Electronic Components Boom! 7 Companies See Profit Growth as Electric Vehicles Drive Demand
According to the consolidated earnings forecast of Japan's leading electronic component companies for the fiscal year ending March 2025, seven out of eight companies are expected to see profit increases, benefiting from a robust automotive market. The number of electronic components installed in vehicles is expected to rise with the spread of advanced driver assistance systems (ADAS) and electric vehicles (EVs). Leading the pack, Nidec is forecasted to achieve a 31.6% increase in net profit, reaching 165 billion yen.
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Japan, May 16, 2024 – For the fiscal year ending March 2025, top leader Nidec expects a net profit increase of 31.6% to 165 billion yen. Meanwhile, TDK and Kyocera, are expected to see net profit increases of 2.7% to 128 billion yen and 10.8% to 112 billion yen, respectively.
Alps Alpine is expected to turn a profit for the current fiscal year. In addition to steady performance in automotive parts, the supply chain is gradually cleared of inventory, and demand is expected to recover. Amid concerns about the impact of the slowdown in the Chinese economy, some companies are moving ahead with restructuring, including cutting staff, focusing further on key businesses, and trying to become more efficient. Companies are getting ready for further demand.
The number of electronic components installed in the automotive market is expected to increase with the spread of advanced driver assistance systems (ADAS) and electric vehicles (EVs). Taiyo Yuden’s Managing Executive Officer Tomomitsu Fukuda said it was an “attractive market.” Murata Manufacturing expects growth in demand for automotive multilayer ceramic capacitors (MLCCs), and TDK also expects increased demand for MLCCs as well as automotive magnetic sensors.
While attention is focused on the car market, trends in the Chinese economy remain a cause for concern. Nidec Global Group Representative Nagamori Shigenobu points out, “In China, fierce competition is occurring not only in cars but in all other fields.” Omron President Tsujinaga Junta said of the Chinese market, “We do not expect a full recovery in the fiscal year ending March 2025, and the market will likely remain roughly flat.” Meanwhile, MinebeaMitsumi Chairman and CEO Kainuma Yoshihisa expressed concern about the auto parts business, which includes steering wheels, saying, “Looking at the future of the Chinese market, we cannot feel at ease.”
In order to grow even in this environment, some companies are proactively implementing restructuring measures. For example, Omron has budgeted 28 billion yen for restructuring, which it plans to use to cut 2,000 jobs both in Japan and overseas. Alps Alpine also plans to cut 3,000 jobs, mainly overseas, and streamline and withdraw from non-core businesses and consolidate bases.
However, there are some bright spots. Kyocera predicts that the market for electronic components such as capacitors and semiconductor packages will recover in the second half of the year (October 2024 to March 2025). Demand is expected to recover gradually as inventory is consumed. Koichiro Hagiwara, a senior analyst at the Corporate Research Department of Tokai Tokyo Intelligence Lab, believes that “Compared to the headwinds faced in the fiscal year ending March 2024, there is a ray of hope for the fiscal year ending March 2025.” He emphasized the need to strengthen corporate resilience and create a structure that can meet future demand.
