‘My battery is smaller and more powerful than yours’: TDK’s chief is chasing the ultimate power brag
Wearables set to power next growth surge for world’s largest maker of smartphone batteries.
Ravi Velloor
Senior Columnist
If you name names like the shares Tata group, SoftBank Group KK, Honda and Sanyo, and you spot a Japanese theme, why not try to guess which is the largest maker of batteries powering the world’s smartphones? Or the biggest supplier of tiny batteries powering the billion wearables, wireless earbuds and smart watches being sold every year?
TDK. Most people associate TDK more with cassettes, video tapes, compact discs and similar storage devices. But this Japanese multinational, a specialist in electronic components and advanced materials, is by far the largest supplier of lithium-ion batteries for small electronic devices. About one in every two smartphone batteries in the world is made by TDK.
TDK, believe it or not, is today the world’s largest maker of miniaturised batteries for consumer electronics, or as its president and chief executive Noboru Saito likes to say, “the king of the small battery”.
In fact, if you own an Apple Watch, the battery inside almost surely comes from the TDK stable, said Mr Saito, during a recent morning chat at the St Regis Hotel in Singapore. TDK’s subsidiary, Amperex Technology Ltd (ATL), owns the no. 1 spot in the world, said Mr Saito, who was in town for the company’s board meeting and some customer calls.
TDK’s world of small cell batteries is highly competitive. Samsung SDI, LG, and Murata are the other major battery suppliers. But TDK outstrips them all.
TDK’s market cap at S$34 billion is impressive for a company that most people know for music cassettes and floppy disks. Battery sales accounted for about half of TDK’s S$20.8 billion revenue in fiscal 2023.
While batteries are TDK’s largest business, the company is also a huge player in sensors and sensors modules – essential for modern cars, wearables and smartphones as devices get more “intelligent”. In fact, TDK’s next big bet for growth is wearable technologies, which are set to become standard gear for all ages as medical and health-care uses for wearables keep expanding.
Is the battery powering your smartphone also used in other consumer electronics of the bigger kind, I ask Mr Saito.
Not at all, it is a totally different battery, he says. While technology used in batteries goes into feature phones too, you cannot use smartphone batteries to power things like vacuum cleaners or electric motorcycles. “We actually developed a differentiated technology called the lamination battery as opposed to cylindrical batteries for smartphones. The size and form factor vary.
"People want the world’s thinnest smartphone so we need to keep reducing battery space. A wearable, by contrast, puts more premium on being flexible and light weight, which means we have to innovate. We are working on the battery with no metal case. But safety is always important, we must maintain quality and prevent overheating. That’s why we do not supply the kind of batteries used by Tesla in its cars, for instance. We are focused on the small battery."
At the same time, wearables is a segment growing at high double digits, sometimes 20-30 per cent year on year, which is why TDK is investing heavily there. “As the era of digital healthcare gathers pace, we expect significant revenue growth from this segment. Medical-grade wearables are a huge opportunity, especially with Asia’s ageing populations.”
Apart from Apple, TDK’s batteries go into a clutch of other brands such as Samsung, Xiaomi, Huawei, Oppo and others. TDK also counts hearing aid batteries as a significant franchise.
Some industry analysts talk of falling prices and over-capacity in batteries owing to fierce competition.
But Mr Saito is not worried. “Look, to compete in this industry, you need scale, cost competitiveness and speed. But we have always stayed profitable. Our customers demand ever-higher standards for quality and reliability, and we have consistently met their requirements.”
How is the pandemic and global supply chain crisis affecting TDK?
Mr Saito says TDK weathered the worst of the chip and supply crises with relative ease, compared with “big battery” makers, because TDK’s products require less material and are easier to transport.
Meanwhile, the world is on the cusp of a major technological shift as artificial intelligence and next-generation apps demand ever more efficient and smaller batteries. “It is a good time for TDK because our business is smaller, but also much diversified. A big chunk of the firm's R&D budget is now going into much smaller, differentiated batteries,” he said.
He adds that, in general, more power is being packed into ever smaller form factors, whether it is a 4G, 5G smartphone with extended battery life, or a flexible battery for a wearable. “Smaller and more powerful is in our DNA. For smartphones, it is all about energy density.”
Is TDK too small to matter as the EV battery market takes off?
Not at all, he replies with a smile.
“Think of it as a K-car (the smallest category of Japanese car), which may not have the maximum horsepower but has terrific efficiency. Because of the extraordinary variety of devices that need small but powerful batteries, we are well placed. If anything, we are seeing opportunities for licensing our technology to a number of auto component and EV battery firms. Our technology can be used for any number of things, from drones to robots,” he said.
How many batteries does TDK ship annually?
Company figures are not made public, but industry sources estimate that the company’s annual shipments are in the billions.
How will TDK keep the edge in a crowded industry?
“It is all about staying close to our customers, understanding their pain points and responding quickly. For instance, when Covid hit, we quickly moved to remote monitoring for technical support.”
As for the future, he says, it is about pressing on with more R&D for new generations of batteries for electric vehicles and consumer electronics. “It is about keeping ahead of technology, and never resting.”
UNWAVERING FOCUS
I like to focus on things I can control. I emphasised that recently in a call to all our stakeholders – let us try to control the controllable. So we can control the operations, control the development of new technologies. If we can get that right, we have a great future to tap into the opportunities being thrown up by the emerging AI ecosystem.
—MR NOBORU SAITO, TDK chief, on what keeps him upbeat about the prospects for the world’s most respected tech business.
No comments:
Post a Comment