Japanese electronics group Kyocera will consider divesting businesses with limited growth potential with total sales of about 200 billion yen ($1.3 billion) to streamline its portfolio amid sluggish demand for auto electronics parts and other products.
"We are positioning those businesses that are not expected to grow as non-core businesses and hope to sell them in the fiscal year ending March 2026," said Hideo Tanimoto, president. He did not name specific candidates, but Kyocera expects to gradually sell businesses that are difficult to increase profitability on their own.
Kyocera expects its consolidated net profit for the year to March to fall 30 per cent to Y71bn, its third straight year of decline, due to poor performance in its automotive capacitors and semiconductor packaging businesses.
In October, the company announced plans to split its business into core and non-core businesses that are expected to grow, and to exit some non-core businesses. "We are focusing on profit, not sales, which will be equivalent to 10 per cent of total sales," Mr Tanimoto said.
Kyocera's strength lies in its management style, known as "amoeba management," in which a small unit of about 10 people is responsible for the profitability of each business. Kyocera, which began as a producer of ceramic parts, has diversified into 15 sectors, including electronic parts, communications equipment, medical equipment, cutting and power tools, and multi-function printers.
Some of these businesses have struggled to turn a profit in recent years because of competition from China and elsewhere. The company will continue to invest in growth areas. The company will spend 68 billion yen to build a factory in Nagasaki Prefecture to produce components for semiconductor-related applications.
"Every business area has needed a lot of investment in recent years," Tanimoto said. "Unless we focus on investing in specific areas rather than trying to cover everything, we're not going to win."
Kyocera has also decided to sell a third of its stake in Japanese telecom operator KDDI over the next five years, in which it holds about 16 percent as the largest shareholder. Kyocera Group is expected to gain a market value of about 500 billion yen and plans to invest in core businesses and large-scale mergers and acquisitions.
Kyocera was founded in 1959, the company's business is mainly based on precision ceramic technology, radiation development of a number of industrial chains, divided into information and communication market, automotive market, energy conservation and environmental protection market and health care market, four markets, to provide target customers with valuable products and services.
Electronic components is one of the main businesses of Kyocera, which provides miniaturized, large-volume, high-performance multi-layer chip ceramic capacitors (MLCC) with superb dielectric ceramic processing and manufacturing technology. With a rich product lineup, it is widely used in wireless communication terminals such as smart phones and tablet computers, digital equipment such as liquid crystal displays, industrial and vehicle equipment.
The MLCC market is undergoing structural change. Japanese companies such as Murata, Suntrap and TDK have a high share, but Samsung Electric (the electronic components arm of the South Korean group) and China's Samsung Electronics are gaining market share.
Kyocera's other main business is core components - precision ceramic components, automotive parts, medical devices, jewelry and other products. Kyocera, with its rich material technology, processing technology and innovative design technology as the core, provides highly reliable ceramic packages and substrates for a wide range of products such as small components such as smartphones, optical fiber communication components, and leds for automotive headlights.
With the rapid development of information and communication technology and the popularization of the Internet, the high performance and multi-function of electronic equipment have made rapid development. Kyocera supports the development of electronic devices through organic packaging and printed circuit boards.
According to Kyocera's second quarter results report (fiscal year ending March 2025), the global economy is growing slowly under the influence of falling inflation rates in various countries. The market related to Kyocera's semiconductor business and information and communication business, mainly for AI-related demand has increased, but the overall has not yet achieved a full recovery. At the same time, affected by the downturn in parts orders, the operation rate of production equipment declined, labor costs increased, and performance profits declined.
In addition, the report mentioned that the market weakness and market share decline in the early MLCC, as well as the downturn in the vehicle market, the impact of the decline in the operating rate of the new plant in Thailand is greater, and the profitability of the KAVX Group has declined significantly. Kyocera will focus on developing new products for high-end semiconductors and expanding its business for special uses in Europe and the United States in order to strengthen the MLCC business, which is expected to have high growth, and the titanium capacitor business, which has a high market share.
At the same time, it will also study exiting non-core businesses and products, and for the growth of the electronic components business, Kyocera believes that implementing strategic mergers and acquisitions to expand market share and improve profitability is crucial.
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