Based on a three-business division structure, contributing to solving the problems of our digital society with our extensive range of products

The Digital Society Business Group consolidates digital society-related businesses that are expected to grow in the future. Based on a three-business division structure consisting of the Hi-Performance Ceramics Business, Electronic Devices Business, and Specialty Metals & Molds, we contribute to solving the problems of our digital society, which is evolving remarkably, with our extensive range of products.

Review of the fiscal year ended March 31, 2023 and outlook for the fiscal year ending March 31, 2024

In the fiscal year ended March 31, 2023, in addition to sluggish sales of smartphones and computers, the curtailment and reduction of semiconductor and data center investments became apparent in the second half of the year, resulting in a decline in shipments of mainstay products for semiconductor production equipment and electronic components such as piezoelectric micro-actuators for HDDs. As a result, although net sales increased year-on-year due to the positive effect of the weak yen, operating income fell year-on-year due to decrease in volumes as well as an increase in depreciation expenses.

As for the fiscal year ending March 31, 2024, although the impact of declining demand is expected to continue and then gradually recover from the third quarter onward, the business conditions that we are facing are undeniably severe. To improve profitability in each business as soon as possible, we will review our production system, reduce costs, promote Digital Transformation (DX), and prepare to build a smart production system when demand recovers. Meanwhile, we will promote the development of next-generation products, which is currently underway, and steadily work toward creating the opportunity to take the next leap forward.

Medium- to long-term growth strategies to realize the NGK Group Vision

The most important mission of the Digital Society Business Group is to grow into the second core business after the automotive business. As for business conditions, although we are currently experiencing an inventory adjustment phase in response to deteriorating market conditions, we expect demand to grow in the medium to long term for semiconductor-related and electronic component-related products due to factors including development of IoT, AI, and 6G communications. In the NGK Group Vision, New Value (NV) 1000 is set as the 2030 target to achieve at least 100 billion yen in sales of newly launched products, with the aim of CN and DS products accounting for 80% of sales by 2050. In order to drive us forward to achieve these goals, the Digital Society Business Group has set a target of doubling sales by 2030, focusing on mainstay products for semiconductor production equipment, and is working to expand its business with a sense of urgency.

Products that are expected to experience sales growth in NV1000 consist of DS-related products (including bonded wafers used in optical communications and mobility sensors and CMOS packages, which are expected to grow in the video and communications fields) and CN-related products (including SN* DCB and AMB substrates that are increasingly adopted for power modules in EVs). In addition, our collaborative efforts with the Corporate NV Creation, which is responsible for marketing, is a key factor in developing new products. In fields such as mobility, wearables, and new energy where growth is expected, we will not only develop products but also propose solutions to meet customers’ needs through business tie-ups and cross-industry collaboration.

Silicon Nitride (Si₃N₄)

Value propositions for resolving social issues

Since the evolution of digital society will bring about peoples’ enriched lifestyles and social sustainability, we hope to play a part by providing products and services that utilize our unique ceramic technologies. Our mainstay products for semiconductor manufacturing equipment support the further sophistication of semiconductors. In addition, we already have products that make a smart society more pleasant, such as high-performance wafer products that contribute to next-generation high-speed, large-capacity communications and piezoelectric micro-actuators for HDDs that support the increasing amount of information in the world. We will contribute to solving the challenges of a digital society that continues to develop at a remarkable pace by further creating new products and services in the future.

Furthermore, the Digital Society Business Group also contributes to the carbon-neutral field. For example, the advancement of digital technology that has resulted from the emergence of higher performance semiconductors has led to a reduction in power consumption by products, contributing to carbon neutrality. DCB and AMB substrates and similar products for which demand is expected to grow since they are used in EV power modules are products that push us forward toward carbon neutrality. We are also looking into the development of hydrogen infrastructure components and other products to help realize a hydrogen society in the future.

Since the Digital Society Business Group engages in an extensive range of businesses, we are aware that we have many opportunities due to our connections with customers in a variety of industries. For a prosperous and better future, we will deepen partnerships with our customers and take on the challenge of creating new value while closely monitoring market needs and technological trends.

Note: This interview was conducted in May 2023.