The global passive components market lately has been growing at a promising rate. Despite global challenges, the industry poises to grow steadily in the coming years, backed by the emerging mega trends across various sectors.
According to market research firm Research and Markets, the passive components industry will likely grow at an average CAGR of 5.44 percent between 2022 to 2027. Particularly, multilayer ceramic capacitors (MLCCs) will be the dominant product and a key growth driver.
Moreover, Research and Markets took note of the rising MLCC usage in various sectors and applications, such as 5G infrastructure, 5G SP, server/cloud, and automotive.
Particularly, the accelerating adoption of 5G smartphones, IoT devices, as well as smart grid will also propel the growth of passive components. In addition, the adoption of 5G smartphones facilitates many emerging technologies such as mobile payments, remote monitoring and controlling and many other technologies.
Meanwhile, other verticals that brought about by 5G include industrial, automotive, and consumer electronics.
TDK Corporation has been one of the formidable players in the global passive components market, as well as in sensor and battery business. In fact, in China, a major manufacturing hub, remains an important market for TDK for its products.

In this interview with AEI, Joe Kit Chu Lam, General Manager, TDK China HQ, discussed the outlook of the China market and the trends the company expects in the coming years.

AEI: Can you describe the prevailing business atmosphere of components companies in the China market at present?

Lam: After China ended its ‘Zero Covid’ Policy, China’s GDP growth in Q1/2023 has recovered to 4.5 percent. Due to a sharp increase in energy cost, we see an increasing demand for applications like xEV and photovoltaic (PV). On the other hand, the consumer market remains on a lower level. We can say sales within the smartphone segment is two folds: low-price models are growing, while premium class models are stable. We expect that the current situation will continue for a while.

AEI: What specific trends you see driving growth for components companies like TDK in China?

Lam: TDK is well prepared to deal with the opportunities and challenges from digital transformation and energy transformation. The business environment around electronics is now standing on the threshold – a period of major upheaval. Transformation has begun in earnest, with an energy transformation (EX) driven by the shift from fossil fuels to renewable energy and a digital transformation (DX) driven by the permeation of digital technologies. Namely, the Internet of Things (IoT) and artificial intelligence (AI), to every aspect of society. The TDK Group regards such changes in the social environment as opportunities for new social contributions and business growth.

AEI: What specific industries are you looking at as source of growth?

Lam: In DX, the Group will contribute to the transformation of society through digital technologies by supplying products for high-speed communication networks, sensors, autonomous driving, and robots. In EX, the Group will contribute to the promotion of a decarbonized society by supplying products related to energy storage, conversion, and control necessary for the creation of a highly efficient energy society, as well as products related to electric vehicles and renewable energy.

Moreover, in China we expect that xEV as well as the energy delivery chain including charging stations, ESS (Energy Storage System) and PVs will continue to remain major business drivers.

AEI: Just like in recent years, momentum remains high in automotive particularly EVs. What strategies do TDK employ to keep up with this trend?

Lam: The Chinese xEV and ADAS market is very competitive and continues to grow. This applies to car production, as well as charging station infrastructure. Most importantly, TDK continues to enforce its strengths by the investing in R&D and capacity increase for strategic products like high-reliability MLCC for xEV and TMR angle sensors. Our approach continues to rely on strong communications with our customers, understanding their needs and offering customized solutions for their business. Ultimately, TDK solutions will support not only our customers, but also increase the value for the end consumer.

AEI: What are the challenges Japanese electronic components makers you think will have to deal in the Chinese market?

Lam: In addition to providing a stable supply of high-quality TDK products to the rapidly growing Chinese market, TDK must seize on the powerful tailwinds driven by DX and EX and leverage the foundation for growth we have cultivated to date to make the next leap forward. As customer expectations increase, the key lies in a market-in perspective. Hence, this goes beyond the conventional product-out approach and instead requires paying constant attention to what the world’s people consider issues. Notwithstanding, the expectations they have and incorporating those issues and expectations into product development. This is precisely the Customer Experience and Consumer Experience (2CX) TDK set out in in the present mid-term plan we called “Value Creation 2023”. It is essential that the company recognizes what end users are looking for and even beyond that. Thus, thinking through how best to respond to social issues and market needs by utilizing materials and technologies.

AEI: Despite the challenges in the market, I understand TDK remains focused on continuing innovations. Can you share to us now the values do you think your company leverage to sustain your market position in China?

Lam: During TDK’s 85 years history, it has always aimed to follow its corporate motto “Contribute to culture and industry through creativity”. We have actively expanded our product portfolio with the target to provide an innovative broad range of electronic components and systems for main markets. Namely, automotive, information and communication technology (ICT) and industrial. We try to remain a venture company that challenges itself and constantly offers new solutions to our customers around the globe including China.

Additionally, TDK maintains its sustainable development in the process of scientific and technological innovation. TDK has formulated a new TDK Group’s Sustainability Vision. Most importantly, it proclaims TDK’s proprietary core technologies and solutions and follows the vision “Technology for the well-being of all people”.  We are sharing this Vision throughout the entire Group, putting it into practice in our business. At the same time, considering and implementing specific measures toward the realization of a sustainable society.