The Origins of the Kaga Electronics GroupThe Timeline of Our Growth Driven by the Kaga Spirit
The Kaga Spirit(The Words of Isao Tsukamoto)

Personal connections areintangible assets
The Kaga Electronics Group is capable ofresponding quickly and accurately to changes inthe business environment and customer needs todrive continuous growth. This ability stems fromthe personal connections, or business network,
we have built up over the years based onrelationships of trust with customers andsuppliers. These relationships form a vital part ofour management foundations in conducting
business as a trading company. The idea that“personal connections are intangible assets” hasbeen passed down over the years as one of thepillars of what we call KAGA-ism, the essence of
who we are.

Never say “no”
Based on the motto “Never say ‘no’,” the Kaga
Electronics Group has been expanding its businessdomain from parts procurement to kit-parts sales
and even contract production, planning anddevelopment, and maintenance services, while
enhancing the lineup of products to meetcustomer needs. The origins of our global “onestop service system,” an enduring strength of theCompany, lies in this customer-first approach.

An organization driven
by communication
In order to ensure our ability to quickly seize
opportunities amid a changing businessenvironment full of future uncertainty, it isimportant to have a corporate culture that makes
maximum use of the individual capabilities of ourpersonnel. Based on this philosophy, the Kaga
Electronics Group is working to build an open
workplace that encourages different ways ofcommunication to achieve common goals.

Achieving Business
Expansion by Swiftly
Adapting to Changes
Having started out as a handyman businessbased in Akihabara, Tokyo, with an officespace of less than 7 m2, we achieved
business expansion thanks to surging
electronics parts demand in the wake of
rapidly growing popularity of CB transceivers
and the arcade game “Space Invaders” in the1970s. In 1980, our net sales exceeded ¥10billion. Moreover, in 1983, we became a
supplier of mask ROMs for use in theFamicom, a mega-hit gaming console, thus
making an entry into the field of gamesoftware for household gaming devices.

Net sales

600
600
550
550

The Kaga Electronics Group continues to tackle
new challenges with a view that there is no end
goal to corporate activities based on thephilosophy that “people are a finite asset;
companies are perpetual entities.” Pursuing
aggressive M&A activities and developing new
products and services that resolve social issues
are some of the initiatives we are undertaking todrive sustainable growth. We will remaincommitted to pushing the envelope as a Group as
we head toward a century in business.

3

KAGA ELECTRONICS CO.,LTD.

Proactively Securing Overseas EMS
Production Bases and Executing
M&A from the 2000s onward
Entering the 2000s, we expanded our overseas network of EMS production bases,
which had previously been centered in China, by establishing facilities in Malaysia,Thailand, the Czech Republic, Indonesia, Mexico, Vietnam, Turkey, and India. InThailand, we eventually built two bases. At the same time, the number of our bases inChina grew to four. During the course of these endeavors, our net sales exceeded ¥100
billion in 2001 and ¥250 billion in 2006. From 2019 onward, we executed a rapid seriesof M&As, with KAGA FEI CO., Ltd., KAGA EMS TOWADA CO., LTD., EXCEL CO., LTD. andKyokuto Electric CO., Ltd. made into Group companies. In our pursuit of M&As over thepast several years, we have now entered a second
growth phase and are aiming for net sales of ¥750billion in 2025 on the road to net sales of ¥1 trillion
Aiming to achieve
in 2028, the 60th anniversary of our founding.
target net sales of

Aiming to achieve net sales of¥750 billion

Net sales exceed

Net sales exceed
Net sales exceed

350
350
300
300

Net sales exceed¥10 billion

250
250200200150
150¥50 billion

Stock listed on the Second
Section of the Tokyo StockExchange100100trillion

Electronic components business

Acts as a sales agency handling general electronic parts,
semiconductors and other offerings for customers at homeand abroad

EMS businessNet sales exceed

450
450
400
400

¥1The Kaga Electronics
Group’s Business
FieldsTransitioned to the Prime Market of the Tokyo Stock Exchange*E lectronics Manufacturing Services: Provision ofproduct development and manufacturing services on
a contract basis

500500¥400 billion¥250 billion¥100 billion

Promoted to the First
Section of the Tokyo StockExchange

Provides comprehensive solutions supporting the design,development and manufacture of products ranging fromsemi-finished to finished products

Information equipment business

5050

Inventory is a liability

People are a finite asset;
companies are perpetual entities

In 1981, our TAXAN brand monitors,
developed in-house for use with Apple
computers, achieved considerable sales athome and abroad. Building on this success,we launched our first overseas base in theUnited States and, in 1985, establishedanother in the United Kingdom, significantly
accelerating the pace of our overseas
expansion. In 1986, KAGA ELECTRONICS
stock was listed on the Second Section ofthe Tokyo Stock Exchange. In the 1990s, webegan proactively penetrating Asianmarkets outside Japan, securing our firstregional foothold in Hong Kong in 1992. In1995, we entered the Taiwanese market,which, in turn, contributed to a major sales
increase. In 1997, our listing on the Tokyo
Stock Exchange was promoted to the First
Section. In 1999, we launched KAGA(SHENZHEN) ELECTRONICS LTD., our first
factory concurrently serving as an overseas
EMS* base.

(Billions(Billionsof ofyen)
yen)
650
650

0 0In our earliest days, a lack of ample working
capital forced us to place each order for products
after receiving an order from a customer. This
gave birth to the idea that “inventory is a liability,”
which has evolved into a currently held principle
for how we receive and place orders, a criticalfeature of the Company. Responding as quickly as
possible to order information has enabled us tobuild win-win relationships with customers
and suppliers.

Pursuing Proactive
Global Expansion
since the 1980s’69’69’70’70’71’71’72’72’73’73’74’74’75’75’76’76’77’77’78’78’79’79’80’80’81’81’82’82’83’83’84’84’85’85’86’86’87’87’88’88’89’89’90’90’91’91’92’92’93’93’94’94’95’95’96’96’97’97’98’98Since 1968
Sep. 1968	KAGA ELECTRONICS CO., LTD. founded at 3-8-3 Soto-Kanda, Chiyoda-ku, Tokyo, with paid-in
capital of ¥1 million
Mar. 1980	Net sales exceed ¥10 billion
Jul. 1981	TSK ELECTRONICS CORPORATION established in the United States (liquidated in Oct. 2004)
Dec. 1985	Stock registered on the Japan Securities Dealers Association as an over-the-counter company
TAXAN (UK) LTD. established in the UK (liquidated in Aug. 2007)
Dec. 1986	Stock listed on the Second Section of the Tokyo Stock Exchange

1990–Mar. 1991	Net sales exceed ¥50 billion
Jun. 1992	KAGA (H.K.) ELECTRONICS LIMITED established in Hong Kong
Jul. 1994	KAGA (SINGAPORE) ELECTRONICS PTE. LTD. established in Singapore
Feb. 1995	KAGA (KOREA) ELECTRONICS CO., LTD. established in the Republic of Korea(Merged with KAGA FEI KOREA Ltd. in Sept. 2021)
Dec. 1995	KAGA (TAIWAN) ELECTRONICS CO., LTD. established in Taiwan
Sep. 1997	Promoted to the First Section of the Tokyo Stock ExchangeJul. 1999	KAGA (SHENZHEN) ELECTRONICS LTD. established in China’99’99’00’00’01’01’02’02’03’03’04’04’05’05’06’06’07’07’08’08’09’09’10’10’11’11’12’12’13’13’14’14’15’15’16’16’17’17’18’18’19’19’20’20’21’21’22’22’23’23 ‘25‘25 2028
2028

From 2000 onward
Jun. 2000	KAGA COMPONENTS (MALAYSIA) SDN. BHD. established in Malaysia
Aug. 2000	KAGA (SHANGHAI) ELECTRONICS CO., LTD. established in China
Mar. 2001	Net sales exceed ¥100 billion
Apr. 2002	KAGA ELECTRONICS (THAILAND) COMPANY LIMITED established in Thailand
Dec. 2003	KAGA ELECTRONICS (USA) INC. established in the United States(Merged with KAGA FEI AMERICA, Inc. in Apr. 2022)
Aug. 2006	KAGA (DALIAN) ELECTRONICS CO., LTD. established in China
Apr. 2009	KD TEC s.r.o. established in the Czech Republic
Mar. 2014	Transferred to current Head Office building (company-owned building)Jan. 2017	TAXAN MEXICO, S.A. DE C.V. established in Mexico
Jul. 2017	KAGA ELECTRONICS (VIETNAM) CO.,LTD. established in Vietnam
Apr. 2018	KD TEC TURKEY ELEKTRONIK SANAYI VE TICARET LIMITED SIRKETI establishedin TurkeySep. 2018	KAGA ELECTRONICS (INDIA) PRIVATE LIMITED established in India
Jan. 2019	Fujitsu Electronics Inc. (currently KAGA FEI Co., Ltd.) made into a Group company
Oct. 2019	Towada Pioneer Corporation (currently KAGA EMS TOWADA CO., LTD.) made into aGroup company
Apr. 2020	EXCEL CO., LTD. made into a Group company
Nov. 2020	Kyokuto Electric Co., Ltd. made into a Group company
Apr. 2022	Transitioned to the Prime Market of the Tokyo Stock Exchange

Supplies PCs and PC peripherals to domestic and overseas
distribution channels while providing LED lighting
installation services and accommodating product needs inthe network solutions field

Other business

Operates a PC recycling business in addition to handling thedevelopment, manufacture and marketing of amusementrelated hardware and software as well as the sale of golf
supplies and other operations

Integrated Report 2023

4

The Origins of the Kaga Electronics Group

Value Creation Process

Guided by its corporate philosophy of “Everything we do is for our customers,” the Kaga Electronics Group has achieved
growth by exercising a venturesome spirit that leads it to seek opportunities emerging from changes in society. Under
the Medium-Term Management Plan 2024, the Group is currently pursuing quantitative growth via the electronics trading company business while expanding its EMS business, which aims to contribute to qualitative growth in profit.
Through these two endeavors, the Group strives to raise its net sales to ¥1 trillion and become a competitive world-classcompany. This is how we deliver greater environmental and social value via our business operations.

Medium- to Long-Term Sustainability

Management Plan
Expand our economic value

Medium-Term Management Plan 2024
Further enhance our earnings power

Everything we do isfor our customers

Strengthen management foundations“Challenge 1.60”
Create new businesses

Become “the Japanese industry’s
No. 1 corporate group”
Organic growth + Inorganic growth driven by new M&As, etc.

Promote SDG-oriented management

Distribute value tostakeholders¥750.0

E: H
 elp create a clean Earth environment
S: Offer an employee-friendly workplace while
contributing to a flourishing society
G: B uild sustainable management foundations
B: R ealize sustainable business growth

Basic strategy

Total value of products
procured

Increasedsales

Total wages and bonuses paid

¥21.1 billionTotal dividends paid

¥5.7 billion

Growthfields

AutomotiveCreditors

Total interest paid

Risks and Opportunities
Risks

Opportunities

Reduced significance ofexistence as a trading
company and loss ofcommercial rights

Generation of new
demand and market
for EMS business

Shortage of humanresources andsoaring labor costs

Growing need forfurther automationand efficiency

Increased
environmental cost

Growth ofenergy-saving andeco markets

Expansion

Enhancement of valueof trading company businessdelivered through the EMS business

Enhancement and expansion of the overseas business and the EMS businessFactory
automation (FA)¥0.7 billion

Government and administrative
agencies

Total corporate taxes paid

¥9.3 billion
Growthinvestment

Financial capital

M&As and other business activities, are strengthening
non-financial capital and propelling our basic strategy forward
Social capital

Human capitalIntellectual capital Manufacturing capital

Customers

Group employees

Technical staff

7,500
companies

8,092

1,645

Our ownmanufacturing sites

20

worldwide

Aim to become acompetitive worldclass company

Medicaland healthcare

UtilizeNon-financial capitalin conjunction with the 60thanniversaryCommunications

Shareholders
Increased
profitratio¥1trillion

Environmental

Employees

Expand the trading company business todrive further growth in the EMS businessbillion

Suppliers¥473.4 billion

Materiality

Net sales ofAchieve net sales of

Secure stable management foundations
ROE

19.6

Net D/E ratio

%

-0.08

Cost of shareholders’ equity Around

Deliver greater
environmental andsocial value

Equity ratio

45.3%

7 8% to%Strengthen
non-financial capital

5

KAGA ELECTRONICS CO.,LTD.

Integrated Report 20236

The Origins of the Kaga Electronics GroupStrength1

Value Creation Model

Strength2Increased
sales

Global network capability
We provide peace of mind to customers and instill confidence through oursales and production network, which spans 17 countries and regions worldwide, as well as our global procurement and information-gathering
competencies that we have built up over 50 years, which have been reinforcedby the addition to the Group of KAGA FEI Co., Ltd. and EXCEL CO., LTD.

A total of 64 companies,
41 in 17 countries
abroad and 23 in Japan,
comprise the Kaga
Electronics GroupExpansionof trading
company business

KAGA MICRO SOLUTION
Yamagata Site
Gunma Sales OfficeNiigata Sales Office

The Kaga Electronics Group sells not only electronics-related
components and materials but also accommodates for a range ofneeds in the manufacture of modules and finished products, covering
everything from large-lot consumer goods to small-lot industrial
devices. As for hardware, software and systems, ourcomprehensive capability similarly enables us toaccurately meet customer needs from upstream
to downstream.

Increased
profitratio

Enhancement of value

Strengthdelivered throughthe EMS business

KAGA EMS TOWADA

In addition to contract production,
the Kaga Electronics Groupboasts the capability to provide
one-stop services covering sales
through after-sales support

Sendai Sales Office
KAGA MICRO SOLUTION
Fukushima Site
Mito Sales Office
Toride Sales Office

Matsumoto Sales Office
Kyokuto Electric Yabase,
Urayasu and Nakayama factories

KAGA ELECTRONICS Head Office /Head Office Annex

Hiroshima Sales OfficeDomestic Sales BasesGroup Sales Bases in Japan
Group Production Bases in Japan

Osaka Sales Office
Fukuoka Sales Office

Shin Yokohama Sales Office

Nagoya Sales Office

Kita Kanto Sales OfficeHamamatsu Sales OfficeNumazu Sales Office

Shizuoka Sales Office

Meeting customer needs in a swift and flexible manner by taking full advantage ofour global EMS production system, which encompasses 20 bases in 10 countries

One-stop solution capability

3Enhancement and expansion ofthe overseas business and theEMS business

Suzaka Sales Office
Hokuriku Sales OfficeConnect vendors around the world
with customers by fully leveraging
our strengths as an independent
trading company

Expand trading
company business to drive
further growth in theEMS business

The Kaga Electronics Group’s trading company business and EMS business both employ aunique business model backed by a combination of its threefold strengths nurtured in thecourse of its operating as an independent general electronics trading company. This modelis also guided by our corporate philosophy, “Everything we do is for our customers.”

Comprehensive capability in theelectronics field

The Kaga Electronics Group has a structure for delivering products to its customers in the regions where they areneeded through its network of suppliers and production plants spanning North America, Europe and Asia. In order torespond to customer requests more quickly and flexibly, KAGA ELECTRONICS supports its customers’ businessdevelopment through a one-stop support structure offering everything from planning consultation to engineeringdevelopment, the contracting of high-mix, low-volume production for both semi-finished and finished products, andfrom sales to after-sales services, leveraging the specializations of each Group company while collaborating together.

Planning,
development anddesign

Parts procurementand kitting

EMS and contract
production

Sales anddistribution

KAGA ELECTRONICS Co., Ltd.

KAGA TECHNO SERVICE CO., LTD.

KAGA DEVICES CO., LTD.

KAGA MICRO SOLUTION CO., LTD.
KAGA SOLUTION NETWORK CO., LTD.

Germany

The Czech Republic
AustriaTurkey

SuzhouIndia

Hubei
ShenzhenHong Kong
Thailand

Malaysia
Indonesia

Group Sales Bases Overseas
Group Production Bases Overseas

7

KAGA ELECTRONICS CO.,LTD.

SANKOH ENGINEERING CO., LTD.

KAGA AMUSEMENT CO., LTD.

AD DEVICE CO., LTD.

KAGA AMUSEMENT CO., LTD.

DIGITAL MEDIA LAB., INC.

KAGA TECH CO., LTD.

KAGA SPORTS CO., LTD.

EXCEL CO., LTD.

EXCEL CO., LTD.

KAGA EMS TOWADA CO., LTD. / Kyokuto Electric Co., Ltd.

DalianSouth Korea
ShanghaiTaiwanVietnamSingapore

San Jose

ChicagoLos Angeles

MexicoSupport andafter-sales
services

KAGA AEROSYSTEMS CO., LTD.

KAGA FEI Co., Ltd.

BostonKAGA ELECTRONICS (USA) INC.
KAGA (DALIAN) ELECTRONICSCO., LTD.
KAGA (TAIWAN) ELECTRONICSCO., LTD.

TAXAN MEXICO, S.A. DE C.V.
KAGA COMPONENTS (MALAYSIA)
SDN.BHDKAGA (SHANGHAI) ELECTRONICS CO., LTD. /KAGA (H.K.) ELECTRONICS LIMITEDKAGA ELECTRONICS (THAILAND) COMPANY LIMITED /KAGA ELECTRONICS (VIETNAM) CO., LTD.
KAGA (SINGAPORE)
ELECTRONICS PTE. LTD.

KAGA ELECTRONICS INDIA
PRIVATE LIMITEDKD TEC (Czech Republic) s.r.o. / KD TEC TURKEY ELEKTRONIK

Integrated Report 2023

8