-voltage• In-house production engineering technology

Business opportunities• Increase in added value and number of components due to theprogress of xEVs and ADAS of vehicles• Increase in demand for low power consumption passive
components, e.g., AI servers• Increase in demand for high value-added custom products forindustrial equipment use

Risks and issues• Catching up technologically by passive components
companies in China and other Asian countries• Unpredictable price fluctuations in energy, raw materials, anddistribution costs• Geopolitical issues

35About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Strategy by Segment Passive Components Segment

Market growth

The market for automotive passive components is expected
to grow with a compound annual growth rate in excess of
12% on a value demand basis. We expect solid growth indemand for MLCCs as well as inductors, piezoelectric
protection components, and other components.
Estimated market demand for automotive
passive components
CAGR 12%High Voltage
Contactor
Piezo
Protection

TOPICS
New needs for passive components in AI markets
In conjunction with the rapid development of AI, the AI
computing market is expected to undergo substantial
growth in the future. In this market, the demand isincreasing not only for software including AI services, butalso for hardware, such as the electronic components usedby processors and peripheral devices, and in 2030, we
expect the growth rate to exceed 36% compared to 2023.
Growth of the AI computing market

Inductor

SoftwareHardwareService(10 USD billion)

1,500
MLCC

FY3/23

FY3/24

FY3/25

FY3/26

FY3/27

FY3/28

FY3/291,000(TDK forecast)

There are also expectations that the number ofcomponents used in xEVs will increase steadily. In tandemwith this trend, we will substantially increase our production
capacity for our main products including MLCCs and film
capacitors to steadily meet this demand.
Number of components usage per gasoline vehicles vs. xEVs

ICE

HEV

PHEV

BEV

MLCCs

5,000

6,000

8,000

10,000Inductors

450

600

650

700

Piezoelectric
Products

100

140

160

180

HardwareCAGR 36.8%

include, for example, an increase in vertical power supply
methods, where the power supply and electronic
components are placed directly under the processor, andintegrated voltage regulators (IVRs) that are mounted on
the board.
If these new technologies can be achieved in the
future, we expect that power loss will be reduced by theequivalent of several nuclear power plants compared toconventional power supply methods.
These new technologies will require ultra-compact andultra-thin electronic components, and for this reason, TDK
is developing next-generation inductors that use thewinding, multilayering, and thin-film technologies andmultilayer thin-film capacitors, which we have developed
over many years so that we can respond to these needs.
Horizontal power supply method(conventional method)

Processor

500
VR

VR

PCB
0

2023

2030

(TDK forecast)

As the performance of the processors used in AI servers
improves, the electricity consumption of and the amount ofheat generated by power supplies are also expected toincrease greatly. To solve these issues, TDK is conducting
research on next-generation power supply methods thatcan save energy by reducing resistance component.
Until now, a horizontal power supply method where
electronic components are located around a processor
was the mainstream. We believe that future trends will

Vertical power supply method(next-generation method)VR

Processor

VR

PCB
VR

IVR (next-generation method)
VR

PCB

VR

ProcessorVR

36

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Strategy by Segment

TDK’s production technologies, know-how, and humanresources, while also promoting a production base strategy
to bolster cost competitiveness and the supply chain.

Sensor Application Products
Takao Tsutsui

Net sales and Biz ROA (ROIC) targets
Net sales (¥ billion)
OP margin (%)

CAGR

8–11%

CEO, Sensor
Systems BusinessCompany

Biz ROA (ROIC) (%)

180.5

169.5
130.8
6.3

-0.2
-1.2

FY3/22

3.5
FY3/23

8.0

3.3
1.2
FY3/24

FY3/25

FY3/26

FY3/27

Measures to improve net sales and Biz ROA (ROIC)Net sales• Increase sales due to increased demand for TMR
sensors• Expand sales of MEMS microphones

Biz ROA(ROIC)• Increase earnings from TMR sensors• Improve profitability of MEMS sensors• Improve earnings from temperature andpressure sensors• Increase investment amounts from the previous
Medium-term Plan

Priority products and estimated market share
Temperature sensors

35–40%

Share No.

1

Magnetic sensors

20–25%

Share No.

3

MEMS Motion sensors

15–20%

Share No.

3

To-be in the long-term
In Sensor Application Products segment, we have set aLong-term Vision of: “Create different and Connect” (create
things which differ from those that have come before; andactively connect all things to each other). We will repeat thecycle of “market-in,” to apprehend the needs of the market
and of our customers, followed by “concept-out,” to delivercustomized solutions at the concept level, to make a realityof being “first-to-market.” We will meanwhile strive to achieve
improved margins by also putting into practice rigorouscompany-wide “quality first.” Specifically, with the aim ofdelivering products of value that satisfy the needs of ourcustomers, we will expedite the market launch of products,
including offering them in both single sensor and user-friendly
sensor modules. TDK has furthermore begun to offer
high-precision position sensors that combine a TMR sensor
with a MEMS motion sensor, utilizing TDK’s magnetic
technology, to apprehend the needs of customers seeking
high-precision position detection.
We are moreover endeavoring to create an organizational
structure oriented around the market, to achieve prompt
market-in as part of our own transformation. In addition, weare actively planning to enhance our Monozukuri(manufacturing excellence) capabilities by fully leveraging

Growth strategies• Establish a “market-in” business approach, which captures
market/customer needs to achieve “first-to-market,” and a“concept-out” approach, which provides solutions based on
concepts• Expand collaboration with technology leaders and gamechangers that drive the industry forward• Optimize the internal resources by transformation oforganization structure
Competitive advantage• TMR technology derived from long accumulated magnetic andthin-film technologies• Temperature sensors with top share in the automotive market• Our unique production methods, materials and processes
technologies• MEMS design technology and magnetic circuit design
technology• IC design capabilities of IC Sense and InvenSense, including
expertise of sensor characteristics• Product development capabilities by combining sensors andsoftwareBusiness opportunities• Increased demand for sensors due to the utilization of AI• Increased business opportunities due to electrification of vehicles• Establishment of top position leveraging the cooperative
relationships of existing and new businesses
Risks and issues• The rise of new competitor companies• Unpredictable price fluctuations in energy, raw materials, anddistribution costs• Geopolitical issues

37About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Strategy by Segment Sensor Application Products

Market-in/concept-out business approach

TOPICS

Market-in
SystemExpansion of sensor products into
the automotive market
TDK sensor products are deployed in a range of applications.
Among these, we are seeing the expansion of applicationsof TMR sensors, as well as temperature and pressure
sensors, into the automotive market.

ModuleCustomers

TDK

Parts

Material

Concept-out

Market growth

TDK estimates that demand for sensor components will growat a compound annual growth rate of 6% in line with thegrowing demand for EX and DX. By market, we estimate thatgrowth in the automotive, ICT, and industrial equipment
markets, will respectively progress in the manner illustrated in
the below graph.
Sensor demand estimate by industry

TMR sensors
Demand for TMR sensors can be expected to increase inline with the electrification of automobiles, including theshift to xEVs. We are also utilizing technology developed in
products for the ICT market
to develop products for the
automotive market, and havefinalized an augmentationof the Asama Techno
Factory to enhance our
production system.
Expansion of Asama Techno Factory
Examples of automotive products in use

Our sales target
CAGR 8–11%

Demand CAGR 6%
Ind & HAe-axle / Traction motor• Motor angle sensor

Temperature and pressure sensors
For xEVs, thermal management systems to control thetemperatures of various vehicle components have become
extremely complex. This is because there is a greater needthan is the case in engine vehicles to better regulate heatto realize comfortable driving conditions while conserving
battery power. In line with progress in the shift to xEVs,
opportunities for TDK temperature and pressure sensors
to contribute are expanding.
For example, unlike conventional air conditioning
management in vehicles, BEVs require a heat pump thatuses the properties of liquids and gases—namely the facttemperatures will rise in response to increases in pressuresand fall when pressure is reduced—to adjust the temperatureof the coolant, which serves as the medium for heattransfer. TDK temperature and pressure sensors may be
deployed to fulfill this role, due to the necessity to control
the temperature of this heat pump using pressure.
In addition to the above, it is anticipated thattemperature and pressures sensors will be deployed in avariety of other applications, including battery
management systems.

EPS steer by wire
• Steering angle sensor

ICT

Automotive
FY3/23(TDK forecast)

FY3/24

FY3/25

FY3/26

FY3/27

FY3/28

FY3/29Operations at factory in Hungary(temperature sensors)

Battery management system
On board charger (OBC)
Invertor• Current sensor

Electric mechanical brake system• Angle sensor for brake motor

38About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Strategy by Segment

Growth strategies

Magnetic Application Products

Albert Ong
CEO, Magnetic
Heads BusinessCompany

Net sales and Biz ROA (ROIC) targets
Net sales (¥ billion)
OP margin (%)

CAGR

Biz ROA (ROIC) (%)

248.4

200.6

8–11%

Competitive advantage

184.2

4.0

3.3
1.8

-22.0
-28.1

FY3/22

FY3/23-12.2-19.3
FY3/24

FY3/25

FY3/26

FY3/27

Measures to improve net sales and Biz ROA (ROIC)Net sales

Biz ROA(ROIC)• Recovery of data center demand• Continued expansion of near-line HDD market• Profitability improvement of HDD heads andsuspensions• Improved productivity of magnets• Curtailment of investment fromthe previous Medium-term Plan
• No new investments, only renewals

Priority products and estimated market share
HDD heads
HDD suspension
assemblies

20–25%
40–45%• Maintain MAMR technology leadership, accelerate developmentof HAMR technology, and prepare for mass production• Optimize production capacity and operations• Strive to increase market share of Tri-SA suspensions to
support high capacity near line drives

Share No.

3

Share No.

1

To-be in the long-term
Magnetic Application Products business’s mission is clear: tomaintain its status as the premier independent manufacturer
in magnetic head storage, meeting the demands of thelarge-capacity data storage era. Our vision encompasses
restoring profitability and ensuring business sustainability,
advancing innovative technologies, particularly in
Heat-Assisted Magnetic Recording (HAMR) magnetic heads,
and scaling up of Tri-SA suspension shipments. Moreover, as
for our efforts to deepen digital transformation, we’reenhancing our data analytics and mining capabilities, andintegrating them into our development and production
processes to drive efficiency and innovation.
In FY March 2024, we saw a sudden slowdown in themarket, but the data center market also appears to bebottoming out, so we expect the market see continued
growth in the future. We will improve profitability by gradually
increasing the mass production ratio of high value-added
products such as Microwave-Assisted Magnetic Recording(MAMR) technology while also incorporating the benefits of
the restructuring implemented during the previous
Medium-term Plan.

• Ability to continuously develop and mass produce newtechnology products• Optimize production capacity and operations by continuously
working on automation and increasing the use of big data

Business opportunities• Increase in demand for data storage due to the progress of AI
technologies and the spread of cloud services• Leading in medium- to long-term innovation in cutting-edge
technologies

Risks and issues• Curbs on investments in data centers and storage• Cost reductions due to SSD technology innovations• Unpredictable price fluctuations in energy, raw materials, anddistribution costs• Geopolitical issues

39About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Strategy by Segment Magnetic Application Products

Market growth

Demand for Head Gimbal Assembly (HGA) bottomed out in
FY March 2024, and will have a tendency to increase in themedium- to long-term due to an increase of the amount ofdata transaction generation and an expansion of HDD
storage volume. With suspensions as well, demand for the
Tri-SA system is expected to increase by roughly three times
due to an increase in high-capacity models.
HGA demand forecast
Enterprise

Nearline

3.5"

2.5"
(M Head)FY3/23

FY3/24

FY3/25

FY3/26

FY3/27

FY3/28

FY3/29(TDK forecast)

Tri-SA suspension demand forecast

TOPICS
The evolution of technologies in HDD heads andsuspensions
TDK has developed innovative head technologies over theyears. In 1987, we developed the thin-film magnetic head,
which significantly increased recording density overconventional heads. In 2005, we commercialized thePerpendicular Magnetic Recording (PMR) head, which brokethe density limitations of Longitudinal Magnetic Recording.
The Perpendicular TMR head, which incorporates
high-sensitivity TMR technology, has pushed recording
densities even further, enabling higher-capacity HDDs.
On the other hand, with the higher-capacity HDDs,
the size of a recording bit within therecording (magnetic) layer has become sosmall that writing using current magnetic
head technology is approaching the limitsof physics. Two recording technologies isavailable to solve this problem: MAMR and
HAMR. In the near future, the movementof mass production of HAMR is expected to realize as
seen in the HDD technology roadmap below. We will
accelerate to develop HAMR towards the full-scale ofmass production.
In suspension products, the Dual Stage Actuator(DSA) system used to be the mainstream, gradually shifting
toward the Tri-SA system.
TDK will put next generation Tri-SA suspensions forhigh-capacity nearline HDDs on the market to expand
further its share.

MAMR and HAMR, next generation magnetic recording technologies

HDD technology roadmap(Mpcs)

Reader

TDMR
TMR
HAMR

Head

MAMR

WriterSMR
PMR

Suspension
FY3/23(TDK forecast)

FY3/24

FY3/25

FY3/26

FY3/27

FY3/28

FY3/29Tri-SA
DSA
2014

2016

2018

2020

2022

2024

2026

40

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Strategy by Segment

Growth strategies

Energy Application Products
Fumio Sashida
CEO,
Energy Solutions
Business Company

Net sales and Biz ROA (ROIC) targets
Net sales (¥ billion)
OP margin (%)
Biz ROA (ROIC) (%)
Effect of material price reduction

1,173.4
965.3

CAGR

2–5%

Competitive advantage

1,121.7
21.5

15.1

To-be in the long-term

15.6
18.0

17.4
12.8

FY3/22

12.6

FY3/23

FY3/24

FY3/25

FY3/26

FY3/27

Measures to improve net sales and Biz ROA (ROIC)Net sales• Expand small capacity battery high-value-added
products• Expand medium capacity batteries business

Biz ROA(ROIC)• Maintain and improve profitability of small capacity
batteries• Increase earnings from medium capacity batteries• Optimize business assets including investments

Priority products and estimated market share
Small capacity
batteries
Power supplies
for industrial use

50–60%
15–20%• Maintain and enhance top position in the market for small
capacity batteries by continuous development of cutting-edge
technologies• Establish the top position in the medium capacity battery
market as a supplier• Further enhance market competitiveness by strengthening
differentiation technologies and cost competitiveness

Share No.

1

Share No.

1

In our energy application products segment, we seek tocontribute to “TDK Transformation” in two fields. The first is
our contributions to achieving a sustainable society that giveconsideration to the environment, such as GX and EX. In our
medium capacity batteries business, we will push forward on
expanding our energy storage system (ESS) for commercial
and industrial use and promote making renewable energy themain source of power. In our industrial power-supply
business, in addition to our existing product portfolio, we will
expand our renewable energy and battery-related products.
With respect to the electrification of vehicles, we will create
the infrastructure for a full-scale launch of batteries forelectric motorcycles.
Second is our contribution toward transforming people’s
lives into ones that are better and richer. The silicon
anode-using lithium batteries that TDK has developed were
installed in smartphones for the first time in the world last year.
It is a technology that achieves higher energy density
compared to conventional batteries, and can provide one
with a real sense of how smartphones are lighter and thinner.
By using innovative new technologies of this sort, we hope todeliver a new user experience to the world.

• Ability to develop cutting-edge technologies as a technology
leader in the industry• Capability of management transformation based on “Capability
to envision the future” and “Capability to execute”• High-reliability mass production technology, thorough safety
risk management• Cost optimization technology and production engineering
technology capabilities• Broad customer base and long-term partnerships
Business opportunities• Further expansion of applications requiring high-performance
rechargeable batteries• A boost in the high-end smartphone market due to the
expansion of high-function devices, such as foldable
smartphones and AI smartphones• Increased added-value in LIB due to silicon anodes and othernew differentiation technologies• Expansion of the storage battery market and demand for
related devices due to the accelerated introduction ofrenewable energy (rechargeable battery and industrial power
supply businesses)• Local demand increase in growth markets such as India
Risks and issues• Uncertain supplies of raw materials and semiconductors due tosharp expansion of the EVs and renewable energy markets• Unpredictable price fluctuations in energy, raw materials, anddistribution costs• Geopolitical issues

41About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Strategy by Segment Energy Application Products

Small capacity batteries growth strategy
With regard to small capacity batteries, we will support theevolution of small electronic devices such as smartphones
through advanced and innovative technologies.

1. Offer new value through innovative technologies

Road map of energy density

ED (Wh/L)

3. Maximize business value by strengthening the value chain

With regard to materials procurement initiatives, we will
work to strengthen our value chain and maximize businessvalue, including strategic initiatives such as investments inmaterials suppliers.

In the area of medium capacity batteries, we will pursue thefollowing three core values to attain in the medium to longterm our target position of being number one in the world:
Medium capacity battery market demand growth
Our sales target
CAGR 20%

Conventional products

2020

2021

2022

2023

2024

2025–

CAGR 10%

FY3/23

FY3/24

FY3/25

FY3/26

We aim to expand our market share with technology andproduct strategies that further increase customer value. In
particular, for the ESS market, we aim to expand our market
share with extremely long-life (20 to 25 years) span products
based on the life spans of solar power panels and for powerdevices, Jumbo-Power, which provides high output power.

100%
90%

New products

80%
70%
60%

Conventional products
0

5

20

25

30

FY3/27

FY3/28

FY3/29We will work to expand the capacity of new manufacturing
sites to meet demand and sales growth going forward, with
our goal of cementing our status as number one in theindustry in terms of Q (Quality), C (Cost), and D (Delivery).

(TDK forecast)

1. Superior Customer Service

Phase 1

15

Years

India new factory overview

India new factory
Phase 1 construction progress10

3. Operational excellence(Year)

2. Implement a China plus one strategy in view of
geopolitical risks

2. Technology Advancement

Comparison of retention of discharge capacity and life span

Medium capacity batteries growth strategy

Silicon anodes

technologies and product platforms is one of our strengths.

Retention of discharge capacity(%)

We will enhance the user experience through advanced
technologies. Specifically, silicon based on a new structure
will improve stability during charging and discharging.
Increasing the silicon content to improve energy density is
conducive to such purposes as downsizing and loweringprofiles as well as longer periods of use.

In India, we began the pack production process for batteriesin 2017. In 2022, we also started cell production. In 2025,
we plan to begin production in Sohna, India.

TDK is targeting the markets for such applications as ESS,
electric motorcycles, and power devices (such as drones).
Our ability to deliver products tailored to the needs of ourcustomers and the characteristics of devices thanks to being
able to draw on a broad range of aspects as our materials

Manufacturing site in Xiamen, Fujian

42About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Pre-financial Capital that backs TDK’s Value Creation
Just as its roots below the ground are vital for a tree togrow, so the enhancement of pre-financial capital, such astechnological capability, human capital, organizational
capability, and customer base, are important for the further
substantial evolution and growth of the ferrite tree. The
technological capability, organizational capability, andcustomer base we cultivate for the success of a single
business, including some failures, are shared across thecompany and inherited for the next opportunities.
Also, at the foundation of the pre-financial capital is ourGroup’s culture we have embraced since our founding, our

venture spirit and a functional equality. Functional equality is
one of our values to encourage discussions in an open andequal atmosphere, based on functions (roles) rather thanhierarchy. Have the courage to take on new challenges andembracing a functional equality. Encourage open discussion
as equals regardless of role or title and respect the existing
cultures of the companies we acquire. Learn from each otherglobally and generate a unique synergy. By valuing thisculture, we have successfully created innovative new
products throughout the years.

Our thinking regarding pre-financial capital
At TDK, corporate management must pursue more thanfinancial value. It is also critical that we increase ourenterprise value by balancing ESG and other activities thatgenerate pre-financial value. TDK considers technologicalcapability, human capital, organizational capability, andcustomer base and so on, which are called “non-financial
capital” in general, to be capital that generates future cash
flows and expresses it “pre-financial capital.”

New BusinessTechnological capability

RF devices forquantum computer
Photo acoustic
glucosemonitoring• Continuously evolving the
Ferrite Tree

InCellSense• Highly refined manufacturing
technologies

Plasma application
VOC multi gas sensor

NTC thermistor

Bidirectional Converter• Over 100,000 team members,
about 90% of whom work overseas• Appointing members to important
positions, including came fromacquired and other companies

Motion sensor

Edge AI

Multilayer
inductorThin-film
magnetic
Head

Camera module actuator
Suspension

Flash memory applied device

Film capacitorCorememoryMultilayer
ceramic capacitor

Transformer
Wire wound inductor

Ferritecore

ESS

Organizational capability

Lithium-ion battery
NH3 fuel cell

Disc type
ceramic capacitor
Power supply

page 51

Bio magnetic sensor

Ring varistor

WPT
DCDC converter (μPOL)

Wire wound EMC filter

Neuromorphic device

TMR sensor

Cera Charge

Multilayer NTC thermistor

Human capitalThin-film RF
component
Thin-film
inductor

Multi-layer
integrated
devicePiezo actuator

NTC sensor• Deep connections to the world’s
leading customers (High share of
the global market)

SpinPD

Multilayer RFcomponent

PowerHap
PiezoHapt

CO2 gas sensor

pages 29, 44

SAW filter

Cardiovascularmonitoring

Customer base

FCLM

LN thin-film

Tx coil unit (Plating)• Sustainability activities

Optical disk

• DX initiative

Noise suppressing sheet
Audio
cassette
tape

VHS

Radio wave
absorber• Group governance

EMC test
systemFerriteGroup’s culture

Materials × Processes technology × Software technology
Human capital

page 52• Unique Group’s culture, such as
venture spirit and permeating the“functional equality.”

Organizational
capability

Customer basepages 58, 67, 68

Value creation process through pre-financial capital (Examples of the sensor business)
Technologicalcapability
Apply world-class thin-film
and magnetic technologies
and develop throughbehind-the-scenes research

Organizational
capability
Take on numerous challenges
with our venture spirit

Evolving and expanding
the Ferrite Tree

Technological capability/
organizational capability

Human capital/organizational capability

Organizational capability/
human capital

Identify and M&A with unique
technologies
Respect acquired companies’
culture and diversity

Diverse team members workaround the world
Fusion through “empowerment”
and “functional equality”

Introduce TDK Quality
into acquired companies
Strengthen the global
HR system

Sharing successes
and failures

Promoting team members fromacquired companies

Implementing global
management

Customer base
Suggestions and feedback
from worldclass customers

Detecting trends

43About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CTO

Our goal is to become the No.1 partner
contributing together with our worldwide
customers toward realizing a sustainable
future by putting a further polish on our coretechnologies for Monozukuri
Shigeki Sato
Director, Senior Vice President,
Chief Technology Officer, andGeneral Manager of Technology andIntellectual Property HQchanges and increasing sophistication in the technologicalrequirements of our customers, and we have broken groundon new product domains.
One of the leading examples is our battery business,
which has grown into the Group’s largest business. A major
key of the innovation of film-type lithium-ion batteries, which
TDK has made practical use, is the mixing and coating
technologies used to form electrodes on ultrathin sheets.
That in turn is a further advance on the technologies TDK
had cultivated for years in the cassette tape business.
Magnetic sensors are another product that is a TDK forte.
The unique materials and process technologies used forthese are further refinements of the technologies wecultivated with magnetic heads for hard disks.
Furthermore, TDK has developed the new nine-axis
sensor by combining this magnetic sensor technology withthe six-axis motion sensor technology of North America’s
The five core technologies supporting TDK’s Monozukuri

Putting a further polish on the technology platformthat is a TDK forte
TDK has declared in our Long-term Vision “TDK Transformation”
that we will “become the No.1 partner growing alongside ourworldwide customers by pursuing continuous transformation,”
As CTO, I believe that putting a further polish on thetechnology that above all is a TDK forte is crucial towardmaking that statement a concrete reality. Our greatest
technological strengths lie in materials, but that is not limited
solely to our capability to develop and manufacture superiormaterials. The very fact that we have strengths in coretechnologies related to Monozukuri (manufacturing
excellence) in the forms of the know-how about how to usematerials based on a deep understanding of their physicalproperties and the process technologies for getting the mostof the materials’ physical properties makes it possible for us
to propose technologies that will help our customers to set
their products apart.
Another major advantage is that we can develop a wide
range of products by structuring these technologies as atechnological base and platform, rather than hanging on tothem as individual elemental technologies. These technologies
include materials technology sourced from ferrite; process
technology including thin film deposition, multilayer process,and micro-fabrication; evaluation and simulation technology forrealizing smooth development; product design technology for
integrating multiple components to achieve high performance;and production engineering technology that provide for stablemass production. We at TDK have effectively used theseplatforms to quickly deliver solutions that respond to theMaterials technology
The culmination of 89 yearsof experience and know-how
of material design andultra-fine structure

Evaluation & simulation
technology
is applied to accurately
measure and analyze
ultra-fine structure andnoises by electronic
devices

Evaluation &Simulation

Materials

Core
technologies
Product
DesignProduct design
technology
combines expertisewith innovation tocreate new ideas

Process

Process
technology
realizes control
on thenanometer level

Production
Engineering

Production engineering technology
Outstanding technology
to develop and produce
the machines of theoriginal design

44About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CTO

InvenSence, a company that TDK acquired in 2017. The factthat these can detect absolute position and direction on theirown means there is no need for an external motor controller
or CPU to do the calculations, enabling smaller sizes andpower savings. TDK plans to develop them as essential, key
parts for the AR/VR goggles that are expected to serve as
the information devices that will come after smartphones, aswell as for robot controls and so forth.
Thus, at TDK, we have refined the technologies
developed in one of our businesses to create a platform, andwe have managed to develop more advanced new products
and new technologies. In order to further strengthen thesetechnology platforms, we need to first further refine
technologies for materials, processes, and the like in eachbusiness division. In addition, as CTO and general managerof the Technology and Intellectual Property HQ, using thefollowing three approaches I intend to accelerate thedevelopment of our technology platforms.
The first is to search for and take the lead in developing“Disruptive Technology” that could possibly replace current
products and technologies. For example, in the field ofrecording media, as a result of technological innovations,magnetic tape has been replaced with various anchor
products including optical media, followed by HDDs, SDDs,
and so forth. The crucial thing is to recognize these signs andprepare the next move in advance so that one can accurately
respond to these changes in technological trends and market
demands. I believe that, even if a given product is one forwhich TDK holds the largest market share, at the same time
we have to do research and development on newtechnologies whose impact may be so much that we need toterminate that product in the future.
The second is our response to cutting-edge technologies.
For example, we will research how new technologies such as
AI, AR/VR, and digital twinning can be incorporated into
existing TDK businesses, and move forward with preparations
for advancing into new technological domains.

The third approach is to further advance the analyticalevaluation and simulation technology that is also a part of ourcompany-wide technology platforms. It is necessary for us todevelop a more substantial environment for realizingsmoother technological development in each businessdivision. By steadily carrying out these measures, I hope that
we can turn TDK’s technological advantages into something
more rock-solid.
Getting market-in concept to permeate into anorganization that is technology oriented, andstrengthening the capability to envision the future
Another crucial point when it comes to realizing “TDKTransformation” is strengthening our capability to envision the
future. TDK is a company that has grown making use of its
technological capability, and is one where the “technologyout, product-out” orientation remained strong. One of ourgreatest strengths has been that not only our engineers but
also top management and staff from sales and administrative
divisions were quite familiar with the technologies, used thatto come up with strategies, and were able to understand theissues facing our customers. However, with such changes tothe environment as a worsening of the climate change
problem and the digitalization of society accelerating, we will
have to not only understand the issues that our customers
face today but also their visions for the future. If we do notwork together with our customers to envision and then makepractical the products and technologies needed to realize asustainable future, we will not be able to “become the No.1
partner growing alongside our worldwide customers by
pursuing continuous transformation.”
In 2021, we established our Corporate Marketing &Incubation (CM&I) HQ, a cross-business organization meant tofurther strengthen this market-in concept. CM&I HQ sweeps its
antenna across TDK’s wide-ranging markets, customers, andproduct applications while also making use of information about
the latest technological trends obtained from TDK Ventures,

which is our corporate venture capital firm investing globally,
to search for themes for new product and technologicaldevelopment to respond to changes in the environment.
By strengthening collaboration among divisions including
the CM&I HQ and our technology divisions going forward, we
will percolate this market-in concept throughout the company
and further strengthen our capability to envision the future as
the TDK Group. We will also establish a framework wherein
our human resources performing their various functions froma variety of countries and regions work together, where theyenvision the future together with our customers from bothtechnology and market perspectives, and where they
promote new business development and innovation.
Strengthening our capability to respond to software,
realizing better solutions to our customers’ issues
Strengthening our capability to develop software will also be
a major issue going forward. To date, TDK has grown as a
hardware manufacturer that develops and supplies
electronic devices and the like. However, as our customers’
needs have grown more sophisticated and diverse, in recent
years there have been more and more cases where rather
than only devices we are delivering modules that incorporate
software into devices or multiple devices and systems withmodules installed.
For example, a temperature sensor is a device that
detects temperatures changes as a change in a resistance.
However, the function that our customers need is not that
resistance but rather of a specific temperature display, as they
will take whatever actions in conjunction with temperaturechanges. In order to realize such functions at a higher level
and realize better solutions to our customers’ issues, rather
than just supply individual devices we need to have thecapability ourselves to also develop and supply software thatgets the most out of those devices’ performance.
Of course, to accomplish this we need to research tograsp what sorts of functions our customers want from our45About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CTO

devices now and what sorts of functions they will want in the
future. Furthermore, we still have insufficient numbers ofsoftware engineers in the Group. Our plan is to push forward
to achieve a balance between strengthening such researchand broadening our software development system.
Furthermore, I believe that not only our software engineers
but also the engineers responsible for designing the devices
themselves and developing the materials for them will need tofurther hone their knowledge and skills regarding software.
This is because, in order to provide our customers with better
solutions, it will be crucial for our hardware and software
engineers to think together not about developing hardware
and software separately but rather how to design them as a
total system. They will need to design hardware and develop
materials that anticipate the software that will be installed.
Making effective use of our IP landscape, andstrengthening IP intelligence functions
Essential to TDK maintaining and strengthening its
competitive advantages in the market is making effective
use of its intellectual properties, including patents. In
response to the globalization of our businesses and R&D,
we have established intellectual property divisions at ourbusiness companies in each region. Each businesscompany works together with our corporate intellectual
property divisions on patent applications and intellectual
property management in accordance with the businesscharacteristics and laws and regulations of each region.
Furthermore, we have introduced our “IP Landscape” as atool for not only “protecting” our technologies andbusinesses through intellectual property, but also for“proactive” that apply intellectual property information
toward future business growth. Rather than being a simple
patent map, this is an analytical tool that superimposes
information about technology trends in the market, trends
among competitors, our own business and productroadmaps, and so forth. It is used at management level forformulating strategy, and also for the management ofbusiness and technologies in each business division.
Going forward, we will further develop this initiative andfurther strengthen the Group’s “intellectual property intelligence
functions.” Namely, we will of course analyze and determine
how to obtain patents and how to manage and use intellectual
property in each part of the world, but also—with IP providing
our point of view—what sort of development to pursue in the
future and in which directions to pursue business. Toward that
end, staff in a wide range of divisions that includes not only
intellectual property divisions but also corporate planning, eachbusiness division, and R&D must make effective use of the IP
landscape. Meanwhile, it is crucial that the intellectual property
divisions go beyond their simple staff functions to raise theirstatus from an intellectual property standpoint to that ofstrategic advisors and in-house consultants who help eachdivision with making correct analyses and decisions about
information. Setting our sights on such a transformation andorganizational evolution, we are currently working tostrengthen collaborations between the Technology &Intellectual property HQ, the CM&I HQ, the Corporate Strategy
HQ, the Finance & Accounting HQ, and other divisions.
Handing down a culture where every engineer finds theirown development themes and takes on challenges
We are now accelerating to transform ourselves for realizing
our Long-term Vision “TDK Transformation,” but at the sametime there are also those things that we must uphold. These
are our Corporate Motto of “Contribute to culture andindustry through creativity,” and our Corporate Principles of“Vision, Courage, Trust” This is because TDK engages in avariety of businesses worldwide, and for “TDK United”—
which includes overseas subsidiaries and companies joined
the Group through M&A—to continue to grow with a senseof togetherness, it must have such philosophy and a senseof values that provide a core common to the entire company.
Providing a major force toward making these a reality is

TDK’s unique R&D culture, where engineers think up theirown themes and take on their own challenges. In fact, mostengineers at TDK not only take on development themes thathave come down from the top, but have also continued
steady research on themes that are of personal interest tothem and themes in which they have discovered possibilities.
The company also has a culture of supporting rather thanrejecting autonomous activities by its engineers. There havebeen more than a few instances of new products andtechnologies resulting from this bottom-up R&D work, andthey have been used to solve issues faced by customers.
In order for TDK to continue coming up with innovations
and lead the market in technology, I believe this uniqueculture must be carefully handed down and developed
further. In particular, I want to see emerging talent moreproactively take on the challenge of new technologicalthemes. The development of quite novel technologies
frequently comes with failures and setbacks, but there isnothing to be gained if you worry about that and give up on
taking the challenge in the first place. I believe that it isextremely important for engineers to learn from their failuresin order to hone their skills. Even with a failure, if you cancarefully analyze the reasons for it, the next time you won’t
repeat the same mistake and possibility of succeeding at
those things you attempt will rise. For that reason, I am
requesting that everyone to write reports about those matterswhere they have failed. If you share them with everyone, thennot only that person but other members, too, will be able to
avoid failing in the same way.
In this way, if there is something to be gained from failuresrather than viewing them all in a negative light, I believe thatthose failed attempts at taking on challenges should be
evaluated in a positive light. I want to see this positive way of
thinking reflected in our evaluation systems going forward,
and create an environment where engineers do not fear failure
but rather can take on the challenges of coming up with
innovations with even greater courage than ever.

46

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

IP Strategy
Promoting an “proactive” IP intelligence strategy to enhance our capability to envision the future
Strengthening inter-functional collaboration andseeking value creation utilizing intellectual property as
its guiding perspective
Based on our Long-term Vision of “TDK Transformation,” TDK
has set its sights on being the “No. 1 partner to our worldwide
customers,” as we actively work with customers to conceive ofand realize products and technologies to support a sustainable
future. To enhance our capability to envision the future, TDK
does not confine itself to “protecting” intellectual property
activities that protect its core technologies via patents, but
additionally promotes an “proactive” IP intelligence strategy, bywhich it links intellectual property information to returns in theform of business growth by actively utilizing this information to
make new proposals to our customers and to develop new
products and technologies. Specifically, we are strengthening
the inter-functional collaboration between the intellectual
property divisions and corporate planning, marketing, finance,
corporate venture capital (CVC), and other divisions, whilepursuing new value creation utilizing intellectual property as its
guiding perspective. This is enabling us to realize, for example,
proper disclosure of pre-financial information in compliancewith the Corporate Governance Code; IP landscaping
practices to link intellectual property information withmarketing; and better investment decisions in tech start-ups.

Legal affairs

Marketing

Finance andtax affairs

Intellectual
propertyfunction

Businessplanning

Analyzing IP and non-IP information to support
improved decision-making
IP intelligence plays an additional important role in theformulation of business and R&D strategies by our businessand technology divisions. For example, if a customer orcompetitor undertakes a newspaper announcement or
issues a press release, our intellectual property divisions will
analyze aspects including each company’s aims and productstrategy, based on factors such as its patent application
patterns, and report this information to the business andtechnology divisions as important information for TDK’s own
strategic planning. A company’s strategies for development
investments can be understood as a “line” throughcompleting analyses of its number of patent applications andtrends in its areas of focus over time. It is then possible toinfer a company’s development and business strategies bymatching this information with the “points” represented bynewspaper announcements and press releases. Combined
analyses of IP and non-IP information of this kind allow thevisualization of trends among customers and competitors
and thereby support improved decision-making.

We do not only provide IP intelligence at the request of
business and technical divisions, but we aim to make IP
intelligence a regular part of their activities.
Sharing best practices worldwide
TDK has welcomed a variety of overseas corporations into
the Group through cross-border M&A. Intellectual propertysystems differ from country to country, and distinct
workstyles and cultures also exist at companies that havejoined the Group through such M&A. With this in mind, andto realize optimal IP management on a global level, TDK
implements IP management that respects the local
characteristics and the unique features of each company
through the delegation of authority and increasedtransparency in its activities. As a result, diverse bestpractices and IP intelligence have been generated at
respective sites, with these then shared across all Group
companies to further enhance the intellectual property
activities of the entire TDK Group.

Patent portfolio size

Identifying
businesschallenges

Analyzing
IP andnon-IP
information

Creating
easy-tounderstandrecommendations

Representative development site

Knowledge sharing

Makingdecisions
Japan

R&D

EMEA
China & Asia

Corporateplanning

USA
Other

Sustainability

Instilling normalization

47

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Development of New Business and New Products
Improve efficiency in data processing

To contribute to the transformation of society, TDK isdeveloping a variety of new products by applying the
spintronics technologies that it has accumulated throughHDD head manufacturing and combining materials andprocess technologies as well as software technologies. We
introduce three examples of applications achieved throughthe inter-organizational activities that we are emphasizing.

Predictive
maintenancepreventing
anomalies2

3

1
Metaverse implemented
in a society

1

Full color laser module

TDK focused on new Planar Waveguide Technology* thatneither uses a lens nor mirror in order to achieve significant
reduction in module size. Laser beams emitted from the newmodule are visualized onto a MEMS mirror, then reflected off alens and projected directly onto the eye’s retina. Unlike how
one sees real objects, images projected directly onto theretina will always be sharp, without the need to adjust focus.
When used in AR glasses, which layer images over the view ofan environment, all elements stay in focus, making it possible
to provide a more realistic and higher-quality AR experience.

2

Neuromorphic technology
Technology that can solve the issue ofincreasing power consumption for AI processing

With the expansion of AI usage, the energy consumed bycomputers has been increasing explosively. TDK is developinga spin memristor, an analog memory element that electrically
mimics the synapses in the human brain. Devices that utilize
this technology, known as neuromorphic devices, areexpected to be over 100 times more energy-efficient thanconventional devices.

3

A solution business that integrate sensors,edge AI, and networks

The i3 Micro Module, an ultracompact sensor module withonboard edge AI, integrates various sensors (vibration,
temperature, sound, barometric pressure, etc.), edge AI, and amesh network function and can confirm the status of machineryand equipment without relying on humans, minimizing downtime and contributing to a higher productivity. By adding Auto
ML edge AI functions from Qeexo, high added value from edge
sensing combined with edge AI can be achieved, making it
possible to provide sensing solutions that contribute to theimplementation of DX and improved productivity by customers.

Sensor Module* Planar Waveguide Technology: The technology for forming optical waveguides similar to
those in fiber optics, but on a planar substrate

Machine Learning• TDK established AI venture, TDK SensEI Pte. Ltd

https://www.tdk.com/en/news_center/press/20240730_01.html

48About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Design and Production (Monozukuri)
technologies such as DX and AI to fortify our Monozukuri
foundations and take measures to accelerate the pace ofdevelopment and reform business.
In this way, we will optimize the allocation of resources toinnovative elemental technologies, processes, and device
development Group-wide so that we can improve our
Monozukuri capabilities in parallel from a variety of angles
while enhancing Monozukuri human resource training to
make maximum use of individual capabilities and generating
new value.

Regarding CO2 emissions reductions as well, in addition
to reducing emissions generated in production, we are also
cutting Group-wide CO2 emissions from the entire value
chain, including Scope 3.
Integrated measures from order receipt to shipment
Risk management
Sharing best practices
Reducing environmental impacts

GovernanceInitiatives throughout the entire value chain

Hisayuki Abe
General Manager, Production HQ and General Manager,
Production Strategy Planning Group

Reinforcing Monozukuri by optimizing our
production technology portfolio
In order to achieve our Long-term Vision of becoming theNo.1 partner, growing alongside our worldwide customers,
we need to transform TDK’s Monozukuri (manufacturing
excellence). TDK has adopted a medium- to long-term
perspective and is advancing and deepening the basic
technologies (five core technologies) that support our current
production activities while developing unique technologies
that adopt perspectives such as energy conservation.
Over the medium term, we will advance development of
production processes from an early stage so that we canrespond immediately to the product roadmaps of businessdivisions. Over the long term, we will take active measures toadvance technology, including internal and external
technologies as well as technologies from other industries,
and undertake innovative Monozukuri. We will also employ

TDK is taking action to optimize its entire value chain. In April
2023, we created a system that integrates all processes fromreceipt of orders to transportation and includes the pursuit ofzero defects, responses to procurement, geopolitical risks,and so on to ensure stable supplies of high-quality products
to customers around the world. For example, we are globally
deploying a production system that centrally manages
information on the place of origin of raw materials used in
production around the world, the substances contained in
products, and the laws and regulations of relevant countries.
We are also conducting common governance operations sothat we can respond to a variety of conceivable risks.

n

uctio

ent

urem

pliers

Proc

n
uctio
Prod ns
pla

Prod

&
ment
Ship rtation
po
trans

Sup

Technology
Creation of new products using original technology
Increasing development and production
efficiency through DX and AI technologies
Energy reduction technologies

Example of Initiative

Development of Monozukuri human resources
At TDK, the Production HQ is focusing its efforts on the training of human resources toreinforce Monozukuri. We conduct training on the fundamentals and key points of Monozukuri
and systematically and continuously develop human resources who can drive the evolution of
manufacturing sites.
Veteran team members (employees) with high levels of knowledge on Monozukuri passtheir varied expertise down to other members, developing human resources who can perform
core roles in manufacturing. We also conduct training for IT and maintenance engineers andintroduce new technology by inviting external lecturers to give talks.

mers

Custo

Human resource development training

49

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Quality Assurance
satisfaction as goals in the new Medium-term Plan. To
achieve these goals, we are reinforcing upstream
management in terms of both software and hardware.
Specifically, we are developing autonomous AI control
systems that can enable equipment to automatically set
manufacturing conditions and adjust equipment, introducing
AI concierge functions in design reviews, and taking otherDX measures.
To anticipate and respond to application changes bycustomers in recent years, we will seek to anticipate changes
in reliability requirements for products and establish
advanced reliability technologies. Through these activities, wewill reinforce upstream management.
What are the “3Qs”?

Takeshi Takahashi
Corporate Officer
Chief Officer of Quality,
Safety and Environment and General Manager,
Quality Assurance HQ

Reinforcing upstream management throughdigital transformation of the 3Qs
TDK is further reinforcing its quality assurance activities withthe 3Qs—human resource quality, technological quality, andsystematic quality as the theme. In addition to existingmeasures to address these “3Qs,” we are introducing
technologies such as analysis of big data and deeplearning. We are supporting design through systemdevelopment using prediction and prevention of in-processproblems and AI with these tools and achieving upstreammanagement-type quality assurance that prevents defects
in the product planning and equipment design stages.
We set pursuit of zero-defect product quality, reductionof quality failure costs, and enhancement of customer

3Qs

Measures

Human Resource Quality· Introduction of DX to QC
education and implementationof small-group activities

Sustained quality improvement
activities facilitated by raising quality
awareness and practical skills

Technological Quality
Sustained quality assurance
initiatives keyed to improvements
in quality technology andpreventive measures

Systematic Quality
Sustained quality improvement
activities mobilizing quality
management systems structured
to integrate TDK’s distinctive
Monozukuri know-how withinternational standards* EPQ: Environmental Product Quality· Development of on-site DX
human resources through theimplementation of DX in quality
management operations· Development of autonomous AI
control systems· Introduction of AI conciergefunctions to design review· Establishment of reliability
technology in response to new
customer requirements andapplications· Establishment of supply chain
management that includes EPQ*
and software requirements that
anticipate future markets

Example of Initiative

Digital transformation of design review:
introduction of AI concierge functions
TDK’s Quality Assurance HQ believes that creating
high-quality new products will require upstream
approaches that start with product design and isdeveloping AI concierge functions that can be usedduring all design review stages. Simply put, an AI
concierge function refers to an advisory function thatdraws designers’ attention to things they may overlook.
During day-to-day development work, it is necessary toquickly find the needed decision-making materials fromwithin a massive amount of technical information. The
AI serves as a concierge to provide advice on this.
Many business organizations in the TDK Group
have accumulated extensive know-how in productdesign. Representative examples of this are the valuablelessons contained within the troubleshooting that has
been performed in the past. By having an AI concierge
extract information during each stage of design review,
it will be possible, for example, even for new engineers
who were recently hired to identify optimal solutions
equivalent to those found by seasoned veterans.
The TDK Group will proceed in step with this global
trend and create products that even more customers
can use with confidence.

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About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

MarketingMichael Pocsatko
Senior Vice President
General Manager, Corporate Marketing & Incubation HQ

CM&I initiatives to expand business activities
The Corporate Marketing & Incubation (CM&I) HQ vision is totransform TDK and expand by Exploration. CM&I wasestablished as a cross-business organization to quickly
identify market and customer needs and to strengthen themarket-in function so that TDK can respond promptly topotential needs and collaborate across the organization.
We promote a “Market Centric – Customer Pain”
focused approach to develop and implement new Business
Models. We strive to enable “best in class” products = “Kingof the Hill,” to ensure the early adoption of our ideas. To
create something new, we sometimes consider System oreven Software Business Models. Concretely, the CM&I-team
ideates to generate new revenue, accelerates growth throughincubation projects, establishes new internal startups andconsolidates incubation activities and processes.
We embrace the new corporate strategic direction oftransformation through a diverse toolbox of novel
methodologies including bridge building between crucial TDK
innovators such as Technology and Intellectual Property(Tech & IP) HQ, TDK Ventures, Business Companies, andother internal and external global partners.
We intensify homegrown entrepreneurship in the form of
TDK’s initial internal startups (TDK Kindergarten), and thescaling of incubation projects like i3 Micro Solution—realizationof predictive maintenance based on edge AI.
Strengthened cooperation with Tech & IP HQ
To enhance support for Tech & IP HQ, the two departments
will jointly develop, establish, and deploy an innovation
process management system to raise the commercial
success rate of R&D. CM&I will support Tech and IP HQ withmarket and customer “in” development requirements, as well
as define market potential for technology, product, andsolution “out” projects. The teams will collaborate to validate
desirability, feasibility, viability, and customer value.
We will delve deeper into market and technology mega
trends, customer and partner requirements through crossfunctional technology roadshows, user experience (UX)
caravans and pinpoint research.

Example of Initiative

Internal incubator program
TDK Kindergarten
Internal incubator program TDK Kindergarten aims tocreate TDK’s next superstars by empowering aculture of entrepreneurship within the organization.
The program is designed to ideate, create, andaccelerate groundbreaking ideas by leveraging TDK’s
core capabilities.
We always start with customer pain so that we donot build something that nobody wants to use or buy.
TDK team members (employees) with an idea can
explore his/her dream by understanding customer
pains, how they behave, and how they make decisions.
We differentiate between must solve and nice-to-solve
customer pains. We validate or invalidate hypotheses.
We are planning to provide a fellowship program so that
more TDK members learn the new customer-centricagile working style.

Working on a project created by TDK Kindergarten

51About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CPSO and General Manager, Human Resources HQsocietal service. We call this vision, TDK Transformation.

TDK Transformation fosters sustainability andfuture-shaping capabilities
Andreas Keller
Senior Vice President
Chief People and Sustainability Officer and General Manager,
Human Resources HQProfileAndreas Keller joined the company in 2000 and has held several positions.
Prior to assuming his current role, he served as Executive Director of Human
Resources and Supply Chain Management at TDK Electronics Europe GmbH.
In 2017, he was appointed General Manager of Human Resources andAdministration Headquarters. In April 2023, he was appointed Chief People andSustainability Officer, where he leads the development and implementation ofhuman resources and sustainability strategies. He concurrently holds the
position of General Manager of Human Resources Headquarters, overseeing
the strategic direction of human resources initiatives.

At the core of the TDK Group lies a robust management
structure that oversees the growth and development ofover 100,000 team members (employees) across a
network of more than 100 companies worldwide. This
expansive network not only focuses on maximizing thevalue creation capability of each member but also
cultivates an environment conducive to their individual
growth. This approach serves as the bedrock of TDK’s
success, offering substantial potential for continued
expansion and development.
As Mr. Andreas Keller—spearheading TDK’s Human
Resources HQ—enters his second year as Chief People
and Sustainability Officer, he aims to illuminate how thecompany will expedite its transformation journey. By
amplifying the intersection of human resources andsustainability initiatives, TDK is poised to embark on apath of accelerated growth and innovation.
I feel that the world presents TDK with numerous
environmental, social, governance (ESG) issues, often
associated with the environment. However, sustainability
encompasses a broader spectrum beyond environmental
concerns, including social and governance aspects. Our
Long-term Vision and aim are built on two main pillars: TDK’s
contribution to societal transformation and its internal
evolution to enhance effectiveness and drive growth for better

Empowering team members to drive value creation
We are dedicated to nurturing a sustainable future while
continually enhancing corporate value, in order to be thecustomer’s indispensable No.1 partner. Spearheading thismission is the Sustainability Promotion Headquarters, which iscommitted to realizing a sustainable society in harmony with
TDK’s Long-term Vision “TDK Transformation,” in order toaccelerate transformation for a sustainable future.
To fulfill this agenda, we foster a culture of My
Sustainability Action (MSA), where each team member is
empowered to act with personal dedication and a proactive
desire to contribute. This ethos extends beyond merecompliance to encompass a broader range of global
issues, making sustainability a personal responsibility for all
TDK members.
Since the establishment of SPHQ in 2019, we havecultivated a system where frontline members actively
consider how to leverage our technology to address diverse
challenges, integrating these solutions into our businessstrategies. Rather than viewing sustainability initiatives asmere costs, we have embraced them as opportunities forinnovation and future growth.
Sustainability initiatives for the year ahead
In the upcoming fiscal year, my focus will center on three key
areas outlined in our Medium-term Plan: fostering
engagement for value creation through MSA, strengthening
our social responsibility management system, andaddressing global environmental challenges.
I plan to enhance team member engagement byleveraging our Group’s shared platforms, such as MSA andMSA Guides, and by promoting internal and external initiatives
through the DX for Sustainability+ project. Over the past five
years, we have undertaken more than 80 projects as part ofour global management development programs, with52

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CPSO and General Manager, Human Resources HQ

approximately one-third of them touching on sustainability insome capacity. These projects have played a crucial role inraising awareness among our members, fostering a common
understanding of sustainability within the Group.
Moving forward, I aim to accelerate TDK’s sustainability
transformation by further encouraging active participation in
our projects. For me, sustainability encompasses achieving
a balance between environmental and social concerns andeconomic prosperity. I believe that prioritizing the continuous
development and well-being of our team members is key
to establishing TDK as a sustainable organization—one
that contributes to building a sustainable company,
society, and future.
Human resources strategy
TDK has set the transformation through promoting andcultivating diverse pool of human resources as one of TDK’s
key issues (materialities) in working towards the realization of
our Long-term Vision. We particularly focus on enhancing
team member engagement to bolster sustainable humancapital for continued growth and development. Under myleadership, I aim to foster a corporate culture that values
diversity, promotes inclusive leadership, and empowers all
members to make meaningful impacts.
Success cannot be achieved by working in isolation orwithin organizational silos. We all share a collective
responsibility, and it is essential to connect and collaborate
across departments and organizational boundaries to thrive.
Advancing leadership and organizational growth
To foster diversity, equity, and inclusion within our organization,
I am committed to appointing leaders from diverse
backgrounds and cultivating inclusive leadership styles. Whenleaders draw upon their varied experiences and knowledge todemonstrate inclusive leadership across all levels andworkplaces, it accelerates the transformation of the entire
Group. Secondly, I aim to enhance our organizational

capabilities to drive innovation and efficiency. Lastly, I am
committed to further improving the health and engagementof our team members. Regarding environmental and social
issues, my focus is on addressing these challenges while
upholding human rights and tackling climate change.
TDK initiatives developing tomorrow’s leadership
We have been actively developing the next generation ofbusiness entrepreneurs and planning for succession througha variety of programs, including the Global Management
Development Programs and TDK Kindergarten where internal
start-ups are nurtured. Guided by our principles of
Empowerment and Transparency, we ensure that all Group
companies adhere to the same programs and objectives,
while granting each company and leader the autonomy tohandle detailed planning and on-site management. Thisapproach, underpinned by mutual support and the sharing of
progress and information, is essential for the success of

Our Long-term people strategy
Long-term
Vision• Contribute to the transition towards a sustainable future by accelerating the transformation of society and advancements intechnology enabled by electronic devices developed using cutting-edge innovation in materials, processes,
and software technology.
• Become the No. 1 partner growing alongside our worldwide customers by pursuing continuous “transformation.”
Leaders and HR Functions collaborate to increase value of human capability in talent, organization and leadership.
Together they foster a corporate culture that values diversity, promotes inclusive leadership practices, andcreates an environment where all team members feel valued & included and create impact.

Attract and Develop Talent

Inclusive Leadership Practices

Attract and develop diversified and intelligent teammembers to enhance competitiveness. We find talented
people worldwide and enable them to create impact.

Our leaders lead by example. They actively demonstrate
inclusive practices, drive TDK Transformation, andpromote culture. They are evaluated on clear goals,
open feedback, & broad value creation.

Global Leadership Pipeline
Execute Global Management Development Programs todevelop future leaders, create & manage succession
plan to all TDK key positions, and enable talent mobility.

TDK United HR
Transforming Human
Capability with
Empowerment &Transparency

Organization Capability and Efficiency
Create a continuous learning culture to improve
individual and team capability, communication, andproductivity through an operating model that integrates
and digitalizes organizational processes.

Team Member Health and Engagement
Develop and implement health programs, listen to and act on Team Member Voices to improve engagement
and retention, enhance employer branding, and develop TDK as an Employer of Choice.

53

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Message from the CPSO and General Manager, Human Resources HQ

inclusive leadership.
One aspect that concerns me is how we can sustain our
progress while considering the global landscape. It is
common knowledge that Japanese companies often seek toadopt Western management styles when expanding globally.
However, I firmly believe that TDK’s true success lies in ourcapability to blend both approaches. That is why our top
leadership program, the Global Executive Management
Program (GEMP), collaborates with both a top Westernbusiness school in Barcelona and a Graduate School of
Leadership and Innovation in Tokyo. In the last leadershipprogram session, roughly half of the participants wereJapanese, with the other half coming from various countries

worldwide, resulting in a diverse mix. Each participant had
the opportunity to learn from different approaches, fosteringa rich exchange of ideas. I am committed to ensuring that we
continue this balanced approach, rather than focusing too
heavily on one perspective over the other.
Reflecting on our company’s growth and workforce
demographics, when I joined TDK in 2000, we had roughly
35,000 members. Since then, numerous companies havejoined us through mergers and acquisitions. Now, we havearound 100,000 members. About 80% of our members
joined TDK through M&A activities. Of the roughly 100,000
members, about 11,000 are based in Japan, with theremaining 90,000 located outside of Japan. This diversity is

TDK global HR - focus & priorities
Develop Next Generation

Establish Efficient Global HR Platform* (DX HR Processes)
Global Recruiting

Top Management

Recruiting process with TDK United Branding approach

Global Competencies & Appraisal Standard
General Manager

Implement to next level globally

Deputy General Manager

Improve
GlobalCommunication

Succession Planning & Executive Development

Subsidiary Presidents

Plan and develop successors for all top key positions

Other key positions

Diversity, Equity, & Inclusion

Improve Team
MemberEngagement

Strengthen TDK’s commitment to DE&I

Successor Candidates

Human Growth
TalentPipeline

Future Management
Candidates

Management Development Programs

Improve
HealthDigital Learning
Global Communication & English Training* All systems we introduce in Global HR are GDPR compliant

TalentManagement
Systemwhat makes TDK so unique. I have noticed that humanresources leaders from other Japanese global companies
have been reaching out to us, interested in learning how wemanage such a diverse population. This uniqueness gives us
a significant advantage compared to our competitors.
Strengthening our foresight capabilities
To achieve our vision of becoming our customers’ No. 1
partner, we must transition from a product-out approach to
one centered on discussing and co-creating various futureswith them. This shift requires foresight capabilities, where
each team member envisions potential market scenarios.
I believe the following three approaches can enhance ourmembers’ future envisioning capabilities.
Firstly, we aim to foster an environment that encourages
innovation. By decentralizing authority to our subsidiaries andimplementing programs like TDK Kindergarten, we encourage
creativity and entrepreneurial thinking. Through this program,
TDK’s first internal start-up business has been underway, whichaims to solve electromagnetic compatibility (EMC) for consumer
electronic companies. We will continue the program to bringout the creativity and future vision of our team members.
Secondly, we prioritize knowledge sharing andcollaboration across regions and divisions throughWeconnect, a group-wide e-Learning platform. This platform
facilitates the creation and dissemination of courses, enabling
members to acquire skills quickly and efficiently. For instance,
our global leaders collaborated to develop standardized
quality training modules. These modules were createdthrough working groups, validated by our headquarters, andthen translated into multiple languages for global accessibility.
This streamlined process ensures that all team members canswiftly access and exchange the knowledge and skills
essential to TDK. Furthermore, these courses undergo
continuous evaluation and improvement, allowing us tomaintain updated and relevant content. By doing so, we not
only enhance individual capacity for future envisioning and54

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Message from the CPSO and General Manager, Human Resources HQ

proposal-making but also foster collaboration by co-creating
new courses with colleagues worldwide.
Lastly, we focus on improving team member
engagement and well-being. Through events, engagement
surveys, and initiatives promoting empowerment andtransparency, we create an environment where every teammember feels valued and can contribute meaningfully.
Implementing these programs that prioritize ourprinciples of Empowerment and Transparency enables TDK
to gain insight into the perspectives and experiences of eachteam member. This allows us to promptly identify andaddress any issues that arise.
For example, during last year’s engagement survey
across all Group companies, many team members reported
encountering procedural barriers when attempting tasks
beyond their company’s scope. In response, we introduced aglobal IT system to digitize decision-making processes,
improving organizational efficiency. This initiative exemplifies
our commitment to the PDCA cycle, where we use survey
results to pinpoint on-site and organizational issues andimplement effective solutions.
Moving forward, we will continue to strengthen bothindividual and organizational foresight capabilities, fostering acohesive team dedicated to our shared goals whileempowering each member to implement their own MSA by
thinking and acting proactively.
Empowering TDK Transformation through my own
personal transformation
By default, I am not an expert on sustainability. When I firststarted, I was not an expert in human resources either; mybackground was in supply chain management. However,thanks to the knowledgeable individuals at TDK, I am
learning something new every day.
Shortly after assuming the role of General Manager of
Human Resources HQ in 2017, I recognized the criticalimportance of globally enhancing our human resources

development to fortify the Group’s organizational structure.
This realization, informed by my background in supply chain
management, spurred me to devise a plan to appoint humanresources leaders from Group companies and regions
worldwide. Presenting this proposal to the then-president
Ishiguro, he promptly granted me the authority to proceedwith the initiative under TDK’s auspices.
Subsequently, I delegated authority to human resources
leaders from our U.S., Asian and European Group companies
for various global projects, emphasizing their autonomy inproject management while collaborating closely with me. Thisapproach empowered them to present their initiatives directly
to management and the CEO, instilling a sense of
responsibility and pride in their newfound roles, which, inturn, fueled their motivation and yielded positive outcomes.
Consequently, we fostered an organizational culture
characterized by Empowerment and Transparency.
This cultural shift, combined with our distinct approaches
to team management, brought about a transformation within
our Human Resources HQ. Previously comprising solely
Japanese members, the HQ now boasts approximately 20
non-Japanese managers and leaders, reflecting a morediverse composition.
In April 2023, I was honored with the appointment of Chief
People and Sustainability Officer. As the head of Human
Resources HQ, I perceive the significance of this role lies in theinherent connection between “people” and “sustainability.”
Having witnessed firsthand how fostering connections
and nurturing individual growth generates value and opens
avenues for new possibilities, I firmly believe that humanresources are indispensable for both the sustainability andgrowth of our company and society.
I am committed to my ongoing personal growth intandem with TDK’s development, as together, we continue
our transformative journey.
Our vision is to establish an autonomous and sustainableorganization where our talented leaders inspire and empower

their team members to think and act independently, guided
by the principle of “Empower Minds, Ignite Action.”
To address areas for improvement, we will enhance andleverage our Group’s common communication platforms tofoster cross-cultural understanding and embrace a feedback
culture. Additionally, we aim to enhance operational efficiency bypromoting greater transparency through increased sharing of
information and evaluations with senior leaders and executives.
Achieving these objectives necessitates harnessing thestrengths of Europe, America, Asia, and Japan to bolster our
readiness to navigate any global business environment. I see
it as my mission to propose and implement effective
initiatives in pursuit of these goals, and I am fully committed
to realizing them.
Through the integration of our human resources andsustainability initiatives, we are poised to swiftly advance our
TDK Transformation, paving the way for a future ofsustainable growth and innovation.
Global HR structure (male/female)
FemaleFemale

10%

46%
2024

2016

Male
90%

Male
54%

Global HR structure (Japanese/non-Japanese)
NonJapanese

10%Japanese
26%

2024

2016

Japanese

90%

NonJapanese

74%

55

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

People Strategy
Transformation through promoting andcultivating diverse pool of human resources tofurther enhance competitive advantage
Linkage between investment in human capital andvalue creation
We are accelerating to transform ourselves through our“capability to envision the future,” “capability to execute theenvisioned future,” and “capability of human resource
transformation” to ensure it continues to contribute to Social
Transformation based on its Long-term Vision. The diversity of
our human resources is one of TDK’s strengths. We believethat strengthening the relationships between our diverse
human resources beyond boundaries of the Group
companies will facilitate an enhancement of our capability toenvision the future as well as to our capability to execute. We
have therefore set out three themes for human resources key
issues (materiality), which we will focus on over the period of
new Medium-term Plan.
With regard to Materiality 1 (“Promote diversity, equity
and inclusion driven by inclusive leadership practices”), we
have established a global human resource development
system (see page 55), and have adopted the best practicesof our acquired companies.
For Materiality 2 (“Develop organizational capability toenhance innovation and efficiency”), we hold a leadershipprogram which brings together management and future
leader candidates with a wide variety of backgrounds fromthroughout the world. Trainees on this program build
horizontal connections between themselves who would notnormally interact in their daily work.
From ideas generated from this program, in addition tofacilitating the successful establishment of a system called the“TDK Kindergarten” (see page 51), an internal incubator
program to offer an environment to identify, create, and scale
new business creations, a number of candidates for business
commercialization have now started to emerge. One example

is an idea for a solutions business utilizing edge AI which was
generated from horizontal connections by the triggered of thecorporate officer-ranked training, and which is currently tabled
for further work toward commercialization at a future point.
Implementing measures to enhance horizontal
connections in this way expedites the processes of securing
and developing talents while at the same time hastening theassignment and promotion of the right people in the rightplaces, regardless of nationality. We also anticipate that it willserve to create workplace environments which attract adiverse range of individuals, thus facilitating the achievementof Materiality 3 (“Improve team member (employee) healthand engagement”.)
Meanwhile, we will actively invest in various educationand training programs and recruit highly professional people
to enhance our software technology, which is indispensable
to the achievement of our Long-term Vision.
We anticipate that, as an outcome of these initiatives, avirtuous cycle will be created whereby the diverse pool ofhuman resources will directly effect on our competitiveness. We
also believe that further enhancing our “capability to envision
the future” as well as our “capability to execute” towardachieving transformation will facilitate a cycle of value creation,with new businesses thus created from a diversity of ideas.

Human capital disclosure indicators and initiatives

INPUTSOUTPUTS• Increase in the number of attendeesof TDK Kindergarten and otherinternal entrepreneurial programs

Impact on
our finance• Increase of education expenses• Increase in recruiting-related costs(Pre-financial investment)• Identify potential candidates anddevelop next generation• Optimization of business operations
by promoting the appointment of
the right person to the right position,
regardless of nationality

OUTCOME• Diverse pool of human resources
directly effect on our competitiveness• Improve the capabilities to envision
the future and transform ourselves• Generating new businesses from adiversity of ideas• Progress in succession plans at
all levels

Pre-financialand HR
activities

Materiality 1
Promote diversity, equity andinclusion driven by inclusive
leadership practices

Materiality 2
Develop organizational capability
to enhance innovation andefficiency• Establish Global HR development
system

• Global leadership• Promoting diversity• Adopt effectively the knowledge of
our acquired companies• Improve global communication tobuild horizontal connections up• Global learning platforms

Materiality 3
Improve team member (employee)
health and engagement• Create and organize workplaceenvironment to attract a diverse
range of individuals• Improve engagement56

About TDK

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Governance

Data Section

Contents

TDK Integrated Report 2024

People Strategy
Key initiatives in people strategies

Three key themes for transformation through promoting and cultivating diverse pool ofhuman resources to further enhance competitive advantage(1) Promote DE&I
TDK commenced full-fledged activities to promote DE&I in
2020. We set a target for TDK Corporation of increasing theratio of women in managerial positions to 15% by 2035. We
held the career development seminars focusing on change ofthinking for female team members and conducted mentoring.
As a result, as of April 2024, the ratio increased by 4.8%,
which was more than double the level four years ago at thestart of these measures.
In 2023, we established a global DE&I team and took
steps to strengthen Group collaboration and initiatives,
including formulating a global approach for promoting DE&I
throughout the TDK Group worldwide, engaging the Global
HR organization in a DE&I survey to help set strategic
direction, and conducting activities globally on International
Women’s Day. The most recent ratio of women in managerial
positions for the TDK Group as a whole was 22.0%.
In addition to supporting the active participation of women,
we have also initiated measures to raise understanding andencourage respect for the dignity of the LGBTQ+ community.
In 2023, we implemented measures such as holding a study
session on LGBTQ+ issues with the participation of corporate
officers in Japan including the president and about 90 managers.

(2) Develop organizational capability to enhanceinnovation and efficiency
We develop business entrepreneurs who are able to generateinnovation and create new business. Specifically, we strive todevelop leaders who demonstrate the capability to createbusiness that contributes to the reinforcement and expansionof continuous commercialization of cutting-edge technology
from a market-in perspective that understands the needs ofthe market and customers and a concept-out perspectivethat can propose value from a concept-based approach that
adopts customized solutions.
To accelerate innovation, it is also important that wenotice new things and make discoveries by combining
knowledge from different fields and different time frames thatat a glance do not seem to intersect. As TDK United, we willcontinue reinforcing various global programs that instillbusiness entrepreneurship so that we can make maximum
use of the Group’s assets and enhance collaborative
capabilities for creating new innovation and businesses.

Scene from training(3) Improve team member (employee) healthand engagement
In February 2023, TDK conducted the first Team Member
Engagement Survey (“My Voice”) of Group team members
worldwide. Going forward, in order to create a working
environment which both measures engagement and ensuresthat each individual can flourish, we have established targets
relating to team member engagement in the Medium-term
Plan, as one of the assessment indicators for Performance
Share Units (PSUs) as performance-based stock
remuneration for corporate officers.
Also, we have set the KPIs for this survey for FY March
2027. One is at least 80% of the response rate, to maintain thesame level of the previous survey in February 2023. The otheris at least 75 points of the communication score, the previous
survey score was 67 points, which requires an improvementof 12%. We believe that focusing on communication iseffective due to the fact that it has the potential to influence
many aspects of engagement, including leadership andbarriers to duties execution.
Actions

Ratio of women in managerial positions
Non-consolidated(1) Improvement ratio in communication scores

Improved by 12%

Global(Ratio of improvement required to achieve target score of 75)

(%)

22.0

25

22.0

22.0

20

Team member
engagement(TME) KPIs

15
10
5

• Establish readily-accessible communication channels• Design clear processes• Support global collaboration• Support effective communication by leaders

2.0

3.0

3.7

4.3

4.8

FY3/21

FY3/22

FY3/23

FY3/240
FY3/20* Figures are the ratios of women in managerial positions as of the day after the last day of
the fiscal year (i.e., April 1)

Vision to beachieved(2) Response rate

Maintain a level of at least 80%(industry benchmark of 75%)

Link to PSUs
Target amount paid for
100% achievement of KPICreate a working environment so that the “people”
who are responsible for executing
transformation can be more active themselves

57About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Sustainability

Response to Climate Change
TDK’s mission is to establish our presence as a company
contributing to a sustainable future. This is because webelieve that this approach is necessary for us to growtogether with society and to create sustainable value throughinitiatives that combat climate change. Therefore, the TDKGroup has identified our response to climate change as aimportant issue in our key issues (materiality) and isconducting activities accordingly toward realization of the
TDK Environmental Vision 2035 (The operation under theenvironmental load within natural circulation, halve the CO2
emissions intensity from a life-cycle perspective by 2035).
Furthermore, since our goals are consistent with the
1.5˚C target, we have received recognition of the Science
Based Targets initiative (SBTi). This approach shows clearly
that TDK aims for net zero by 2050 and is a declaration of
our determination to take steps to combat climate change.
As one aspect of measures to combat climate change, wehave set CO2 reduction as a KPI and are promoting efforts
toward its achievement. As a measure to permeate efforts totackle environmental problems among the management, wehave linked the goal of CO2 reduction with the remunerationof directors and Audit & Supervisory Board members. In
addition, we are forcefully promoting the use of renewableenergy (RE). TDK is promoting climate-change
countermeasures throughout the entire organization and isplaying a positive role toward the realization of a sustainable
society. Through these efforts, TDK grows together withsociety and fulfills our social responsibility as a company, andat the same time we are showing that we directly link these
efforts to the sustained growth of our business.

RE and EP initiatives
TDK will aim to achieve our target for the reduction of CO2
through a dual approach of promoting a transition to
renewable energy (RE) and engaging in activities to improveenergy productivity (EP).
Transition to RE
As a BtoB (Business to Business) company, TDK stands inthe midstream of the supply chain. Our aim is to reduce theenvironmental load throughout the entire lifecycle ofproducts by achieving energy saving and lighter products
together with customers. In particular, as a drive to
introduce RE, we have joined the RE100 initiative and aim
to switch all of our production sites both in Japan andoverseas to 100% RE-derived electricity by 2050. We aremaking this challenge not only in response to demands
from society and stakeholders but also to fulfill our own
social responsibility. TDK is actively promoting the
introduction of RE globally, and in 2023 we succeeded in
attaining 100% RE-derived electricity at all our
manufacturing sites in Japan. Thanks to theseachievements, we achieved our RE-derived target of 55%
of electricity consumed worldwide in FY March 2024, twoyears ahead of the original schedule.

EP activities
TDK has been promoting energy-saving activities heretofore,
but in the present state of ongoing growth, there are limits to
the reduction of total energy consumption. Therefore, inplace of energy saving, which placed the emphasis onenergy reduction, we are introducing the effective use ofenergy, in other words, the improvement of energy
productivity, as a new guideline. Our aim is to double EP,
which is defined as net sales divided by energy consumption,over the 25 years from 2020 to 2045. Through EP activities,
which are the crux of this initiative, we will respond toclimate-change risks. EP activities will be a continuous
endeavor in which the energy perspective is included alongwith quality improvement and productivity improvement,
which TDK has been tackling heretofore as the essence ofthe manufacturing business. Through these EP activities, wewill strengthen TDK’s Monozukuri (manufacturing excellence)
and accelerate the reduction of CO2. And TDK will continue
to march forward with the aim of both achieving further
corporate growth and contributing to the realization of asustainable society.
Image of transition to RE and EP improvement toward 2045
Net sales
Energy consumption
RE consumption
Energy productivity (Net sales/Energy consumption)

Double energy productivity

Please refer to the Sustainability Website for details.
Environmental Policy and Environmental Visionhttps://www.tdk.com/en/sustainability/
environmental_responsibility/policy-vision

2020(Present)

2045(Target year)58About TDK

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Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Sustainability

Response to Climate Change

Aiming to achieve both corporate growth and CO2
reduction for sustainable management

Trends in CO2 emissions at manufacturing sites (global)*CO2(ten thousand t-CO2)

CO2 emissions (left)

No action

Example of Initiative

Intensity (FY3/15 = 100) (right)

400

100

300

75

200

155.8

176.8

50

170.1
138.3

100

29.9
25

82.7

CO2 Emission0

EP Activity

0
FY3/20FY3/21

FY3/22

FY3/23

FY3/24*T he measurement and calculation methods, as well as the numerical results for FY March
2020 and beyond, have been verified by a third party.

RE Activity

Trends in volume of total energy consumption and intensity
Volume of total energy consumed (left)

Intensity (right)(GWh)(GWh/millions of yen)

5,000
4,000

2035

3,000

4,744

4,463
3,761
0.00284,654

0.00404,338
0.00300.00250.00300.00202,000

0.00210.00210.00101,000

Reduction of CO2 emissions at manufacturing sites
At TDK, we are tackling the effective use of energy andexpanded use of renewable energy in order to reduce CO2
emissions at our manufacturing sites. In FY March 2024 CO2emissions decreased by 40% from the previous year to 0.827
million tons due to the expanded introduction of renewableenergy. Going forward, we will promote reduction efforts
rooted in manufacturing activities across the entire Group.

0

Innovative sustainable films are applied in TDK’s film
capacitor series ModCap. The use of eco-friendly
materials further improves products initiallycontributing to the environment. All ModCap products
use bio-circular materials to pursue highenvironmental performance.
We are constantly investigating different approaches
related to the circular economy to extend the lifecycle ofour components, reduce material required, and better
manage end-of-life waste. Therefore, we are actively
collaborating with suppliers to develop new sustainable
materials without compromising on the final material
properties. During our activities, a revolutionary proposalof applying bio-based films, which are already a wellknown solution for packaging, especially for the foodsector, to our capacitors was made.
This biobased film has the very same electrical andphysical properties and performance as conventional
products. The technology can be applied to other film
capacitors in addition to ModCap.

0
FY3/20FY3/21

FY3/22

FY3/23

FY3/24

Percentage of electricity from renewable energy
sources introduced(%)

100
Target:FY3/26 50%

80

55.2

60

50

39.9

40
20

Leading the development and commercializationof sustainable films for capacitors

18.2

23.9

30.0

0
FY3/20FY3/21

FY3/22

FY3/23

FY3/24

FY3/26

Dr. Marisa Rico (left side ofphoto), coordinator of thematerials science laboratory
Mr. Victor Alcaide Lozano(right side of photo), Directorof Product Marketing for PEC
HP Capacitors
TDK Electronics
Components, S.A.U.

59

About TDK

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Long-term Vision

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Governance

Data Section

Contents

TDK Integrated Report 2024

Sustainability

Response to Climate Change

Expansion of contributions to reduction of
CO2 emissions through products
Aiming to realize carbon neutrality by 2050, manufacturers
around the world are endeavoring to reduce CO2 emissions
through their products. Furthermore, by measuring the CO2
emissions of products and comparing them with previous
ones, manufacturers are publicizing the improved performanceof new products. Also, when purchasing such items as TV
sets, household electric appliances, and cars, it has becomeroutine for consumers to check CO2 emissions at shops, incatalogs, online, and so forth. In the European Union, efforts
have been made since 2018 to display common energy labels
on household electric appliances, such as refrigerators andwashing machines, showing their environmental performanceso that consumers can check when making a purchase.

Trends in CO2 emission reductions by products*

Amount of electricity consumed during product use (kWh)Industrial equipment and general electric appliances (left)
Intensity (FY3/15 = 100) (right)(ten thousand t-CO2)

214.2

600

200

520.7

500

300

226.7

263.3

Reduction Calculate
CO2of energy
equivalentor fuel

150

423.3

400

200

contributions to assessment requirements at the productdevelopment stage. Going forward, TDK will continue toestablish calculation rules and endeavor to disseminate themthroughout the Group.
The contribution to CO2 reduction by products in FY
March 2024 was 5.207 million tons, a year-on-year increaseof 23%. In terms of intensity, it was a 27.5% rise over theprevious fiscal year, and so we were able to achieve ourtarget by a wide margin.
Going forward, we will strive to develop eco-friendly
products that contribute toward reducing the environmentalload of customers and society and to popularize suchproducts by publicizing their value.

How product contribution is calculated

Automotive (incl. HEVs and EVs) (left)
ICT (left)

To mount potent appeals for the social contributions by
TDK products as the fruits of technical initiatives, theseproduct contributions have been calculated and disclosed.
Public awareness activities are also being advanced to gain
understanding of the contributions of electronic components
as intermediary parts, along with moves to formulate
coherent industry standards for calculation methods
positioned to serve as the basis for earning appropriate
evaluations of product contributions performance, and theresults were released in the form of guidance by industry
groups. Based on these results, TDK established the
Guideline for Calculation of Product Contributions and is
promoting the diffusion of global calculation work throughout
the entire TDK Group by adding the calculation of product

296.9

100

50

Efficiency
Improvements

Product Contribution(in tons of CO2)

100
0

0
FY3/20FY3/21

FY3/22

FY3/23

FY3/24* The calculation method was reviewed by a third party.
* The product contributions have been calculated based on the internal guidelines compliant
with IEC’s “TR62726 Guidance on Quantifying Greenhouse Gas Emission Reductions fromthe Baseline for Electrical and Electronic Products and Systems,” the Institute of Life Cycle
Assessment, Japan’s “Guidelines for Assessing the Contribution of Products to Avoided
Greenhouse Gas Emissions,” and JEITA’s “Guidance on Calculating GHG Emission Reductions Contribution of Electronic Components.”

WeightReduction

BenchmarkProduct

Annual Sales Volume

Product Contribution byIndustrial Sector/ProductCategory(in tons of CO2)

New
Product

The concept of product contribution: By calculating the amount of CO2 reduced through efficiency improvements and weight reduction in energy-saving products and multiplying them by annual
sales volumes, the amounts contributed to the reduction of CO2 can be broken down by industrial sector and by product group.

60

About TDK

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TDK Integrated Report 2024

Sustainability

Response to TCFDIn May 2019 TDK expressed its support of the Task Force on
Climate-related Financial Disclosures (TCFD), which makes
recommendations to analyze and disclose information on theimpact of climate change on corporate finances.
The TDK Environmental Vision 2035 calls for “halving theCO2 emissions intensity from a lifecycle perspective by 2035”
throughout the entire value chain from procurement todisposal. Believing that assessing the risks and opportunities
to our business due to climate change and appropriately
disclosing information are going to be essential for bothachieving corporate growth and building a sustainable society
in the future, TDK is steadily addressing these matters.
TDK’s initiatives to address the issues of climate change
are disclosed below according to the TCFD framework.
Governance
Board’s oversight of climate-related risks
At TDK, the CPSO carries out a management review morethan four times a year of the state of progress inenvironment-related matters, including climate change, as
well as plans and risks. The results of the management
review and matters requiring management decisions aredeliberated in the Executive Committee and, if necessary, theBoard of Directors.
Management’s role in assessing and managing
climate-related risks
Positioning
Regarding risks relating to the environment, including climatechange, TDK has clarified the responsibilities of the CPSO,
who is appointed by the President & CEO. In addition, theEnterprise Risk Management (ERM) Committee discusses
important matters among environmental risks, including
climate change.

Responsibilities
Regarding a company’s social responsibility, TDK recognizes
that coexistence with the global environment is an important
issue in management and has established the post ofenvironmental officer. Appointed by the President & CEO, the
CPSO takes responsibility for environmental management ingeneral, including climate change. In addition, the head of
the Safety, Environment and Social Group of the
Sustainability Promotion HQ, which has been establishedunder the environmental officer, is given responsibility for
implementing environmental management, including climatechange. In the TDK Group, all business groups, departments,
sites, manufacturing subsidiaries, and head office functions
come together in unison to work toward realizing the goals of
the TDK Environmental Vision 2035.
Among environmental risks, including climate change,
important matters are reported through the ERM Committee
to the Executive Committee and the Board of Directors.
Content of responsibilities
The Safety, Environment and Social Group of the
Sustainability Promotion HQ sets Group-wide targets forenvironmental matters, including climate change, andidentifies environment-related risks for the Group. The ERM
Committee identifies Group-wide risks in accordance with
“Enterprise Risk Management Regulation” and handles
problems relating to climate change as one aspect of Groupwide risks.
Monitoring
The achievements of environmental activities, including
activities relating to climate change, are reported in the
management report, and more than once a year the CPSO
carries out a management review, discussing and deciding

important matters in the promotion of environmental
activities, such as the compilation of reports and medium- tolong-term targets for major KPIs and energy-saving
investment. In addition, matters in this management review
that are deemed to exert an important impact onmanagement, such as visions and large-scale investment,
are discussed in the Executive Committee and, if necessary,
the Board of Directors.
Strategy
TDK has designated the vision of what we want to be for TDK
in 10 years as our long-term vision, the “TDK Transformation.”
which declares “Contribute to the transition towards asustainable future by accelerating the transformation of society
and advancements in technology enabled by electronic
devices developed through leveraging cutting-edge innovationin materials, processes, and software technology” and“Become the No.1 partner growing alongside our worldwide
customers by pursuing continuous ‘transformation.’”( page 13 Long-term Vision)
To realize it, TDK has reidentified key issues (materiality) and isaccelerating the shift to renewable energy and innovation
toward reducing power consumption and enhancing efficiencyof material technology and material function to support interms of addressing global warming and energy security.

61

About TDK

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TDK Integrated Report 2024

Sustainability

Response to TCFD

Results of scenario analysis
In accordance with the Practical guide for Scenario Analysis
in line with the TCFD recommendations issued by the
Ministry of the Environment, TDK implemented scenario
analysis based on the following preconditions:
Assumed period: FY March 2031
Applicable scope: Entire TDK Group
Adopted scenarios: 1
 .5°C scenario (Net Zero Emissions by
2050 [NZE] of the International Energy
Agency [IEA]), 4°C scenario (the IEA’s
Current Policies Scenario [CPS], Stated
Policies Scenario [STEPS], andRepresentative Concentration Pathway[RCP] 6.0 scenario)
The following are the main risks and opportunities
identified based on the scenario analysis. Under the 1.5°C
scenario, in which countries’ regulations throughdecarbonization policies become stricter, we understood thepossibility of transitional risks occurring with the introductionof carbon pricing and higher cost of renewable energy. The
analysis estimated the financial impact of these risks in 2030
to be ¥11.4 billion in the case of carbon pricing and ¥15.5
billion for renewable energy.
In the automotive market, which is one of TDK’s key
markets, since the shift to electric vehicles will progress, we
also recognized the possibility of expanded sales
opportunities for EV-related products and battery-relatedrisks and opportunities.
Under the 4°C scenario, the analysis also showed thepossibility of increased risks of flooding due to the frequent
outbreak of abnormal weather.
Physical Risk Response Plans
As a physical risk relating to climate change, TDK has
specified the increase of business risks due to increased
flooding. Regarding water risks at all manufacturing sites of
the TDK Group, we conduct investigations in accordance

Main risks and opportunities
Risks andopportunities

Occurrence*

Carbon pricing /carbon-emission
targets of each country

Risk

Medium-longterm· Promotion of the effective use of energy, expanded use ofrenewable energy, etc. at manufacturing sites toward therealization of net-zero CO2 emissions in 2050

Increase of energy
costs due to rise inrenewable energy ratio

Risk andopportunity

Medium-longterm·P romotion of the effective use of energy at manufacturing sites
toward the realization of net-zero CO2 emissions in 2050
· Promotion of the development of products for renewableenergy, etc.

Increase in price of
cobalt and lithium

Risk

Short-longterm·M onitoring of raw material price trends and implementation ofrisk hedging at time of procurement· Implementation of long-term supply contracts· Reduction of amount of cobalt and lithium used in products, etc.

Increase of new
business chances due
to expansion of EV
marketOpportunity

Medium-longterm·P romotion of product development with an eye on EV market
expansionDevelopment of
next-generation battery
materials

Risk andopportunity

Long term·P romotion of the development of all-solid-state batteries

Increase of customer
demands regarding
RE100

Risk andopportunity

Short-longterm· Analysis of customer initiatives to respond to climate change· Compilation of plan to introduce renewable energy, etc.

Increase of businessrisks due to rise inflooding

Risk

Medium-longterm· Implementation at sites of measures to counter flooding risks·P romotion of BCP response, building of BCM framework, etc.

Classification

Transition
risks

Physicalrisks

Main countermeasures* Time horizon: “short-term” is expected to be less than 1 year, “medium-term” between 1 and 3 years, and “long-term” between 3 and 20 years.

62About TDK

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Data Section

Contents

TDK Integrated Report 2024

Sustainability

Response to TCFD

with the TCFD using two global evaluation tools—the WWF
Water Risk Filter and the Aqueduct, announced by the World
Resources Institute (WRI). This enables us to identify highly
water-stressed regions. Among other things, each site
implements measures to counter flooding risks, promotes
BCP response, and builds a BCM framework.

Risk management
Risks which are significant for management is assessed as apart of comprehensive risks in the ERM Committee.
Regarding risks deemed by the assessment to requireGroup-wide efforts, including climate change risk, the ERM
Committee checks the progress of countermeasuresapproved by the Executive Committee and, after completionof the countermeasures, obtains the approval of the
Executive Committee.

Metrics and targets
Medium- to long-term targets
In the TDK Group’s key issues (materiality) we declare ouraim of realizing net-zero CO2 emissions by 2050, and in the
TDK Environmental Vision 2035 we set the target of halving
the CO2 emission intensity from a life-cycle perspective by2035 (compared to FY March 2015). Based on this vision, as
an environmental basic plan up to 2025, we have stipulated
activity tasks and objectives in the TDK Environment, Healthand Safety Action 2025 and are managing progress. In
addition, in June 2024 we received a certification of the
Science Based Targets initiative (SBTi).
Climate Change Initiatives

https://www.tdk.com/en/sustainability/
environmental_responsibility/climate-action

Medium- to long-term targets
TDK Group’s key issues(materiality)

Strengthen our activities to reduce greenhouse gas emissions and promote measures to address climatechange in order to realize a net-zero CO2 emissions society by 2050. (Scope 1, 2)

TDK Environmental Vision
2035

Halve the CO2 emissions intensity from a life-cycle perspective by 2035, compared with FY March 2015
(Scope 1, 2, 3)

Action Plan in TDK
Environment, Health and
Safety Action 2025

Improve CO2 emissions intensity by 30% by 2025, compared with FY March 2015 (Scope 1, 2, 3)
Achieve renewable energy target of 50% by 2025 (Scope 2)

FY March 2024 goals and achievements
Goals

Achievements

Reduction of CO2 emissions at manufacturing sites
Improve CO2 emission intensity from energy use by 1.8%
compared with the previous fiscal year

Improved by 38.0% compared with the previous fiscal year

Improve energy consumption intensity by 1.0% of the previous
fiscal year

Improved by 2.9% compared with the previous fiscal year

Implement efforts to achieve 50% renewable energy by 2025
(Scope 2)55.2% introduced compared to target of 40% in FY March 2024

Reduction of CO2 emissions through Scope 3 category-based initiatives
Promote reduction of environmental load through activity of
Scope 3

GHG emission (kt-CO2)

FY 3/24 result

Total emission

20,373

Scope1

134

Scope2

694

Scope3

19,546

Reduction of CO2 emissions in global logistics
Improved CO2 emission intensity in logistics by 12% comparedwith the previous fiscal year

Response to the TNFD
In response to the final recommendations of the Task
Force on Nature Related Financial Disclosures (TNFD),
and in accordance with the guidance, we began anassessment of our dependencies, impacts, risks, andopportunities relating to natural capital in general,
including biodiversity.
Please refer to the Sustainability Website for details:
TCFD/TNFD

https://www.tdk.com/en/sustainability/
environmental_responsibility/tcfd_tnfd

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TDK Integrated Report 2024

Sustainability

Other Environmental Initiatives
Water resources conservation
Our approach
At TDK, water is an essential resource in manufacturing
activities. Since we are impacted by such events as theexhaustion of water resources and flooding, the proper
understanding and management of water risks are important
issues for us. TDK stipulates the TDK Supplier Code of
Conduct and requests suppliers to address the managementof wastewater and efficient use of water. Together with local
communities and stakeholders, TDK will continue to promotesustainable water use.
From the procurement of raw materials to the disposalof products, TDK strives for operations with little
environmental load throughout the entire supply chain.
Similarly, we promote the conservation of forestry resources
and water resources. In line with the TDK Environmental
Charter, we aim for “Develop and Prosper in Harmony with
the Global Environment.” Every single employee will act
positively by thinking about the impact of production
activities on the environment and the relationship between
corporate activities and the environment, endeavoring toconserve an affluent global environment, and constantly
paying heed to contributions to preserve the ecosystem.
Furthermore, in consideration of business characteristics,
TDK has specified the key SDGs that we will focus on andclarified our policy of solving issues, including water-related
problems, through technological development in our main
businesses. As a water-related example, we are promoting
the development of various sensors in accordance with Goal
12 of the SDGs, which is titled “Ensure sustainableconsumption and production patterns” In addition, we are
reducing water withdrawal in manufacturing processes.

Addressing biodiversity
Our approach
We at TDK consider the role we fulfill through our businessactivities as being to achieve a sustainable future through, forexample, working to restore and protect the global
environment. The decline in biodiversity has become along-term global risk second only to climate change.
Throughout the entire value chain—from the procurement of
raw materials to the disposal of products—there is demand
for activities that avoid, mitigate, and restore adverse impacts
on biodiversity.
All TDK employees are aware of the impact on theenvironment from production activities. We consider the
relationship between business operations and theenvironment and strive to protect an affluent global
environment. The TDK Environmental Charter expressly
provides that employees are to consider contributions toecosystems and take proactive action at all times.

Please refer to the Sustainability Website for details.
Water Resources Conservation

Please refer to the Sustainability Website for details.
Initiatives for the Circular Economy

https://www.tdk.com/en/sustainability/environmental_responsibility/
water-resources

https://www.tdk.com/en/sustainability/environmental_responsibility/
limited-resources

Please refer to the Sustainability Website for details.
Addressing Biodiversity

https://www.tdk.com/en/sustainability/environmental_responsibility/
biodiversity

Responsible management of chemical substances
Our approach
Management of chemical substances in products
In 2004, TDK introduced the “Environmental Product Quality
Management System” (EPQMS) as a system to prevent andcontrol exposure to hazardous substances in products thatthreaten human health and the environment, and we operate
it within our Quality Management System (QMS).
Management of chemical substances inmanufacturing processes
We are promoting management of chemical substances
globally by means of common guidelines with the goals of
understanding the hazardousness and danger of chemical
substances and improving safety in their handling incompliance with each nation’s laws and the like. In addition,
we are moving forward on reducing the use and emissions ofhazardous or dangerous chemical substances in order toreduce their impact on the environment as well as to mitigate
the health risks to employees and risks of fires or explosions.
Please refer to the Sustainability Website for details.
Responsible Management of Chemical Substances

https://www.tdk.com/en/sustainability/environmental_responsibility/
chemicals-management

Initiatives for the circular economy
Our approach
Amid the need to shift to a circular society, from theperspective of the effective use of limited resources, TDK
promotes initiatives to curb the generation of waste itself.
We also hope to contribute to the building of a circularsociety by promoting a circular economy that maximizes
efficiency of resource usage throughout product life cycles
and minimizing dependencies and impacts on natural capital.

64

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Sustainability

Respect for Human Rights
The TDK Code of Conduct states that “The TDK Group willcontinue to respect human rights, comply with relevant laws
and regulations and international rules, and discharge its
social responsibility with a strong sense of ethical values forthe purpose of creating a sustainable society.” Toward thisend, for example, the TDK Code of Conduct prohibits all
child labor, forced labor including human trafficking, andunreasonable restrictions on movement that lead tocompulsory labor in supply chains. The TDK Code of
Conduct also requires compliance with all relevant humanrights laws and regulations including those prohibiting childand forced labor in the supply chain and the other laws
identified above.
The TDK Group Policy on Human Rights was formulated
in 2016. We respect and support international norms onhuman rights including the International Bill of Human Rights,
the ILO Declaration on Fundamental Principles and Rights at
Work, the OECD Guidelines for Multinational Enterprises, andthe Children’s Rights and Business Principles. Based on theframework of the UN Guiding Principles on Business andHuman Rights, TDK promotes the correct understanding ofpotential human rights issues and takes steps to address
them, not only within the business operations of the TDK
itself but also throughout the value chain. We expect ourbusiness partners and suppliers to understand and support
the TDK Group Policy on Human Rights, and we also require
our business partners and suppliers to comply with TDK
Supplier Code of Conduct.
Governance
At TDK, the Sustainability Promotion HQ—with the Chief
People and Sustainability Officer (CPSO) in place as the
responsible party—promotes human rights responses while
coordinating with related functions. The Sustainability
Promotion HQ issues reports at Board of Directors at least
twice a year regarding the status of sustainability initiatives forthe entire Group including those with respect to humanrights. Based on this information, the Board of Directors
conducts deliberations and adopts resolutions as necessary.
Strategies
The TDK periodically assesses the issues which could
present potential human rights risks and the groups ofpeople who might be vulnerable to such risks throughdialogues with external parties, reports from international
human rights organizations and conducting risk assessments
and CSR self-checks. (See the figure below)
In FY March 2024, TDK reviewed materiality when
formulating the new Medium-term Plan that started in FY
March 2025 and re-evaluated key human rights themes.
As a result, we identified the following three points aspriority issues:• Responsible sourcing of minerals• Respecting the human rights of employees at our
manufacturing sites• Respecting the human rights of employees ofsuppliers (including manufacturing sub-contractors
and labor agencies)
TDK is committed to implementing prevention and mitigation
measures and monitoring progress to address each major
human rights issue relating to those priority issues and willcontinue to perform periodic re-evaluation.
Risk management (human rights due diligence)
TDK undertakes human rights due diligence processes andpromotes its due diligence activities in line with the procedures
set out in the UN Guiding Principles on Business and Human
Rights. We also continue to dialogue with internal/external
parties and stakeholders to make our activities more effective.

Human rights due diligence process of TDK Group

Policy Commitment

Risk Identification
and Assessment

Prevention/Remediation
Measures andPeriodic Review

ReportingDialogue

Dialogue

Dialogue

Dialogue• Identify potential human rights
issues in the value chain• Implement measures foreach key theme andundertake periodic review• TDK Code of Conduct• TDK Group Policy on
Human Rights• TDK Supplier Code of
Conduct• Evaluate risks by probability,
human rights impact, and scaleof our company’s leverage• Prioritize key themes basedon risk evaluation result• Assess detailed risks for eachkey theme• Assess potential humanrights risks in potential new
business relationships
created through M&A andsimilar transactions• Training• Sustainability Website• Human Rights Statement65About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Sustainability

Respect for Human Rights

Initiatives for prevention and reduction ofhuman rights risks

Metrics and targets
Action items
Responsible sourcing ofminerals

Respecting human rights of
employees at our
manufacturing sites

Respecting human rights of
employees at suppliers(including manufacturingsub-contractors and laboragencies)

FY 3/24 goals

Results

A ratio of at least 92% of suppliers recognized as procuring
the 3TG minerals from RMAP*-conformant refineries

90.9%

Achieve 100% implementation of CSR self-checks atmanufacturing sites (TDK Group manufacturing sites)

100% implementation

Achieve 100% implementation of labor, human rights, andethics risk assessments at manufacturing sites (TDK Group
manufacturing sites)

100% implementation

Conduct either of RBA-authorized audit (VAP, AMA, or CMA),
customer CSR audit, or CSR assessment based on the RBA
VAP Operations Manual at all our manufacturing sites at least
once every three years

Implemented at 100% of sites over
the three years from FY March 2022
to FY March 2024

Conduct training for personnel involved with CSR in Japanand overseas

Conducted CSR internal auditors
training in Japan, ASEAN, and China

Achieve 100% implementation of labor, human rights and ethics
internal audits at targeted manufacturing sites

100% implementation at subject sites

Achieve CSR compliant supplier rate of 99.5%

100%

Achieve 100% implementation of CSR self-checks at
sub-contractors (FY March 2023 to FY March 2024)

97%

Achieved 100% implementation of CSR self-checks at dispatch
companies used by manufacturing sites in the high-riskcountries in Asia

100%

In 2020, TDK joined the Responsible Business Alliance(RBA), an organization which is dedicated to improvingsocial, environmental and ethical conditions in the global
supply chains. TDK utilizes the RBA Code of Conduct as
the standard to promote our CSR activities atmanufacturing sites. We conduct activities to prevent andreduce human rights risks identified as major human rights
issues by making use of the RBA’s Code of Conduct,assessment items, and audit frameworks.
For information on specific measures, please see the Sustainability Website.
Respect for Human Rights

https://www.tdk.com/en/sustainability/social/human_rights* The Responsible Mineral Assurance Process (RMAP) is a program that verifies compliance with responsible sourcing of minerals. The program uses an independent third-party organization toevaluate smelters’ and refiners’ management systems and procurement practices.

66

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

DX Promotion

Roshan Thapliya
Corporate Officer
Chief Digital Transformation Officer andGeneral Manager, Management System HQDigital transformation in TDK
Recent technological trends in cybersecurity, data platform,
AI and IoT have rapidly accelerated the transformation ofsociety. These trends undoubtedly bring challenges to thestatus quo, but from our perspective, it provides us with
opportunities to serve society better in many new ways. I
see this as an example of creative disruption, where wecan certainly bring value through our broad businessportfolio, which we acquired from our history of innovationand diversification.
It is with this in mind that in our digital transformation(DX), we intentionally embrace these cutting-edge
technologies by design and complement it with oursustainability-conscience intentions and global diversity
in talent, market and culture, by default. To be specific,
TDK is intentionally evolving itself via business cycletransformation, putting emphasis in data-driven market
trend insight, revolution of manufacturing throughproprietary data-driven process optimization, and futureproofing our supply chain with environmentally-geared
focus. The established companywide DX initiatives willundoubtedly contribute to further enhance our corporate
value, both as “Financial” and “Pre-finacial”-enablers,
through operational efficiency and value creation,
respectively. To ensure execution, we put emphasis inpromoting upskilling and reskilling of our human assets
through agile deployment of digital technologies for DX-OJT,
formulating curricula for domain specific DX andstrategically hiring external top talents globally. Furthermore,to accelerate TDK Transformation, we formed a dedicatedorganization to develop cutting-edge AI technologies, that
ensures the integration and alignment of TDK’s proprietary
AI technologies with other advanced AI innovations into ourbusiness processes worldwide.

Enhancing our manufacturing processes
Combining digital technologies and systems with ourglobally diverse workforce, extensive knowledge andmanufacturing data, we improve overall equipment
effectiveness, quality of products and inventory turnover toenhance our manufacturing productivity.
Strengthening our commitment to sustainability
Over the years, our commitment to sustainability has
consistently grown in significance. Here, we will reinforce
our activities on decarbonation with DX by employing
advanced digital technologies that will allow us to trace
carbon emissions and optimize entire supply chain toprovide sustainable business processes.

DX initiatives for the Long-term Vision
Accelerate TDK Transformation

DX initiatives to accelerate TDK Transformation
The DX initiatives are intended to accelerate TDKTransformation based on our Long-term Vision. The threepriority fields are: “Reinforcing sales and marketing
capabilities,” “Enhancing our manufacturing processes,”and “Strengthening our commitment to sustainability.”
Reinforcing sales and marketing capabilities
By combining proprietary sales and marketing data withemerging technologies such as generative AI, we willreinforce our current market and find new opportunities for
growth. That will help us to become the No.1 partner forour customers around the world.

Global DX Initiatives

Broadbusiness
portfolio

Reinforcing
sales andmarketingcapabilities

Enhancing ourmanufacturing
processes

Strengthening
ourcommitment tosustainability

DX/IT Platform
GenAI &
domain-specific
AI platform

Cutting-edge
cybersecurity &privacy-enhancing
technologies

Globaldiversity inculture &talents67

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Advance Group Governance
Organization building to display diverse strengths
One of TDK’s strengths is our diversity. To further demonstrate those strengths, we areworking to transform ourselves into an autonomous and decentralized organization based ona fundamental policy of “Empowerment and Transparency” that will also serve to guarantee
transparency for our stakeholders, while also working to speed up decision-making bytrusting the people who share our goals and principles and empowerment. We are adopting
a matrix management system based on two axes—the business axis, which is the chain ofcommand for the execution of work, and the function axis, which involves the support ofbusiness operations and monitoring of the state of operations by headquarters functions. We
are also setting up regional headquarters in Europe, the Americas, and China that, incooperation with the global headquarters, will implement support and monitoring of our
subsidiaries in each region. We have also established R&D and marketing functions in tune
with the special characteristics of each region, thus forming setups capable of responding toregional needs and technological trends in a timely manner.
Furthermore, regarding M&A, rather than controlling acquired companies, we adopt a
policy of post-merger integration (PMI) by which we maintain equal relationships and respect
one another’s corporate culture. In this way, we position acquired companies as partners andaccept their technologies, strengths, and values, thereby creating synergy on a global scale.

Appointment of non-Japanese corporate officers
TDK has been pursuing its businesses on a global scale. In 2004, we appointed our first
non-Japanese corporate officer, and since then have been increasing the number of suchofficers while promoting the globalization of management. At present, both the ratio ofoverseas sales and the overseas employee ratio stand at around 90%, while non-Japanese
account for 50% of our corporate officers.
(As of the end of June 2024)

Michael Pocsatko

Andreas Keller

Albert Ong

Ji Bin Geng

Senior Vice President

Senior Vice President

Corporate Officer

Corporate Officer

Werner Lohwasser

Roshan Thapliya

Ludger Trockel

Joe Kit Chu Lam

Corporate Officer

Corporate Officer

Corporate Officer

Corporate Officer

Group management structure with the policy of Empowerment and Transparency
Function-related direction and supervision

Board of Directors

Business-related direction and supervision

President
Executive Committee Meeting

Function axis

Businessaxis

Composition of corporate officers
BC

BC

BC

HQ functions
Global HQ

Regional HQs

Corporatefunctions(technologicaldevelopment,
human resources,
legal affairs,
finance &accounting,qualityassurance, etc.)

Japan

Subsidiaries
Coresubsidiaries

Coresubsidiaries

Coresubsidiaries

EuropeAmericas
China

Subsidiarygroup

Subsidiarygroup

Subsidiary
group

Other
subsidiaries
Other
subsidiaries
Other
subsidiaries

Jim Tran
Corporate Officer

Non-Japanese

9

As of
the end of June
2024

Japanese968About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Risk Management
Potential risks over the term of Medium-term Plan

Risk assessment
As a risk assessment, each term the residual risk (i.e., after
control by the measures taken so far) is examined from theperspective of the three elements of management resources(people, goods, and money), relationships with internal andexternal stakeholders, reputation, and BCP. We calculate
the magnitude of the impact on the TDK Group from theabove and combine it with the possibility of the riskmaterializing to create a residual risk heat map to visualize

Category

Contents

Economic/Market trends

Slowdown of global economy, changes insocial trends, soaring prices and personnel
costs, hikes in raw material purchase costs
and energy resource prices

TechnologicaltrendsDelay in the use of digital technologies,
acceleration in technological transformation

Geopoliticalrisks

Geopolitical tensions, tightening regulations
for technology export

Compliance

Deficiencies in compliance system,
deficiencies in contract signing, insufficientlegal due diligence, information leakage due
to misconduct

Supply chain

Quality deficiencies in supply chains, soaring
row material and logistic costs, inadequate
human rights efforts in value chains

Risk management structure

Risk Management
Policies & Strategies

Risk Management Structure

Risk Management Infrastructure

Risk Management Process

Plan
Identify

Assess

Draft
Measure

Do

Check

Act

ExecuteMonitorImprove“Residual Risk” heatmap
Level 5and evaluate the priority of risk countermeasures. The
results of these risk assessments and the status ofcountermeasures are deliberated at the Executive
Committee and reported to the Board of Directors. In
addition, the validity of the heat map is verified at least once
during the period, and the assessment of residual risk isreviewed if necessary.

Magnitude of impact

Risk management structure
In aiming for sustainable growth, the TDK Group
promotes company-wide measures against factors(risks) that hinder the achievement of organizational
goals and implements company-wide risk management(Enterprise Risk Management; ERM) activities toappropriately manage them. TDK’s basic policy for risk
management is to ensure that each organization within
the TDK Group takes appropriate risks in order to create
corporate value(Value Creation) and prevent damage tocorporate value(Value Protection) by appropriately
identifying and responding to opportunities and risks.
In order to consider and implement measuresrelated to ERM activities and strengthen risk
management activities, we have established an ERM
Committee under the direct control of the Executive
Committee, which is chaired by a corporate officer
appointed by the president. The ERM Committee
clarifies the role of each organization in risk management
activities and promotes the PDCA cycle of a series ofrisk management activities, from identification of risks toevaluation, consideration of countermeasures,
implementation, monitoring, and improvement.

Level 4
Level 3
Level 2
Level 1
Level 1

Level 2

Level 3

Possibility to materialize

Level 469

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Chapter 3

TDK’s

Governance
71 Changes in TDK’s Governance/
TDK’s Board Culture
72 A Talk by Outside Directors
76 Corporate Governance Structure
77 Strengthening of the Board of
Directors’ Monitoring Function
78 Operational Policy and Yearly Agenda of
the Board of Directors Meeting
79 Activities of Advisory Committees andOther Similar Meetings
80 Succession Plan
81 Skills Matrix
82 Remuneration for Executives
84 Effectiveness Evaluation of
the Board of Directors
86 Directors, Audit &Supervisory Board Members,
and Corporate Officers

How Is TDK’s
Governance Evolving?

70About TDK

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Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Governance

Changes in TDK’s Governance/TDK’s Board Culture

History of governance reforms

2020

2012
2008

Appointment of first female director

2023

Appointment of an outside
director as chair of
the Board of Directors

Stipulation of
TDK’s Board Culture

Establishment of Nomination
Advisory Committee(chaired by an outside director)

2002

2018
2015

Establishment of Compensation
Advisory Committee(chaired by an outside director)
Number of directors reduced from 12 to 7

2009

Appointment of first outside director

2004

Appointment of two non-Japanese
corporate officers
Appointment of one more outside
director for a total of three

Appointment of first non-Japanese
corporate officer

Decision reached on basic
policy that at least one-third of
directors should be independent
outside directors
First implementation ofeffectiveness evaluation of theBoard of Directors

Establishment of
the Corporate
GovernanceCommittee

2024
Decision reached on basic
policy that at least half ofdirectors should be
independent outside directors
Majority of the board of
directors became independent
outside directors

Transformation

TDK has established the culture that should be passed down across generations, even if composition of the Board of Directors changes, on the TDK Basic Policy on Corporate Governance.
TDK’s Board Culture
Board members consisting of Directors and Audit & Supervisory Board Members and the executive side such as Corporate Officers, based on their respective
responsibilities, endeavor toward the common purpose of achieving sustainable corporate growth and increasing the medium- to long-term corporate value of
the TDK Group. The philosophy and culture shared by the Board of Directors to achieve this purpose are as follows.
• Board members and the executive side build and maintain a relationship of deep mutual trust and a sound tension.
• Board members and the executive side achieve both the delegation of authority to encourage prompt and autonomous decision-making and the transparency
in business execution (Empowerment & Transparency).
• Based on the premise that discussions at the Board of Directors meetings should be essential discussions that contribute to corporate value, Board members
actively and diversely make remarks and engage in discussions from each member’s standpoint and from a broad point of view, regardless of whether they
are inside or outside members or whether they are Directors or Audit & Supervisory Board Members.
• The executive side takes the opinions of the Board of Directors sincerely as an opportunity to improve management and implements necessary measures.
Directors and Audit & Supervisory Board Members supervise and audit from an objective standpoint. Through these efforts, they aim to further improve the
TDK Group’s corporate value.
TDK Basic Policy on Corporate Governance
Article 1-2 (6)https://www.tdk.com/system/files/governance_pdf_basic_policy_2024_04_en.pdf

Continuation

71

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

A Talk by Outside Directors

We will maintain the spirit of taking on challenges that has
existed since the company’s founding and further evolve
management as a global company while working to achieve“TDK Transformation,” our Long-term Vision.

Mutsuo Iwai

Kozue Nakayama

Shoei Yamana

Outside Director

Outside Director

Outside Director

Chair of the Board,
Member of Nomination Advisory Committee,
Member of Compensation Advisory Committee,
Member of Corporate Governance Committee

Chair of Nomination Advisory Committee,
Member of Compensation Advisory Committee,
Member of Corporate Governance Committee

Chair of Compensation Advisory Committee,
Member of Nomination Advisory Committee,
Member of Corporate Governance Committee

Formulation of the New Medium-term Plan
What discussions took place within the Board of
Directors during the process of formulating the new
Long-term Vision and Medium-term Plan?
Iwai: During that process, the executive side expressed an
intention to start by clarifying the new Long-term Vision andthen backcasting from that to formulate a Medium-term
Plan. Discussions, which started with the Long-term Vision,
were conducted not only at the monthly Board of Directors
meetings, but on multiple other occasions such as during
off-site meetings. The Board’s time is limited, and as a result,
there is a tendency for the Board to be given explanations ofplans that have already been set, but this time we were able
to discuss the issues in a variety of forums, and theexecutive side presented matters on the draft level indicating
their thought process. Since we were able to carefully
consider the specific details at an early stage, I believe thatthe opinions of the outside directors were well reflected in
the plan.
Nakayama: As Mr. Iwai stated, there are still many
companies where plans are generally solidified internally andthe Board of Directors simply approves them, but once
details are set, it becomes more difficult to see the problems
in the background or the process leading up to formulation,and there is little opportunity to make revisions. At TDK, if I
liken the process to cooking, the ingredients were presented
to the Board at a stage when they were still just raw
ingredients, and we were able to think together about how
they should be cooked.
Yamana: If you don’t gather high-quality ingredients,
however, the result will not taste good no matter how it iscooked. In that respect, I believe that excellent ingredientswere prepared this time. When formulating the Long-term
Vision, for example, President & CEO Noboru Saito
personally re-examined the purpose of TDK’s existence,72

About TDK

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Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

A Talk by Outside Directors

prepared a statement expressing his thoughts on what typeof company TDK should be in the future, and asked our
opinions before beginning the debate. In this way, top
management considered very carefully what type of company
TDK should be in the future based on its purpose, presented
a solid foundation for the vision, and also engaged in
repeated discussions that included external perspectives
from an early stage. I believe that as a result of that process,the Long-term Vision, known as TDK Transformation, isextremely convincing to a wide range of stakeholders.
Nakayama: TDK has adopted “Technology for the wellbeing of all people” as its sustainability vision and formulated
the Seven Seas as its direction for the future in order to makethat vision a reality, and I think that it’s wonderful that thecompany is looking even further into the future to create a
new vision, and I can sense the company’s strength.
Yamana: One additional aspect of the process that was
positive is that not only was the Medium-term Plan
formulated by backcasting from the Long-term Vision, areview was also conducted of materiality. Also, I believe that

it was very meaningful that we were able to participate at an
early stage in the discussions that followed along with theoverall flow regarding where to set the targets of the threeyear Medium-term Plan.
Were there any aspects of the discussions that you
placed particular emphasis on or that made a particular
impression on you?
Nakayama: From the perspective of an outside director, I
requested that the company strengthen its measures toenhance team member (employee) motivation. Of course, theexecutive side fully understands the importance of this, butsince the team members are the source of all power for a
corporate organization, I argued for this quite strongly in avariety of forums including the Board of Directors,
Nomination Advisory Committee, and Compensation
Advisory Committee. Also, one thing that made a lasting
impression on me was when Mr. Yamana asserted that “inorder to pursue benefit for customers, we need to think
about applications that combine hardware and software,rather than individual components.”
Yamana: Under a business model as a parts manufacturer
that has been adopted until now, the company has been able
to fully fulfill its role by listening to the requests of customers,
which are end-product manufacturers, and using technology
to provide components that meet those requests. For TDK tobecome the No. 1 partner to its worldwide customers,
however, this alone will not be sufficient. We have to engage
in co-creation with customers at an early stage and create
new innovations from the perspective of end-productmanufacturers and a brand owner. To achieve this, we needto think from the perspective of applications by asking, “whatdo end-product manufacturers and end users want to dowith these devices?” Also, software technology will become
more and more important for achieving this. For example,
TDK has superior hardware technology in the sensor field,
and accordingly, we discussed whether we should combine

this technology with software, AI, and other technologies tocreate new applications.
Iwai: I personally have had the opportunity to tour overseas
subsidiaries, factories, and other facilities over the past
several years. When I visited InvenSense, a sensor
manufacturer, the year before last, I was struck by thecomment of a local team member that in the future, they wantto combine sensors with software and sell products withincreased added value, rather than individual components.
The Medium-term Plan includes reinforcing software
technology as one measure, and it should be extremely
convincing, even to overseas Group team members.
What do you believe are some issues that need tobe addressed in order to carry out the new
Medium-term Plan?
Iwai: In order to achieve the reinforcement software
technology that I mentioned earlier, it will be necessary tobuild development structures by recruiting specialized humanresources and taking other measures, but it will not be easy
to recruit adequate numbers of software engineers with skills
that can be applied immediately, and it also takes time todevelop human resources when starting from the ground up.
In the future, therefore, I believe that it will be important toimplement measures promptly while making use of various
means including M&A.
Yamana: We need to speed up the implementation of
measures, but at the same time, reinforcing risk management
even further is a major issue. The outlook for the global
economy is increasingly uncertain due to the war in Ukraine,
the situation in the Middle East, the slowdown of the Chinese
economy, and other factors. In order to enhancecompetitiveness while responding to these geopolitical risks,
TDK will need to rebuild global supply chains and to rebuild
business processes, manufacturing processes, and so on
based on new ideas. Both of these are reforms that will
require expenditures, but if we start now and produce results73About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

A Talk by Outside Directors

in a few years, TDK will be able to grow into a company thatis unrivaled in terms of the reliability of its technology and its
cost competitiveness.
Nakayama: In order to carry out these reforms, I believe that
it will be important to raise the level of global management
even further while maintaining TDK’s unique culture. I believethat one of the major sources of TDK’s competitiveness is its
culture of taking on challenges. For example, in the past,
TDK sold its SAW filter business, which had been performing
well, to raise funds and implemented M&A with the objectiveof strengthening the sensor business as a seed for future
growth. There are very few companies in Japan that can takeon a challenge of extreme business transformation of thistype. TDK is now a global company with market capitalizationin excess of 3 trillion yen and more than 100,000 teammembers worldwide. It is by no means easy to operate
global matrix management centered on both business andfunctions without losing the culture of taking on challenges
that TDK has.
Iwai: Just as you say, fully maintaining this distinctive spirit oftaking on challenges like a venture company from the time ofits foundation, even though it has grown to such a scale, is
one of TDK key attributes. It is precisely for this reason that
TDK was able to achieve this tremendous transformation ofits business portfolio. Even as the company has grown larger,
I believe that its cohesiveness has remained strong. Whenviewed on the level of operations, however, I feel that there issome degree of inconsistency in current conditions, withsome subsidiaries maintaining their earlier methods of doing
business at the time of acquisition, and also, some havefinancial functions handled by the parent company whileothers have had authority delegated to them. For TDK tobecome a much stronger corporate group, I believe that it isimportant to achieve operational consistency from theperspective of overall optimization, to the extent that this canbe done without losing the spirit of taking on challenges.
Nakayama: Reinforcing brand strategies will also be a major

issue in the future. If TDK is unable to substantially enhance
its name recognition and establish an appealing brand image,it will become increasingly difficult to recruit outstanding
human resources. Raising team member motivation throughinternal branding is also important. Reinforcing brandstrengths takes time. It will be important to thoroughly
analyze what measures produce what types of results,
including overseas, for raising TDK’s recognition and then to
implement effective brand strategies.
Iwai: Also, closely monitoring changes in the businessenvironment and technology trends, appropriately
reorganizing the business portfolio in the future will also be
a major issue. The company intends to discuss thisthoroughly at Board of Directors meetings as a high-priority
agenda item.

The Evolution of TDK’s Governance
What discussions are taking place concerning thereinforcement of corporate governance?
Iwai: Mr. Shigenao Ishiguro, who retired from president andwas appointed non-executive Chairman & Director in FY
March 2023, restructured the Corporate GovernanceCommittee to serve as a venue for discussing how thecompany should be managed in the medium- to long-term
view. Since then, all of the outside directors have participatedin these discussions. In FY March 2023, we discussed thehanding down of the Board culture, which was an issue that
had been pointed out in the effectiveness evaluation of theBoard of Directors, and we clarified the ideal state of TDK’s
Board. Starting in FY March 2024, we initiated full-scale
discussions on how we should change governance of TDK.
Nakayama: To give an example, the Nomination Advisory
Committee has discussed matters in response to debate at
the Corporate Governance Committee. Until now, TDK has

not used executive titles such as CEO, CFO, and CTO, butthere has been discussion that uniform executive titles thatcan be understood globally should be used in order tobolster global management. We also discussed theintroduction of the global grading to evaluate teammembers at Group companies around the world using thesame criteria.
Yamana: As of the General Meeting of Shareholders in Juneof this year, a majority of the Board is made up by outside
directors, and this reform was first discussed by the
Corporate Governance Committee.
Nakayama: TDK has an Audit & Supervisory Board, and the
Corporate Governance Committee, Compensation Advisory
Committee, and Nomination Advisory Committee are all
discretionary committees, and I believe that excellent
collaboration between the Board of Directors and these threecommittees has facilitated steady progress in improving
governance. After the Corporate Governance Committee
discussed the introduction of the CxO positions mentioned
earlier as well as the composition of the Board of Directors,74

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A Talk by Outside Directors

the skills matrix, succession plans, and other topics, theCompensation Advisory Committee and Nomination Advisory
Committee have investigated these issues in greater detail.
Yamana: The Compensation Advisory Committee, for which
I serve as chair, conducted a major review of the remuneration
system for officers this fiscal year. Specifically, in addition to
substantially increasing the portion of short-term and mediumterm results-linked compensation included in remuneration for
officers, we also incorporated new pre-financial evaluation
items into the medium-term evaluation criteria, such as therate of reduction of CO2 emissions and Team Member
Engagement Survey scores. We have furthermore succeededin raising the ratios of evaluations of achievement both interms of TDK’s financial performance and our outcomes, andof the missions of individual corporate officers.
Nakayama: The Nomination Advisory Committee clarified
selection policies and processes for outside directors andoutside Audit & Supervisory Board members in response toindications made during the effectiveness evaluation.
Iwai: Within the various discussions concerning optimal
governance by TDK, the issue of institutional design arose. It
is generally believed that a company with committees has amore advanced governance format, but I believe that TDK’s
current governance format is quite excellent.
Yamana: I would also evaluate TDK’s governance highly.
Even though TDK is “a company with an Audit & Supervisory
Board,” the effectiveness has been refined from an earlystage, and the governance structure is extremely advanced.
A lot of effort is put into the annual effectiveness evaluations
in particular, and I feel that TDK is the most serious about
governance among all the companies that I have observed.
Nakayama: TDK truly is thorough about governance.
Iwai: Of course, we gather opinions from everyone using
surveys. After responses were submitted, former Chairman
Ishiguro, who was the chair of the Corporate GovernanceCommittee, conducts interviews with each team member
individually to ask the reasons for their evaluations in
specific areas and to obtain more detail about certain
issues, thereby acquiring detailed information and the true
thoughts of the respondents, which cannot be conveyed inwriting alone. Based on this, topics are identified and an
improvement cycle is carried out. The process itself has
been thoroughly considered and it is put together with theutmost care.
Yamana: In the case of “a company with a nomination andother committees,” the Board of Directors performs
supervisory and monitoring functions, and it is myunderstanding that if some problem arises concerning theexecutive team, the nomination committee functions to selectthe next executive team. It is beneficial if there is somedegree of tension between the executive team and theBoard, but if it is excessive, there is a risk that the executive
team will atrophy. It is important to separate execution fromsupervision, but it is necessary for each company to discussin detail what type of monitoring will enable the executive
team to demonstrate the greatest capabilities.
Nakayama: This is because it’s all meaningless if motivationon the part of the executive team drops.
Yamana: Although TDK’s governance structure separates
execution and supervision, the two are not in a
confrontational relationship. For example, the Corporate
Governance Committee is able to transcend the differencesin positions and roles between the outside directors and theexecutive side to share their wisdom regarding even better
management for TDK. TDK’s approach to governance is that
this is the inherent value of the Board.
Iwai: I think that’s right. I believe that under the current TDK
system, where in-depth discussions are held in thediscretionary committees followed by final discussion anddecision by the Board of Directors, highly effective governancecan be achieved if the systems are properly operated.
Nakayama: Of course, looking to the future, it is necessarythat the Corporate Governance Committee and the Board
continuously discuss the issue of what form of governancesystems will be optimal.
Iwai: Indeed. If we can identify examples of best practices byother companies, we will of course gather information fromthose companies and use that information for designing andoperating systems in the future, and if TDK’s governance isgoing to be enhanced even more, we will need to conduct
substantial reviews of the system design itself. I hope to
evolve TDK’s governance even further in the future by all of
the outside directors working in collaboration with the Audit &Supervisory Board members and the executive side.

75

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Data Section

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TDK Integrated Report 2024

Corporate Governance Structure
Basic stance and structure
Emphasis on enhancing corporate value
As “a company with an Audit & Supervisory Board,” TDK
strives to ensure the soundness, compliance, andtransparency of management through the introduction ofvarious mechanisms to strengthen corporate governancewith the aim of enhancing long-term corporate value.
Regarding the Board of Directors, we strive for swift
management decision-making by having a small number ofmembers, and we actively appoint independent outside
directors with no conflicts of interest so as to strengthen
monitoring functions. Discussions are conducted from along-term perspective. In addition, to strengthen supervisory
functions over management, three committees have been

established as advisory bodies to the Board of Directors (theNomination Advisory Committee, Compensation Advisory
Committee, Corporate Governance Committee).
Regarding the execution of business, TDK endeavors toensure swift decision-making and to clarify responsibility andauthority in business execution through the adoption of acorporate officer system. In addition, regarding global Groupmanagement, TDK trusts people who share the same goals
and principles and delegates authority to them. Furthermore,
to ensure transparency toward stakeholders, TDK advocatesa policy of Empowerment and Transparency and is
promoting reforms to realize an autonomous anddecentralized organization.

Roles and authorities of the Board of Directors, ECM,
and BCs/BGs“Empowerment & Transparency”
Board ofDirectors

Shifted from considerationof individual cases todiscussion of important
issues involving corporate
management

Review
Empowerment

Transparency
and reporting

Thoroughdiscussion

ProposalDiversity/Inclusion
The smartest
structure and culture
for arriving at
better wisdom

Accountability
Responsibility andidentity as teammembers

ECM

Review

Corporate governance structure chart

Elects and dismisses

Nomination Advisory
Committee

Audit & Supervisory
Board Members Office
Reports

Reports

Cooperates

Reports

President & CEO

Corporate GovernanceCommittee

Instructs
Reports

Executive Committee
Meeting
Reports

Management Review &Support Group

Cooperates

Enterprise
Risk Management
Committee
Compliance Committee

Corporate Officers

Elects and dismisses

Board of Audit &Supervisory Board Members

AuditsReports

Compensation Advisory
Committee

Elects and dismisses
Reports

Crisis Management
Committee
Information Security
Committee
Disclosure Committee
Divisions and Group Companies

Reports
Reports

Reports

Help Lines(Consultation services)

Accounting Auditors

Board of Directors(Directors and Audit &Supervisory Board
Members attend
the meetings)

Reports

Transparency
and reporting

ProposalOrdinary General Meeting of Shareholders
Reports and submits proposals

Thoroughdiscussion

Empowerment

Business Company/Group

Corporate governance at TDK is based first of all on conducting
rigorous discussions within the ECM on the business execution
side. The Board of Directors then issues its management decisions
based on even more thorough discussion of the conclusions
presented by the ECM that also incorporate outside perspectives.
This not only increases management transparency and ensurestrust, but also speeds management decision-making by advancing
the delegation of authority to the business execution side. In thisway, the Board of Directors and the executive side maintain an
appropriate relationship of both tension and trust and an ongoingcycle of rigorous discussion, ensuring transparency, and delegationof authority, creating a balance between effective governance andmanagement speed. Note that the number of members on boththe Board and the ECM is limited to achieve active, effective
discussions while also ensuring diversity. To ensure fairness in these
discussions, both groups are comprised of members that do notinclude the individuals responsible for the respective businesses.

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Strengthening of the Board of Directors’ Monitoring Function
Appointment of outside directors
Persons recruited as independent outside directors have a
wealth of practical experience relating to corporate
management and are able to provide advice from an
independent perspective regarding general management forenhancing TDK’s corporate value. To secure theindependence of outside directors and outside Audit &Supervisory Board members recruited to the board, TDK
established “items to be verified regarding independence” bymaking reference to “Securing Independent Director(s)/Auditor(s)” of the Securities Listing Regulations and the
Guidelines Concerning Listed Company Compliance, etc.,
established by the Tokyo Stock Exchange, Inc. The directors’
terms of office are set at one year to give shareholders an
opportunity to cast votes of confidence regarding directors’
performance every fiscal year.

Composition of directors (as of June 21, 2024)

Composition of the Nomination Advisory Committee(as of June 21, 2024)

Outside Directors

Inside Directors

Outside Directors

4

3

4

Chair:
Outside Director

Inside Director

1Chair:
Outside Director

Composition of the Compensation Advisory Committee(as of June 21, 2024)

Outside Directors

Inside Director

4
Emphasis on external and medium- to long-term
perspectives
TDK’s basic policy is to have a small number of members (upto 10 persons) on the Board of Directors so as to expedite
speedy management decision making. At present there areseven directors sitting on the board. In addition, in order tostrengthen the management supervision function, TDK’s
basic policy is that a half or more of these directors should
be independent outside directors with no conflict of interests.
Currently four of the seven directors sitting on the board are
independent outside directors. Furthermore, in principle anindependent outside director serves as the chair of the Boardof Directors. The three inside directors are the CEO, CFO,
and CTO. Independent outside directors serve as the chairs
and a majority of the members of the Nomination Advisory
Committee and Compensation Advisory Committee, which
are advisory committees of the Board of Directors, and the
Corporate Governance Committee, which discusses thebroad framework of TDK’s governance, also includes
independent outside directors.

Members of Advisory Committees (as of June 21, 2024)
Nomination
Advisory
Committee
Noboru Saito

Representative
Director

Tetsuji Yamanishi

Representative
Director—

Shigeki Sato

Director—

Kozue Nakayama

OutsideDirector(Chair)Mutsuo Iwai

OutsideDirector

Shoei Yamana

OutsideDirector

Toru Katsumoto

OutsideDirector

Compensation
Advisory
Committee

1Chair:
Outside Director

Corporate
GovernanceCommittee*—(Chair)——Composition of the Corporate Governance Committee(as of June 21, 2024)

Outside Directors

Inside Directors

42
Chair:
Inside Director(Chair)* One more person, the corporate officer serving as GM of the Corporate Strategy HQCorporate Officer

177About TDK

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Operational Policy and Yearly Agenda of the Board of Directors Meeting
Taking note of the results of evaluation of the effectiveness of
the Board of Directors, the Corporate Governance Committee
compiles operational policy for the Board of Directors every
fiscal year and, on the basis of this policy, discusses anddecides the yearly agenda of the Board of Directors.
In the previous term (T128), the Corporate GovernanceCommittee stipulated the operational policy as follows and,based on this policy, discussed and set the agenda of theBoard of Directors.

Operational policy for the T128 Board of Directors:
basic policy for board operations:
Directors and Audit & Supervisory Board Members andthe executive side endeavor toward the common
purpose of achieving sustainable corporate growth andincreasing the medium- to long-term corporate value of
the TDK Group. T128 represents the final year of thecurrent medium-term management plan and the year
for formulating a new Medium-term Plan starting from
T129. Therefore, the Board of Directors will provide
supervision and advice from various perspectives toensure the formulation of a plan that is highly feasible
and compelling to stakeholders.
Key items for discussion in the Board of Directors
in the T128
(1) Review of the long-term plan and discussion on the
new Medium-term Plan
(2) Discussion on the strengthening of stakeholder
engagement(3) Discussion on the next management structure

Outline of the yearly agenda of the Board of Directors for T128 (April 2023–March 2024)
Financial accounts, humanresources, compensation

Businesses, functions(cases of capex, M&A, etc. to be
added as they arise)

Governance(lawsuits and other important
issues to be reported as they arise)

April

Full-year results, Financial
Results

Internal control system (resolution)May

Account documents(Companies Act)
Resolution on convening ofOrdinary General Meeting of
Shareholders

State of internal audit reportState of possession of crossshareholdings report
Group risk management reportCompliance management report
Business Ethics Supervisory
Committee report

June

Executive Structure after the
General Meeting of Shareholders IR activity report
Securities Report

Board of Directors’ operational policy
Auditing policy and auditing plan
Sustainability activity report

July

Quarterly results, Financial
Results
1Q quarterly report
Global HR strategy

Review of standards for referral to
Board of Directors

AugustSeptember

October

Branding and PR strategy

HQ function reports (production, quality
assurance)

Sustainability activity report

TDK’s Long-term Vision
Panel discussion in Akita area

Board of Directors evaluation (kickoff)
Group risk management reportCompliance management report
Business Ethics Supervisory
Committee report

CEATEC inspection tour

LGBTQ+ study meeting
Inspection of internal
technology exhibition
Discussion in Narita area

December

Succession plan report

Progress report on main businesses(Medium-term Plan)
IR activity report

Board of Directors evaluation (interim
report)January

Quarterly results, Financial
Results
3Q quarterly report

Progress report on main businesses(Medium-term Plan)

Sustainability activity report

Branding and PR strategy
IR activity report
Integrated Report policy

Business Ethics Supervisory
Committee report
Sustainability activity report

Next Group-wide Medium-term Plan
(resolution)
Next Group-wide business plan
(resolution)(strategy, finance, investment,
management targets)

Board of Directors evaluation(deliberation of evaluation results)

March

Decision on candidate directors
Compensation standards fornext-term directors and Audit &Supervisory Board members

Next management structureLong-term strategy update
toward next Medium-term Plan

Global market report
Review of long-term plan and directionof next Medium-term Plan
Progress report on main businesses(Medium-term Plan)

February

Study meeting on geopolitics

HQ function reports (technology,
Business Ethics Supervisory
intellectual property, DX, marketing, etc.)
Committee report
IR activity report

Quarterly results, Financial
Results
2Q quarterly report
Interim dividend resolution

November

Discussions, study
meetings, etc. outside theBoard of Directors

Important themes in next
Medium-term Plan (businessportfolio management)78

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Activities of Advisory Committees and Other Similar Meetings (FY March 2024)
The Nomination Advisory Committee

The Compensation Advisory Committee

Members

3 outside directors and 2 inside directors

Members

3 outside directors and 2 inside directors

Number oftimes held

10 times

Number oftimes held

9 times

Theme

Theme

The Committee deliberates on thenomination of directors, Audit &Supervisory Board members andcorporate officers, as well as on
successor planning, and contributes toensuring the appropriateness of theirelection and dismission as well as thetransparency of the decision-making
processes. In the current fiscal year, theCommittee deliberated on the selectionof candidates for the Board of Directors,
succession plans, and the clarification of
the policy and processes for theselection of directors and Audit &Supervisory Board members.

The Committee deliberates on theframework and level of remuneration for
directors and corporate officers andcontributes to ensuring the transparency
and appropriateness of the remuneration
decision-making process. In the current
fiscal year, the Committee held
deliberations on the institution of a new
remuneration plan for executives, theexecutive remuneration table, and thecorporate officer results-linked bonus
target values and payment amounts.

Meetings of outside directors only

The Corporate Governance Committee

Members

All outside directors and all outside Audit& Supervisory Board members

Members

3 outside directors, 2 inside directors,
and 1 corporate officer

Number oftimes held

4 times (including 1 time with full-time
Audit & Supervisory Board members)

Number oftimes held

4 times

Theme

Theme

The Committee is a organization which
undertakes considerations on the ideal
configurations of TDK’s medium- tolong-term corporate governance. In thecurrent fiscal year, it held discussions on,among other topics, the Board of
Directors’ operational policy, delegationof authority, and management structure,and made recommendations to theBoard of Directors. It also undertook theformulation of a plan for the Board of
Directors evaluation as well as theimplemented the initial evaluation,
confirmed the operational status of theinternal control system, and verified thestatus of compliance with the Corporate
Governance Code.

From the perspective of ensuring thatoutside directors actively contribute to
discussions at the Board of Directors,
meetings exclusively attended by outside
directors and outside Audit &Supervisory Board members are held ona regular basis. These meetings areintended to facilitate exchanges of
information and shared perceptions
based on the attendee’s independentand objective positions.

Discussions outside the Board of Directors
Members

All directors and Audit & Supervisory
Board members

Number oftimes held

4 times

Theme

Open discussions are regularly held withthe aim of deepening and improving theeffectiveness of discussions at meetingsof the Board of Directors. As the current
fiscal year constitutes the fiscal year inwhich the new Medium-term Plan wasformulated, discussions were held on theLong-term Vision and important themesof the Medium-term Plan.

ColumnInitiatives to enhance employee engagement
The effectiveness evaluation of the Board of Directors for the 127th term, identified
the issue that: “It would be beneficial for the Board of Directors to be more open
to employees, as the entire Group works toward the common goal of TDK’s
sustainable growth and enhancement of corporate value over the medium andlong term.”
In response to this issue, in the current fiscal year, the Board of Directors
initiated activities called “Open Board” to enhance engagement with employees.
This included holding board meetings in the Akita region with panel discussions
involving employees, discussions between outside directors and employees in the
Narita region, and messages from directors to employees, aiming to facilitate
interaction and information sharing between the Board of Directors and employees.

79About TDK

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TDK Integrated Report 2024

Succession Plan
CEO Succession PlanningElection shall be made in accordance with the following policy and procedures.

The Nomination Advisory Committee undertakes considerations on CEO succession planning.
The Committee agrees on the required criteria for CEOs in terms of their skills, experience, anddistinguishing characteristics, with the potential CEOs identified from among the pool ofcandidates in succession planning for key positions as well as graded training conducted by the
Human Resources HQ. The training and experiences necessary to assume the role of CEO isthen provided and the appropriate candidate is selected.

1

2

3

4

Formulation ofrequirements
for CEOs

Selection of
successor
candidates

Conducting ofassessments
and reviews

Review andimplementationof required
training plans

Discussions by the
Nomination Advisory
Committee basedon TDK’s new
Medium-term Plan
and the Long-term
VisionDiscussions by the
Nomination Advisory
Committee basedon a longlist of
candidates
presented by the
executive side

Conducting ofassessments by
third parties toconfirm thecompetence ofcandidates andsubmission oftraining anddevelopment topics

Formulation ofrequired coachingand strategic
placement plans

Ongoing
reviews

Policy for election of directors and Audit & Supervisory Board members
The Company’s policy for election of Directors and Audit & Supervisory Board Members is
as follows.
(1) The candidate must be able to understand the Company’s board culture and share its values.
(2) The candidate must have excellent character and insight, as well as experience and abilities
to contribute to the sustainable growth of TDK and the enhancement of its corporate value
over the medium to long term.
(3) The candidate must have a high sense of legal compliance and ethics.
(4) The Company shall strive to balance diversity, including gender, internationality, andprofessional experience, with appropriate size for the Board of Directors as a whole,including Directors and Audit & Supervisory Board Members.
(5) Outside Directors and Outside Audit & Supervisory Board Members must satisfy the requirements
provided in the items to be verified regarding independence established by the Company.
(6) Independent Outside Directors must include those with management experience at othercompanies.
(7) At least one (1) of the Audit & Supervisory Board Members must have sufficient knowledgeof finance and accounting.
Procedures for election of directors and Audit & Supervisory Board members
In selecting candidates for Directors and Audit & Supervisory Board Members, the Nomination
Advisory Committee, the Chair and more than half of the members of which are Independent
Outside Directors, shall thoroughly deliberate on the candidates and report to the Board of
Directors. The Board of Directors shall respect and deliberate the contents of the report, decideon the candidates for Directors and Audit & Supervisory Board Members, and submit them to
the General Meeting of Shareholders. In selecting candidates for Audit & Supervisory Board
Members, the Audit & Supervisory Board shall review the candidates in advance, and with theconsent of the Audit & Supervisory Board, the Board of Directors shall select the candidates.
Deliberations on candidates

Deliberations on candidates

Resolutions and elects

The Nomination
Advisory Committee

Board of Directors

Ordinary General Meetingof Shareholders

Reports

Consideration of
Audit & Supervisory
Board member
candidates
Audit & Supervisory Board

Consent to candidates
for Audit & Supervisory
Board members

Deliberates

80About TDK

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Data Section

TDK Integrated Report 2024

Skills Matrix
In selecting candidates possessing the respective skills, consideration is given to the overall balance and diversity of the directors
and Audit & Supervisory Board members taken as an integrated whole as the constituent members of the Board of Directors.

Name

Position

Directors
Audit & Supervisory Board
Members

Noboru Saito

Representative Director,
President & CEO

Tetsuji Yamanishi

Representative Director,
Senior Executive Vice President

Shigeki Sato

Director, Senior Vice President

Kozue Nakayama

Outside Director

Mutsuo Iwai

Outside Director

Shoei Yamana

Outside Director

Toru Katsumoto

Outside Director

Masato Ishikawa

Full-time Audit & Supervisory
Board Member

Takakazu Momozuka

Full-time Audit & Supervisory
Board Member

Douglas K. Freeman

Outside Audit & Supervisory
Board Member

Chizuko Yamamoto

Outside Audit & Supervisory
Board Member

Takashi Fujino

Outside Audit & Supervisory
Board Member

Corporate
Management

GlobalBusiness
Experience

Sales/
Marketing

ESG/
Sustainability

Technology/
Research &Development

Manufacture/
Production
Technology

Finance/
Accounting

Legal/
Compliance/Risk
Management

Outside Directors

Inside Directors

43(including 1 female)

Inside: 5
Outside: 7

Outside Audit &Supervisory Board Members

Full-time Audit &Supervisory
Board Members(including 1 female and1 non-Japanese)2

3

Backgrounds of outside directors and outside Audit &Supervisory Board members

Glass & ceramics
products

1

Fields where the Company especially expects Directors and Audit & Supervisory Board Members to demonstrate their skills
Skills the Company expect

Composition of directors and Audit & Supervisory Board
members (as of June 21, 2024)

Reasons for selecting the skills in question

Corporate Management

To contribute to a sustainable society and enhance corporate value, the capability to perform in corporate management and to manage
and supervise executive divisions is required.

Global Business Experience

Experience and knowledge in global business are essential in TDK where over 90% of net sales is recorded outside of Japan.

Sales/Marketing

Sales and marketing skills are necessary to understand market demands and create new business opportunities from the conception ofboth technology-out and market-in.

ESG/Sustainability

An adequate understanding of ESG and sustainability, one of the most crucial issues in present-day society, is an important capability tosupervise the corporate management.

Technology/Research &Development

As under the Corporate Motto “Contribute to culture and industry through creativity,” the Company aims to be a company that
contributes to the realization of a sustainable future by accelerating the advancements in technology and the transformation of society.

Manufacture/Production Technology

An adequate understanding and passion for Monozukuri (manufacturing experience) is required as quality and reliability of products are
the foundation of TDK’s business.

Finance/Accounting

To aim for sustainable growth and carry out necessary investments, knowledge in finance and accounting, which supports a sound andsolid financial basis, is required.

Legal/Compliance/Risk Management

Legal, compliance and risk management skills are necessary to respond to the trust of all stakeholders and to enhance corporate value ina sound and sustainable manner.

Lawyers

1

Transportationequipment
Outside directors: 4
Outside Audit &Supervisory Board
members: 3

1
Foods

1

Certified public
accountants

Electric
appliances

1

2

81

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Remuneration for Executives
Basic Policy
TDK emphasizes linkage with short-term and medium- tolong-term results. Also, to promote as much as possible
behavior on the part of directors geared toward enhancing
corporate results and stock value and sustainably enhance
the corporate value of the overall TDK Group by constantly
pursuing the formulation of a competitive remuneration
system to secure diverse and excellent human resources.

Structure of remuneration for directors and Audit & Supervisory Board members
Type of remuneration

Clawback and malus provision
TDK has adopted a clawback and malus provision thatallows the company to forfeit the right to be issued payment
or shares, or to demand a reduction or recoupment of
remunerated sums based on deliberations by theCompensation Advisory Committee and a resolution passedby the Board of Directors in the event of a sudden anddramatic deterioration in performance, malfeasance, or
violations of the law.

Fixed/Fluctuating

Basic remuneration

Monetary compensation paid monthly

Results-linked
bonus

Monetary compensation which is paid at predetermined times each year with anemphasis on the linkage with short-term performance. The amount of the bonus
fluctuates within a range of 0% to 200% of the standard payment amount depending on
the degree of attainment of the consolidated results for the fiscal year under review andthe targets set for each division.

Fluctuating(single fiscal year)

Restricted stock unit
(RSU)

RSU is a type of stock remuneration which is issued based on continuous service. Incase of RSU, subject to continuous service for a period of three years from the first day of
the first year to the last day of the last year of the Medium-term Plan (or a period of three
years or more as determined by the Board of Directors of the Company, the “Target
Period”), a pre-determined amount of the Company’s shares and money is delivered after
the end of the Target Period.

Fixed

Performance shareunit (PSU)

PSU is a type of stock remuneration which is issued based on factors including
performance. In case of PSU, an amount of the Company’s shares and money calculated
in accordance with the degree of achievement of performance targets set by the
Medium-term Plan is delivered after the end of the Target Period. Rates of payment willvary depending on the degree of achievement of consolidated performance targets andrelated matters as outlined in the Medium-term Plan.

Fluctuating(medium- tolong-term)

Governance for remuneration
Decision-making process
TDK has in place a Compensation Advisory Committee acting
as an advisory body to the Board of Directors, which ischaired by an Independent Outside Director and of which amajority of the members are composed of Independent
Outside Directors. The Committee examines the remuneration
system and the level of remuneration pertaining to Directors
and Corporate Officers of TDK, submits a report to the Boardof Directors, and thereby contributes to the securement oftransparency of the remuneration decision-making process
and appropriateness of individual remunerations in light ofcorporate business performance, individual performance andgeneral industry standards, among other factors.
The remuneration of Directors and Corporate Officers of
TDK is discussed by the Compensation Advisory Committee
and then resolved by the Board of Directors.

Details of remuneration

Post-delivery typestock remuneration

Fixed

Eligible for payment
Classification

Basic remuneration

Results-linked bonus

Post-delivery type stock remuneration
RSU

PSU

Directors concurrently serving as corporate officers
Directors not concurrently serving as corporate officers——

Outside directors

—

—

—

Audit & Supervisory Board members

—

—

—

82

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

Remuneration for Executives

Increasing the ratio of results-linked stock remuneration
In June 2020, TDK introduced a post-delivery type stock remuneration system with the aim ofsharing the benefits and risks of fluctuations in stock prices with shareholders and increasing
their motivation to contribute to improving medium-term business performance as well as
increasing corporate value. In June 2024, the system was revised to, for example, increase theratio of stock remuneration linked to business performance, while maintaining the current levelof basic remuneration (fixed compensation), to further increase such motivation and to ensure
a competitive remuneration level in the human capital market in a rapidly changing and difficultto-predict global business environment.
In addition, as evaluation indicators for PSUs, the Company proposes to introduce
environmental and social indicators in order to increase the willingness to contribute to therealization of a sustainable society, and to introduce stock price indicators in order to further
motivate management practices that are conscious of the cost of capital and stock price.

Past

ChangedBasic remuneration
28%

Outside Audit & Supervisory Board Members
Outside Directors
Inside Directors
Operating¥208.7 billion*1 ¥89.7 billion
profit(MillionsROEof yen)Results-linked bonus
25%

Results-linked bonus
28%

7.8%

¥107.8 billion
9.7%

600

¥97.9 billion ¥111.8 billion*2 ¥166.8 billion ¥168.8 billion ¥172.9 billion
6.7%

11.6%

8.5%*2

35

29

500

27
58
45

400

61
48

58
42
24
58
46

300

8.3%

7.9%

314

36
62
48

30
58
55

477
377

100

Post-delivery type stock
remuneration
33%

497

42
62
52

43
62
58

454

390

413

FY3/22

FY3/23

FY3/24268

0
FY3/17

FY3/18

FY3/19FY3/20FY3/21*A s for the results-linked bonuses and post-delivery type stock remuneration for Directors, the amounts shown above are those recorded as
an expense for the fiscal year under review.

Post-delivery type stock remuneration
44%*1 Includes ¥144.4 billion in gains from business transfer to Qualcomm*2 T DK has adopted the IFRS on its consolidated financial statements in the annual Securities Reports from the FY March 2022 in place of the
US-GAAP. The figures for the FY March 2021 are also presented in accordance with IFRS.

PSU(ROIC)
12.5%

PSU
PSU
(CO2 emission (Employee
reduction) engagement)
12.5%
12.5%

PSU
(Relative TSR)
25%

Financial indicators

Pre-financial indicators

Stock price indicator

PSU(Operating
profit)
12.5%

RSU
25%

19.8%*1

Inside Audit & Supervisory Board Members

700

200

Breakdown of remuneration
Basic remuneration
42%

Trends in total amount of remuneration for directors and Audit &Supervisory Board members

Major initiatives to date

* In the case that the Representative Director, President & CEO achieves 100% of performance targets, etc.

2002

2007

2020

PSU evaluation indicators

Establishment ofCompensation Advisory
Committee (chaired by anoutside director)

Remuneration for outside
directors and Audit &Supervisory Board
members changed tobasic remuneration only

Stock options changed topost-delivery type stock
remuneration

2005

2015

2024

Introduction ofstock-linked
compensation
stock option

Addition of businessperformance achievement
conditions to some stock
options

Increase in ratio of PSUs in
post-delivery type stock
remuneration (introduction ofstock price indicators andpre-financial indicators)

Classification

Financial indicators

Pre-financial indicators
Stock price indicator

Evaluation indicators

Percentage of
payment

Operating income targets in the Medium-term Plan
ROIC targets in the Medium-term Plan
Targets for CO2 emission reduction in the Medium-term Plan

0–100%

Targets for employee engagement in the Medium-term Plan
Relative TSR (vs. TOPIX)

0–200%

83

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Effectiveness Evaluation of the Board of Directors (Process)Continuous improvement based on
effectiveness evaluation
TDK conducts an effectiveness evaluation of the Board of
Directors each year in order to verify whether the functions
expected of the Board of Directors are properly performed
and enhance such functions. Also, TDK requests a thirdparty evaluation institution to evaluate the effectiveness of theBoard of Directors periodically (about once every three years)
in order to verify it from a neutral and objective standpoint.
Given that a third-party evaluation organization
conducted a survey in FY March 2023, in the Board of

Directors evaluation for FY March 2024, the Corporate
Governance Committee (Chair: Shigenao Ishiguro, Chairman& Director who is not also a Corporate Officer *At the time)
conducted the initial evaluation from a neutral standpoint,
and after discussions by the Board of Directors, the Board of
Directors conducted the final evaluation.
As for the issues identified in the evaluation for theprevious fiscal year, TDK implements remedial measures andverifies their results, thereby creating a cycle for continuous
improvement of governance.

The Board of Directors evaluation process and governance improvement cycle
Evaluation process

Questionnaire

November–December
Questionnaire to all Directors
and Audit & Supervisory
Board members

Interviews

December–January
Individual interviews with all
Directors and Audit &Supervisory Board members

Discussions

March–April
Analysis and summary reported
and discussed in the Corporate
Governance Committee and
Board of Directors

Evaluation results

April
Resolution on evaluation
results by the Board of
Directors

Improvement cycle• Reports relating to issues identified in the evaluation planned in
the Board of Directors annual schedule• Implementation of improvement measures• Verification of results in the next Board of Directors evaluation• The above cycle of evaluation, identification of issues,
improvement, and evaluation (verification) is rotated every year
to ensure continuous improvement of governance.

Improvement
Evaluation process
Improvement

Questionnaire Items (Major Items)(1) Role and function of the Board of Directors(questions and free answers)(2) Size and composition of the Board of Directors(questions and free answers)(3) Operation of the Board of Directors (questions andfree answers)(4) Composition and role of the Nomination Advisory
Committee (questions and free answers)(5) Operation of the Nomination Advisory Committee(questions and free answers)(6) Composition and role of the Compensation
Advisory Committee (questions and free answers)(7) Operation of the Compensation Advisory
Committee (questions and free answers)(8) Composition and role of the Corporate GovernanceCommittee (questions and free answers)(9) Operation of the Corporate GovernanceCommittee (questions and free answers)(10) Support system for Outside Directors (questions
and free answers)(11) Role of the Audit & Supervisory Board Members
and expectations of the Audit & Supervisory
Board Members (questions and free answers)(12) Relationship with investors and shareholders(questions and free answers)(13) Governance structure of TDK and effectivenessof the Board of Directors in general (free answers)(14) Self-evaluation by Directors and Audit &Supervisory Board Members (free answers)

Evaluation process* The survey is multifaceted, with detailed sub-items underneath the major items describedabove. While certain question items are not changed in the effective evaluationquestionnaire in order to enable continuous measurement each year, the other question
items are reviewed each year in order to enhance the quality of the evaluation. Also, many
“free comment fields” are provided in order to collect different and various opinions andsuggestions without regard to the questionnaire items.

84About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Effectiveness Evaluation of the Board of Directors (Results)
Progress in addressing issues identified in the effectiveness evaluation of the previous fiscal year
The following issues reported in the previous fiscal year were addressed in the annual plan of the Board of
Directors, and efforts for improvement were recognized.
Item

1

2

3

Progress

Further evolution ofboard discussions

Based on the operational policy of the Board of Directors for the T128, discussions are being focused.
The Corporate Governance Committee has formulated the operational policy (key discussion items)
for the T128 Board of Directors, aiming to focus the discussions on more comprehensive andmedium- to long-term themes. The board operations are conducted based on this policy.
Furthermore, based on the discussions on delegation of authority in the Corporate GovernanceCommittee, the revision of the Regulations on Decision-Making Authority (Board Approval Criteria)
was carried out in the July 2023 Board of Directors meeting to promote delegation of authority to
the executive side. Additionally, the executive side ensured effective discussions in the Board of
Directors by providing appropriate information sharing to board members, including orientation
sessions for new directors, site visits, holding board meetings outside the headquarters, andinviting them to technology exhibitions and internal events.

Strengthening
engagement withstakeholders

In order to enhance the improvement of our group’s corporate value and deepen stakeholders’
understanding of our growth potential and competitive advantage, the board of directors provided
supervision and advice from various perspectives towards the development of a Medium-term Plan
that is highly feasible and appealing to stakeholders. Specifically, starting from August 2023, multiple
discussions were held in the board of directors and other venues (off-site meetings) regarding ourLong-term Vision and the Medium-term Plan derived from it through backcasting. Progress reports
and deliberations on the Medium-term Plan “Value Creation 2023” were received from the entire
company and each business division, leading to the decision on the new Medium-term Plan (T129 toT131) in the March 2024 board of directors meeting.
Furthermore, the Board of Directors conducted multiple discussions on branding and PR
strategies to promote enhanced communication with stakeholders by the executive side. The
executive side made efforts to strengthen information dissemination through the integrated
report and planned and held new IR events, achieving certain results. Additionally, the Board of
Directors initiated activities called “Open Board” to enhance engagement with employees. This
included holding board meetings in the Akita region with panel discussions involving local employees,
discussions between outside directors and employees in the Narita region, and messages fromdirectors to employees, aiming to facilitate interaction and information sharing between the Board of
Directors and employees.

Responding to rapidlychanging market
trendsFuture issues
As a result of the effective evaluation of the Board of Directors this time, the following three items arerecognized as the main issues that the Board of Directors should address in the future.

To enhance the ability to respond to market trends on a global scale, including marketing strategies andgeopolitical and geo-economic risks, the Board of Directors received reports on global market trends inanticipation of formulating the new Medium-term Plan. Discussions on market changes wereconducted in the reports from the major business divisions in each board of directors meeting. Multiple
discussions were also held on group risk management, and external experts were invited to givelectures on geopolitical and geoeconomic risks, targeting board members and the executive
management team.

Final evaluation by the Board of Directors
Based on the primary evaluation by the Corporate Governance Committee, the Board of Directors, as aresult of conducting deliberations several times, confirmed that the effectiveness of the Board of Directors
and its Advisory Committees (Nomination Advisory Committee and Compensation Advisory Committee)
was sufficiently secured in terms of their size and composition, the content of the agenda items anddeliberations, the status of discussions, their reflection in management, etc. In addition, the Board of
Directors confirmed that it continues to enhance its effectiveness by making improvements based on the
results of the Board of Directors evaluation in the previous fiscal year.

Item

Progress

Decision-making forachieving the Mediumterm Plan in the Boardof Directors

To monitor the execution of our Medium-term Plan (T129 to T131) and support its achievement,
the board of directors needs to deepen discussions on important elements of the plan, such as“business portfolio strategy” and “risk management at the management level,” and makenecessary decisions accordingly.
Specifically, in the “business portfolio strategy,” continuous evaluation and optimization of thebusiness portfolio (with a focus on core businesses, creation of next-generation pillar businesses,
and addressing challenging businesses) are important. In terms of “risk management at the
management level,” the Board of Directors has been discussing group risk management, andthere is a need to continue improving the risk heat map and engage in in-depth discussions fromthe perspective of major risk response policies, identified risks, and necessary countermeasures.

2

Strengthening
engagement activities
with stakeholders

To contribute to the improvement of corporate value through the Board of Directors, it is importantto further strengthen stakeholder engagement activities. In the previous term, efforts were focusedon engagement activities between the Board of Directors and internal stakeholders (employees)
through initiatives such as the “Open Board” activities. In the current term, while continuing the“Open Board,” the scope will be expanded to include external stakeholders (investors, shareholders,etc.) and communicate our pre-financial capital (sources of future cashflow: human capital,organizational capabilities, technological capabilities, customer base, etc.) and potential. Additionally,
discussions on enhancing our PR and brand strength will be conducted in the Board of Directors topromote stronger communication with stakeholders by the executive side.

3

Pursuing an optimal
governance structure in
the Medium-Term Plan
periodIn formulating our Medium-term Plan (T129 to T131), we conducted planning based on the
backcasting from our Long-term Vision, “TDK Transformation—Accelerating transformation for asustainable future.” In order to further enhance effectiveness, the Board of Directors itself needs
to transform into an optimal form. This includes verifying the skill matrix, formalizing thenomination process, and inviting directors with the necessary skills. Additionally, in pursuit offurther improvement in governance functions, transitioning to a majority of independent outside
directors and seeking an optimal governance structure will be important.

1

Operational policy of the Board of Directors
Taking note of the results of evaluation of the effectiveness of the Board of Directors, the Corporate
Governance Committee compiles the Board of Directors’ operational policy every fiscal year and, on thebasis of this policy, discusses and decides the yearly agenda of the Board of Directors. The operational
policy for the current term (T129) is as follows.
Basic policy for operation of the Board of Directors for the T129
Directors, members of the Audit & Supervisory Board, and the executive side will make efforts
toward the common objectives of TDK’s sustained growth and the medium- to long-term
enhancement of corporate value. In the T129, which represents the first fiscal year of the new
Medium-term Plan, the Board of Directors will discuss the business portfolio strategy and risk
management, both of which are important elements in achieving the Medium-term Plan and pursue
an optimal governance structure with a view to the period of the Medium-term Plan.
Key items for discussion in the Board of Directors in the T129
1. Discussion of the business portfolio strategy
2. Discussion of risk management at meetings of the Board of Directors
3. Pursuit of an optimal governance structure85

About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Directors, Audit & Supervisory Board Members, and Corporate Officers (As of the end of June 2024)
Directors

Noboru Saito

Tetsuji Yamanishi

Shigeki Sato

Kozue Nakayama

Mutsuo Iwai

Shoei Yamana

Toru Katsumoto

Representative Director

Representative Director

Director

Outside Director

Outside Director

Outside Director

Outside Director

Apr. 2022 Representative Director of
the Company

Jun. 2018 Representative Director of
the Company

Apr. 2021 Senior Vice President of theCompany

Jun. 2019 Outside Audit &Supervisory Board
Member of Imperial Hotel,
Ltd.

Jun. 2021 Outside Director of theCompany

Jun. 2022 Outside Director of theCompany

Mar. 2022 Member and Chairpersonof the Board of JT

Jun. 2023 Senior Advisor of Konica
Minolta, Inc.

Apr. 2022 Senior Executive Vice
President of Sony Group
Corporation (resigned inJun. 2022)

Apr. 2024 President & CEO of theCompany General
Manager of Humidifier
Countermeasures HQ ofthe Company

Apr. 2024 Senior Executive Vice
President of the Company
Chief Financial Officer of
the Company

General Manager ofTechnology and Intellectual
Property HQ of theCompany
Jun. 2021 Director of the Company
Apr. 2024 Chief Technology Officer of
the Company

Jun. 2020 Outside Director of theCompany

Outside Director of Zensho
Holdings Co., Ltd.

Jun. 2022 Outside Director of Nanto
Bank, Ltd.

Jun. 2024 Outside Director of theCompany

Jun. 2024 Outside Director of JAPANPOST INSURANCE Co., Ltd.
Outside Director of SCSKCorporation

Audit & Supervisory Board Members
Corporate Officers
President & CEO

Corporate Officers

Noboru Saito

Albert Ong
Fumio Sashida

Masato Ishikawa

Takakazu Momozuka Douglas K. Freeman

Chizuko Yamamoto

Takashi Fujino

Full-time Audit &Supervisory Board Member

Full-time Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Jun. 2023 Full-time Audit &Supervisory Board
Member of the Company

Jun. 2019 Outside Audit &Supervisory Board
Member of the Company

Sep. 2007 Principal of Law Offices of
Douglas K. Freeman(current Freeman & Partners)

Jun. 2020 Principal of Chizuko
Yamamoto CPA OfficeJun. 2021 Outside Director of
Kyokuto Boeki Kaisya, Ltd.

Aug. 2020 Outside Audit &Supervisory Board Memberof Ozu Corporation

Jun. 2023 Outside Audit &Supervisory Board
Member of the Company

Apr. 2019 Professor of Keio
University Law School
Jun. 2019 Outside Audit &Supervisory Board
Member of the Company* Only present post are listed in the career summary.

Senior Executive
Vice President

Tetsuji Yamanishi

Ji Bin Geng
Werner Lohwasser
Taro Ikushima
Shuichi Hashiyama

Senior Vice Presidents

Roshan Thapliya
Ludger Trockel

Michael Pocsatko

Jun. 2021 Outside Director of Tokyo
Rope Mfg. CO., Ltd.

Takao Tsutsui

Andreas Keller

Jun. 2023 Outside Audit &Supervisory Board
Member of the Company

Ikuo Fukuchi

Shigeki Sato

Joe Kit Chu Lam
Jim TranTakeshi Takahashi

86About TDK

Message from the President & CEO

Key Financial Data for the past 10 years

Long-term Vision

Growth Strategies

GovernanceContents

Data Section

TDK Integrated Report 2024

TDK has adopted the IFRS on its consolidated financial statements in the annual Securities Reports from the FY March 2022 in place of the US-GAAP.
The figures for the FY March 2021 are also presented in accordance with IFRS. Account titles are presented in accordance with the IFRS.
Millions of yen

Consolidated business highlights
Net sales(Overseas sales)
Cost of sales
Selling, general and administrative expenses
Operating profit
Profit before tax
Net profit attributable to owners of parent
Purchase of tangible and intangible assets
Depreciation and amortization
Research and development expenses
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Free cash flow
Cash and cash equivalents at end of period
Total assets
Total equity attributable to owners of parent
Interest-bearing debt
Working capital
Number of shares issued (thousands)

FY3/15
1,082,560
989,348
802,225
199,795
72,45974,51749,440102,525
80,24970,644
142,850(127,312)(35,243)
15,538265,104
1,404,253
738,861
268,332
352,364
129,591

FY3/16
1,152,255
1,061,203
831,123
227,185
93,414
91,83964,828160,674
83,22484,920151,563(140,585)
29,305
10,978285,468
1,450,564
675,361
335,737
289,760
129,591

FY3/17
1,178,257
1,073,024
855,948
239,446
208,660
211,717
145,099
167,631
87,491
91,254160,136(71,111)(37,753)
89,025
330,388
1,664,333
793,614334,132
388,542
129,591

FY3/181,271,747
1,158,004
928,525
257,630
89,69289,811
63,463
178,612
92,171
102,641
91,310(246,099)
110,088(154,789)
279,624
1,905,209
824,634
483,019
296,899
129,591

FY3/191,381,806
1,268,437
985,321287,561
107,823
115,554
82,205173,592
106,631
115,155
140,274(140,179)
9,435
95
289,175
1,992,480
877,290
520,268
208,165
129,591

FY3/201,363,037
1,252,634
959,714289,771
97,87095,87657,780173,429
124,984
117,489
222,390(41,964)(121,769)
180,426
332,717
1,943,379
843,957
424,690
247,577
129,591

FY3/21 (IFRS)
1,479,008
1,361,803
1,052,410
328,217
111,814117,263
74,681
212,196
148,356
127,409230,855(231,488)
21,082(633)
380,3872,359,663
958,929
521,822202,547
388,772*

FY3/22 (IFRS)
1,902,124
1,753,086
1,338,276
410,568
166,775
172,490131,298
291,337
177,031
165,250
178,987(281,546)
113,743(102,559)
439,339
3,041,653
1,300,317
679,813
470,814388,772

FY3/23 (IFRS)
2,180,817
2,004,381
1,596,295
434,803
168,827
167,219
114,187
275,709206,285
179,467
262,772(234,402)
14,94728,370506,185
3,147,027
1,458,446
752,158
603,000
388,772

FY3/24 (IFRS)
2,103,876
1,919,245
1,500,858
452,520
172,893
179,241
124,687
218,589
190,546
188,860
447,007(216,592)(146,368)
230,415
649,998
3,415,304
1,707,332
685,736
711,085
388,772¥392.78
5,865
90.00
22.9

¥514.235,355
120.0023.3¥1,150.16
6,289
120.0010.4¥502.806,532
130.0025.9¥651.02
6,947
160.0024.6¥457.47
6,681
180.0039.3¥197.06
2,530
60.00
30.4

¥346.44
3,431
78.33
22.6

¥301.193,845
106.0035.2¥328.70
4,500
116.00
35.3

91.4
6.5
6.7
7.2
4.0
5.4
43.0
0.36

92.1
7.4
8.1
9.2
4.7
6.7
37.7
0.50

91.1
7.7
17.7
19.8
9.3
13.4
44.0
0.42

91.1
8.1
7.1
7.8
3.6
5.2
34.6
0.59

91.8
8.3
7.8
9.7
4.2
5.7
29.0
0.59

91.9
8.6
7.2
6.7
2.9
4.3
24.9
0.50

92.1
8.6
7.6
8.5
3.5
5.2
29.2
0.54

92.2
8.7
8.8
11.6
4.9
7.4
32.0
0.52

91.9
8.2
7.7
8.3
3.7
5.5
34.8
0.52

91.2
9.0
8.2
7.9
3.8
5.3
35.0
0.40

Yen

Per-share data*
Net profit attributable to owners of parent (basic)
Total equity attributable to owners of parent
Dividends
Payout ratio (%)
Key financial ratios
Overseas sales ratio (%)
R&D expenses to net sales ratio (%)
OP margin (%)
Return on equity (ROE) (%)
Return on assets (ROA) (%)
Return on invested capital (ROIC) (%)
Equity ratio (non-consolidated) (%)
D/E ratio (times)* TDK split one share of its common stock into three shares with the effective date of October 1, 2021. Number of shares issued, net profit attributable to owners of parent (basic) per share, total equity attributable to owners of parent per share and dividends per share are calculated assumingthat the share split was implemented at the beginning of the FY March 2021.

87About TDK

Message from the President & CEO

Consolidated Business Results Highlights
Net sales / Overseas sales ratio
Net sales (left)

Long-term Vision

Growth Strategies

Overseas sales ratio (right)

Operating profit (left)

OP margin (right)

ROIC(Billions of yen)

(%)

(%)

100

250

25

20

80

200

1,500

60

150

15

1,000

40

100

10

500

20

50

0

0

91.2
2,103.92,000

TDK Integrated Report 2024

ROIC / ROE / ROA

(%)

2,500

Contents

Data Section

TDK has adopted the IFRS on its consolidated financial statements in the annual Securities Reports from the FY March 2022 in place of the US-GAAP.
The figures for the FY March 2021 are also presented in accordance with IFRS. Account titles are presented in accordance with the IFRS.

Operating profit / OP margin(Billions of yen)

Governance

172.9

20

ROE

ROA

15
10

0
FY3/20FY3/21US-GAAPFY3/22

FY3/238.2

0FY3/24

FY3/20IFRS

FY3/21US-GAAPFY3/22

FY3/23Purchase of tangible and intangible assets
Research and development expenses

Total equity attributable to owners of parent (left)
Interest-bearing debt (left)
Ratio of equity attributable to owners of parent (right, %)D/E ratio (right, times)

0
FY3/20IFRSCash flows from operating activities
Free cash flow

(Billions of yen)(%) (times)(Billions of yen)(Billions of yen)

80 0.80300

500

60 0.60

1,000

50.0 %
0.40
times

500

40 0.400FY3/20US-GAAPFY3/21

FY3/22

FY3/23

FY3/24

Cash flows from investing activities

447.0

250

230.4

0

120

685.7 20 0.20

0

218.6
190.5
188.9

180

FY3/23IFRS

Cash flows

Depreciation and amortization

240

FY3/22

As a result of a decline in the net profit attributable to owners of parent, in FY March2024 ROE decreased by 0.4 percentage points over the previous fiscal year to
7.9%, ROA increased by 0.1 percentage points to 3.8%, and ROIC decreased by
0.2 percentage points to 5.3%. We have set an ROIC target of at least 8% in FY
March 2027 and at least 12% over the medium to long term.

1,500

1,707.3

FY3/21US-GAAP

Purchase of tangible and intangible assets /Depreciation and amortization /Research and development expenses

Total equity attributable to owners of parent (ratio) /Interest-bearing debt / D/E ratio

7.9
5.3
3.8

5

FY3/24In FY March 2024 operating profit reached ¥172.9 billion, up 2.4% year on year,
which, excluding the business transfer gains recorded in FY March 2017, was thehighest ever. The OP margin was 8.2%. In addition to positive effects from yen
depreciation, an increase in the sales volume of small capacity batteries, cost
reductions from rationalization, benefits from restructuring conducted in the previous
fiscal year, and streamlining of SG&A expenses contributed to operating profit.

In FY March 2024, net sales decreased 3.5% from the previous year to ¥2,103.9
billion. Final demand remained stagnant in the ICT market, and the market was
sluggish. In the automotive market, although the xEV production volume increased
from the previous year, parts inventory adjustments continued in some regions, anddemand was below initial expectations. In the industrial equipment market, demandfor capital expenditures overall was sluggish. Overseas sales ratio decreased 0.7
percentage points to 91.2%.

50

FY3/24IFRS

As of the end of FY March 2024, equity attributable to owners of the parent
company amounted to ¥1,707.3 billion, an increase of 17.1% over the previous fiscal
year end. Other capital components increased by ¥164.7 billion, primarily as a resultof an increase in exchange differences on translation of foreign operations, and theratio of equity attributable to owners of the parent increased by 3.7 percentage
points to 50.0%. Interest-bearing debt decreased by 8.8% to ¥685.7 billion due toprogress in repaying borrowings. As a result, the D/E ratio decreased by 0.12
percentage points to 0.40 times.

-250

60
0

-216.6-500
FY3/20US-GAAPFY3/21

FY3/22

FY3/23

FY3/24

IFRS

Capital expenditures amounted to ¥218.6 billion in FY March 2024, down 20.7%
year on year, depreciation and amortization expenses reached ¥190.5 billion, down
7.6%, and research and development expenses reached ¥188.9 billion, up 5.2%.
During the period of the previous Medium-term Plan, which began in FY March
2022, TDK initially planned for total capital expenditures of ¥750.0 billion over three
years but total capital expenditures were ¥785.6 billion over the three years, due toan increase of about ¥100.0 billion as a result of foreign exchange fluctuations, andupfront investment in businesses which are expected to grow in the future.

FY3/20US-GAAPFY3/21

FY3/22

FY3/23

FY3/24IFRSIn FY March 2024 free cash flow registered a surplus of ¥230.4 billion. Operating
activities improved significantly due to the decrease in working capital resulting fromongoing inventory optimization, and capital expenditures was conducted while
making careful determinations concerning changes in demand, resulting in adecrease of approximately ¥40.0 billion from the initial forecast of ¥260.0 billion. As aresult, free cash flow increased substantially from FY March 2023.

88About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

IR Activities
Disclosures of information

State of implementation of dialogue with shareholders

The TDK Group maintains fairness and transparency bymeans of timely and accurate disclosure of certain
information to its shareholders/investors and otherstakeholders. In addition, the TDK Group shall actively andwidely communicate with society, and its shareholders/investors, customers, business partners, employees, andlocal communities, and shall pay heed to their expectations
and needs, and values and opinions that are different fromthose of the TDK Group, which shall, from time to time, be
reflected in the TDK Group’s corporate activities.

Objectives of investor relations activities
The objectives of the TDK Group's investor relations activities
are to develop a long-term relationship of trust with stakeholders
by fulfilling its responsibilities not only to shareholders, who haveentrusted administration of the company to management, butalso to all other stakeholders including investors and analysts,
through the faithful and fair disclosure of information, and also
to obtain their confidence and esteem through bilateralcommunication. In order to pursue these objectives at all times,
the TDK Group continuously discloses necessary informationand conducts investor relations activities in such a manner thatthird-party opinions can be used to improve management.
Number of annual discussions
FY3/23

FY3/24

Financial statement briefings for analysts andinstitutional investors

4

4

IR Tech Conference—1

Number of Management meetings

50

61

Number of individual meetings (include
conferences)

347

435

Conferences hosted by securities companies

7

7

Overseas roadshow

2

4

Item

Content

Main respondents in dialogue with shareholders

Mainly the President & CEO, Senior Executive Vice President CFO; executives; and the
IR & SR Group, a dedicated team handling shareholder and investor response.

Profile of shareholders with whom dialogue
conducted

Dialogue is conducted with active and passive institutional investors both in Japan andoverseas; investors with various investment styles, such as growth and value investing;and diverse shareholders.

Main dialogue topics and matters of interest to
shareholders

Constructive and lively dialogue takes place on such topics as management policy,
problem awareness, financial strategy, progress of individual business strategies,
progress of initiatives involving ESG and other pre-financial activities, and response togeopolitical risks.

State of feedback of shareholder opinions andconcerns to the management team and Board of
Directors

In-house feedback is being strengthened. For example, the numerous opinions andissues raised in the dialogue with shareholders and investors are sorted in the IR & SR
Group and reported to the Board of Directors every quarter.
Number of reports in FY March 2024: 4

Matters introduced as a result of feedback

Decision to link pre-financial capitals to remuneration for executives

Issues currently under consideration as a result offeedback

Create opportunities for dialogue between investors and Outside Directors
Disclosure on progress of business portfolio management

External evaluation of TDK’s IR activities
Integrated report

IR website

NIKKEI Integrated Report Award 2023
Award for Excellence

BroadBand Security, Inc.
Gomez IR Site Ranking 2023
Silver Prize

Government Pension Investment Fund (GPIF)
the Excellent Integrated Reports(receiving 1 vote)the Most-improved Integrated Reports(receiving 2 vote)by the GPIF’s Domestic Equity Managers

Daiwa Investor Relations Co. Ltd.
Internet IR 2023, Commendation Award
Nikko Investor Relations Co., Ltd.
All Japanese Listed Companies’
Website Ranking 2023
All Markets Ranking, AAA Website

Japan Investor Relations
Association (JIRA)
Greatest IR Improvement
Premium Company

Best Continual IR Efforts
Premium Company

89About TDK

Message from the President & CEO

Long-term Vision

Growth Strategies

Governance

Data Section

Contents

TDK Integrated Report 2024

Corporate Information(As of March 31, 2024)

Corporate name

TDK Corporation

Principal shareholders (10 largest shareholders)Number ofshares held
(thousandsof shares)

Status of ownership

Percentage
of number ofshares heldin the total
number ofissued shares*(%)

Corporate
headquarters

Nihonbashi Takashimaya Mitsui
Building, 2-5-1, Nihonbashi,
Chuo-ku, Tokyo 103-6128

Date ofestablishment

December 7, 1935

The Master Trust Bank of Japan, Ltd.
(Trust account)

102,039

26.90

Authorized
number of shares

1,440,000,000 shares

Custody Bank of Japan, Ltd.
(Trust account)

52,14713.74

Number ofshares issued

388,771,977 shares

JP MORGAN CHASE BANK 385632

16,314

4.30

STATE STREET BANK WEST CLIENT- TREATY 505234

8,111

2.14

SSBTC CLIENT OMNIBUS ACCOUNT

7,517

1.98

HSBC HONGKONG-TREASURYSERVICES A/C ASIAN EQUITIESDERIVATIVES

6,855

1.81

Number ofshareholders

27,031

Common stock¥32,641,976,312

Securities traded

Tokyo Stock Exchange

Securities code

6762

Number of
employees(consolidated)

101,453

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)

Name of shareholder

Japanese securities firms
3.28%Japanese corporations
0.57%

Japanese individuals, etc.
5.10%

Treasury stock
2.41%

Foreign institutions andindividuals
43.81%

About Our Website

CITIBANK, N.A. -NY, AS DEPOSITARYBANK FOR DEPOSITARY SHAREHOLDERS

5,607

JP MORGAN CHASE BANK 385781

4,994

1.48

Investor Relations (IR)https://www.tdk.com/en/ir/index.html

1.32

Sustainability
https://www.tdk.com/en/sustainability/index.html

GOVERNMENT OF NORWAY

4,090

1.08

STATE STREET BANK AND TRUSTCOMPANY 505103

3,660

0.96

Product Center
https://product.tdk.com/en/index.html* Other than the above, the Company holds 9,381 thousand shares of treasury stock.

Japanese financial
institutions
44.83%

90

TDK Corporation
Nihonbashi Takashimaya Mitsui Building,
2-5-1, Nihonbashi, Chuo-ku, Tokyo 103-6128
https://www.tdk.com/en/index.html