Company Reports

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 10%-15% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet the tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

TDK's first-quarter revenue rose 38% year over year, while operating income increased 53%. Robust demand from artificial intelligence data centers, on top of the weaker yen, drove broader products such as passive components. Despite the upbeat earnings, TDK maintained its full-year guidance.

After follow-up meetings held after the March-quarter results, we revisited our view on artificial intelligence data center demand and updated our earnings forecasts and fair value estimates for Murata Manufacturing, Samsung Electro-Mechanics, Yageo, Taiyo Yuden, and TDK.

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 10%-15% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet the tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 10%-15% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

TDK's March-quarter revenue exceeded the guidance by 6%, thanks to strong sales of rechargeable batteries for smartphones. For fiscal 2026, the company guides revenue growth of 3% and operating income growth of 8%. Its shares rose by 8% the following day.

Following meetings with companies regarding December-quarter results, we revised our earnings forecasts and fair value estimates for passive component suppliers Murata Manufacturing, Samsung Electro-Mechanics, or Semco, TDK, and Taiyo Yuden.

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 10%-15% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

TDK's sales grew 16.2% in the December quarter, driven by a 24.4% increase in sales of sensor application products and a 30.5% increase in sales of magnetic application products. The company raised its operating income guidance for fiscal year 2025 (ending in March 2026) by 8% to JPY 265 billion.

Major passive component suppliers, Murata Manufacturing, Samsung Electro-Mechanics, Yageo, TDK, and Kyocera all reported solid revenue growth in the September quarter, driven by computing demand. All of the Japanese suppliers raised their full-year guidance for fiscal 2025 (ending March 2026).

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 10-15% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

Despite the yen appreciation, TDK's June quarter results were largely flat compared with the previous year. Although the operating margin of the passive components segment dropped from 9.7% to 4.6%, the shortfall was offset mostly by sensor application products and magnetic application products.

TDK's results for fiscal 2024 (ending March 2025) were in line with guidance. For fiscal 2025, the company guides operating income of JPY 225 billion, largely unchanged from the previous year. The company estimates operating income could decrease by JPY 45 billion if tariff risks materialize.

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 16% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

TDK reported December-quarter earnings results, with revenue and operating income up 3.9% and 8.0%, respectively, amid weak IT demand and slowing growth in electric vehicle shipments.

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 16% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

TDK's September-quarter revenue of JPY 571 billion was up 2.6% year on year and operating income of JPY 75 billion was up 27.3% year on year. These are both better than our forecasts due to the faster-than-expected recovery in hard disk drive heads, driven by the robust investment in AI servers.

TDK is one of the top suppliers of passive components, especially focusing on the automobile industry. We estimate that TDK’s market shares in multilayer ceramic capacitors, or MLCCs, and inductors for automobiles are approximately 16% and 50%, respectively. While we expect electronic devices per automobile to continue increasing, owing to the progress of safety and environmental regulations, there are still a limited number of component manufacturers that could meet tough requirements of automakers. Therefore, we expect TDK to remain one of the beneficiaries of auto digitalization.

Over the past two days, four passive component suppliers reported their June quarter results. Compared with our expectations, Murata Manufacturing’s numbers were slightly lower, Samsung Electro-Mechanics’ were mainly in line, and TDK’s and Yageo’s were higher. Such divergence in earnings performance is mainly due to differences in product portfolios, but demand by end-product generally showed a similar trend. While industrial products remained sluggish and automobiles and smartphones are stagnating, demand for applications related to high-performance computing, such as servers and PCs, seem to be improving. While we maintain our earnings forecasts and fair value estimate of JPY 4,000 for Murata Manufacturing, we plan to review our earnings forecasts for Semco, TDK, and Yageo after meeting with each company in early August. Overall, we expect that margin expansion for passive component suppliers will continue to improve in the coming quarters, driven by the better capacity utilization and an improved product mix. However, the strengthening of the Japanese yen could be a risk factor for Japanese suppliers.

Three passive component suppliers, Murata Manufacturing, Kyocera, and TDK announced their earnings results for fiscal 2023 (ending March 2024) Friday, April 26, and each company’s operating income guidance for the new fiscal year fell short of our expectations. We believe that they made conservative assumptions for sales and capacity utilization especially in the second half of the fiscal year, as they were less confident of a full recovery in end demand. Nevertheless, TDK’s guidance may disappoint the market as it is most divergent from our expectations and the market’s. While we maintain our fair value estimates for the three companies, we have lowered our fiscal 2024 operating income forecasts for Murata and Kyocera, reflecting price erosion for automotive passive components and a slower-than-expected recovery in capital spending for industrials and general servers. We plan to revise our TDK earnings forecasts after the company announces its new midterm plan at next month’s investor day. We believe Murata Manufacturing’s shares are undervalued, while Kyocera and TDK are fairly valued.