TDK Corporation (6762) Earnings Call Transcript

Thank you for waiting. It is now time to begin. We will now start TDK Investor Day 2026 Enhancement of Corporate Value through Prefinancial Capital. Thank you very much for joining us today. I would like to serve as the MC. My name is Ito from TDK's IR Department. Let me briefly introduce today's agenda. First, we will have opening remarks from CEO Noboru Saito. This will be followed by the CHR session and the CTO session, each lasting approximately 20 minutes. Finally, we will have approximately 45 minutes for a Q&A session with today's speakers and attending executives. Mr. Saito, please.

Good afternoon. So usually, I will be speaking from the podium on this side. But today, I have my smart glasses that I'm wearing, so I would like to use that for my opening remarks. Once again, thank you very much for attending this session despite your busy schedules. I am CEO and President, Saito. For today's agenda, it is just as shown on the slide. Last year, we also held a briefing on prefinancial capital. Today, I would like to focus on one of my commitments, strengthening the management of prefinancial capital, and we will explain about our technological capabilities and the human capital that supports them. This shows how our materiality medium-term plan? And human resources strategy support our long-term vision and strengthen prefinancial capital to realize our long-term vision materiality focuses on maximizing corporate value while creating long-term value for all stakeholders. Our approach is to align the sustainability of society with that of TDK. For pre-financial capital, our key materiality areas are R&D that contribute to social transformation and promoting and developing talent that supports R&D and continues to create competitive advantage. Our human resources strategy is closely aligned with our corporate strategy. To realize our long-term vision, we see human capital, not simply as a resource, but as the driver of transformation and the core form of capital that drives strategy. execution and value creation. We face 2 major management challenges in transforming our business, strengthening existing businesses and transforming our business portfolio. To address these challenges, we need to strengthen our human resources and transforming human resources capabilities. we need talent who can drive business transformation and innovation and how to attract and develop such talent is something our CHRO, Andreas Keller, is going to explain right after myself. This talent will continue to drive our growth strategy, particularly our business portfolio management. as we work toward our mid- to long-term target state. The biggest driver of this growth strategy is the expansion of our business for the AI ecosystem by FY 3031, we plan to increase sales to about 3x of the FY March 2026 level. In the first quarter this year, growth has been stronger than we initially expected. Today, this gray part, new business expansion is something we are talking about. We will talk about cutting technology development and the solution business using software and other technologies. And our CTO, Shuichi Hashiyama; and the GM [indiscernible] will give you presentations.

Thank you. Thank you very much, Mr. Saito. So without further ado, we would like to start the CHRO session. And for the CHRO session, for the CTO session, we are going to have an English presentation. And therefore, who would like to use the interpretation service into Japanese, please use the receivers. And those who are participating through the Zoom, you don't need to switch to language. So Keller-san and Greg-san, please.

Thank you to. Good afternoon, everyone. My name is Andreas Keller. I'm the CHRO of TDK. Last year, I stood here with Tomoyo Hiraoka, and Angela Wan, and I am pleased that Hiraoka-san is with us again today over there. However, this year, I will present together with my colleague, Greg Brower, another key member of our Global HR leadership team. Together, we will spend the next 20 minutes on what we believe is the most fundamental driver of TDK's ability to execute on everything you hear today, our people. When you look at the title, human capital management, fueling innovation and inclusive growth, the title says it all. Every growth target every technology ambition, every market expansion, none of it happens without the right people without the right capabilities in the right culture. This is what Greg and I are here to demonstrate. My background before TDK was Hilton Hotels, 13 years in multiple countries, which is an industry where every single competitive advantage ultimately comes down to people. I carried this conviction with me when I joined TDK 26 years ago, at our German subsidiary. Starting in supply chain, moving through various functions in business administration, HR and eventually making my way to this role as CHRO. That journey across so many of TDK's chapters of change gives me both perspective and conviction. And perhaps more importantly, it is itself an example of what I'm here to tell you about. TDK's genuine capability to identify, develop and grow its own leaders. Everything in our HR approach begins with one principle, branding, alignment. As Saito-san said earlier, HR strategy and corporate strategy do not run in parallel in TDK. They move as one. Delivering what Treasury requires us to build a talent portfolio of 4 distinct strengths, which you see at the bottom left, people who drive business transformation, people who drive innovation, people who are capable in AI and software, translating that capability in solutions and finally, people who can directly deliver those solutions to our customers. These 4 are not aspirational. They define the talent portfolio we are actively building today. And 5 HR pillars bring this to life, which you can see on the right in our HR strategy, which is attract and develop talent, inclusive leadership practices, global leadership pipeline, organizational capability and efficiency, and finally, team member health and engagement, getting more and more important, all driven by our TDK United transformation. To bring this strategy to life, we use a model we call the TDK Human Induction Cycle. And I have to be honest, I love this because this is very much like TDK. Just as an inductor, stores, energy in a magnetic fields and releases it efficiently when needed, we bring in individual potential, enhance it through our culture, and release it as business and societal value through TDK's transformation. And like an inductor, this is not a onetime charge. It is a continuous self-reinforcing cycle because stronger culture builds a stronger pipeline, a stronger pipeline drives greater innovation. And finally, greater innovation attracts exceptional talent. This cycle is driven by 3 initiatives, which you can see on the right. Enhancement of our human capital is a change driver, strengthening value creation through TDK united and finally, advancement of technical capability. Let me show you how this maps to our value creation model. This slide represents the output and financial dimension of our human capital strategy. We believe human capital investment must be measurable, not just in engagement scores, which is, of course, very important, but in its direct contribution in financial value creation. We track human capital return on investment as a key metric, and we are actively working to define clear benchmark targets in dialogue with you. our investors going forward. The human induction cycle, you have seen on the previous slide, operating at full capacity translates into faster innovation cycles, stronger leadership decisions, lower organizational friction and improved marketing market positioning. And these are not just soft outcomes. They are strategic returns on people investment. Today, I want to take you through the major KPI progress that demonstrates this model working in action. But first, let me anchor in 3 cultural values that make everything possible, functional equality, venture spirit and diversity. Functional quality. Every team member has a meaningful voice regardless of title or location. It is the cultural competition that makes genuine engagement real, something very special about venture spirit, TDK's entrepreneurial DNA. The drive to always challenge always create and always be willing to pursue the new, it is what makes our internal incubators possible. And finally, diversity of thought, background, gender and nationality. It is the fuel for differentiated innovation. Diverse teams, I think you all agree with me, diverse teams see problems differently and solve them better. These are active operating principles, we measure, reinforce and hold ourselves accountable to. Let me show you the KPIs. The first major output KPI I want to highlight is team member engagement. We monitor this globally through an annual survey paying particular attention to our communication score, which is also quite unique because we believe that the quality of communication is the truest measure of functional equality in practice. Our engagement score has risen from 72 points in fiscal year 2024 to 76 points in fiscal year 2026 and which I believe is a meaningful step forward. Our communication score has grown from 67 points to 71, advancing towards our target of 75% or more. And our response rate has climbed from 80% to an incredible 92%. 92% participation rate at a global company is exceptional. And it tells me our people trust that their voice matters. How do we achieve this? Through concrete initiatives like in the middle below, you can see the quarterly global town hall meetings that we established. We held 4 last fiscal term, where every employee worldwide can ask questions directly to the management team induction series on is, you can see on the left, and events like the International Women's Day used as a genuine platform to inclusion for inclusion dialogue globally. Moreover , it is not shown on this slide, but every department in every location is having follow-up conversations with their respective teams for improvements. You might recall our low management development program, GMDP from last year. So let me go straight to the progress. Just to remind everyone, the program runs across 4 different management levels. TCTP, GMP, Gum, together with the IMD business school in Los and camp with ES in Spain and Shizenkan University in Japan, covering approximately 1,250 participants in total so far from territorial leaders all the way to our most senior executives. And the progress for this midterm speak for themselves: Cumulative GMDP participants stand at 367, on track towards our target of 500-plus. Female participation is growing year-on-year from 25.4% and over 25.7% to now 26.1%, advancing also towards our target of 30% and also very important successor readiness for top back executives has reached 212%, well beyond our 200% target. It means we have more than twice as many ready successors as positions to fill. But I would like to emphasize one point, GMDP is not just building leadership pipeline is also about creating business. Through our global executive management program, the TOP program, participants have launched real ventures. Let me highlight SensEI, which you can see on the right-hand side of the slide. As Jim Tran will talk about it during the session, it is a company established entirely by game participants from outside the sensor systems business company. They identified an opportunity form the cross-functional team and build a new business. SensEI is now a functioning venture. And by the way, Jim Tram as well as our CTO, Hashiyama-san, have both participated in this GEM program. The other start-up companies that emerged through our TDK launch engine formerly called the TDK Interarte were already mentioned last year, so let me skip that part. This brings me to the next dimension of our talent strategy, how we make TDK visible and compelling to the world's best talents. Let me first share the strategic framework and then hand over to my colleague, Greg Brower, who will elaborate on this important topic further. Let me emphasize one point, employer branding is not only a communication exercise. It is a strategic business lever that drives competitiveness and sustainable growth. Corporate branding answers, why should I buy from TDK? While employer branding answers a different question entirely, the one every candidate and every team member asks, why should I work for TDK and why should I stay? Separate strategies, but deeply aligned, again, an alignment in the brand in action. Our employment branding strategy targets 3 outcomes: becoming the employer of top seekers, giving team members compelling reasons to stay and grow and strengthening the Ag pipeline for our management bench, which you can see on the right top side, delivered through 4 goals just below a unified global in identity, consistent messaging across all markets, clearly communicating our appeal and building long-term trust with candidates, our team members, customers and society. I now hand over to Greg Brouwer. By the way, he joined TDK in 2017 throughout the InvenSense acquisition. So another example how our strategy works, and he's now leading our Global HR Business Partnering. Greg, over to you.

Thanks, Andres. Seems you've done some of my introduction prior to joining TDK, I was at a company called Cisco. It's a global IT enterprise company, and I had a variety of roles that prepared me for this one. working in IT, manufacturing, engineering and HR. Today, we will discuss aligning the strategy through a shared culture of employee branding. It's a random use case for us, and we're going to take you from concept to implementation. So employer branding should be aspirational to attract talent. TDK in everything better is a wonderful description. For our team members, our employees, there must be consistency and integrity between our brand and their lived working experience. whether you're hired in the university, mid-career or through an acquisition. We understand and encourage team members to share their voice, their authentic voice. We then build a coherent global story and scale that impact through structured social media, career pages, local recruiting events. Our branding campaign is consistent scalable and effective. That's RENDO. We're transitioning from autonomy to a more structured aligned entity through employer branding. Let's look at some real activities. So to attract talent, we implement employer branding to keep our current and future team members engaged. For new graduates, Mr. Keller already mentioned the special onboarding we do at the World Athletic Championships. And we also already mentioned the town hall meetings to keep our team members engaged and informed. So let's focus on the middle picture. What you're going to see is a group of engineers that we invited to attend the Tokyo E-Gran Prix. Our HR team and our Tech IP team ensured that all of those potential engineers understood TDK and as well, understood our special technical partnership with Porsche. So we use the brand to attract the talent in. And then what we do is show them our exciting world of technology with TDK. And the results show it. You can see how we have increased the amount of candidates applying by 140%. But there's also branding result here that we'd like to share with you. According to the Toyo Kai's ranking, TDK ranked 100 in the most popular company among 2027 graduates. We're paying attention to this, and we're focusing on it for continual improvement as you see it rise into the future. For the fourth time, TDK has also been qualified as a top employer in Germany for the Top Employer Institute. These are trends that we see globally, and it's because we're focused on looking at our brand and telling a cohesive story to the market. Now let's look at how TDK leverages brand to support our growth strategy. Mr. Keller has already emphasized the alignment of the HR and the business strategy. These must connect for us to win. So let's dive into a use case of strengthening the technical capability together. So TDK creates value by providing solutions to our customers. And we have expertise in materials and process, and we're strengthening our software capability, which is critical for a total solution. With the Chief Technology Office, we have an approach. First, we must have both software expertise with an understanding of TDK devices. Second, we must be able to adapt to the business by understanding changing customer requirements and applications security and regulatory requirements globally. Third, we connect our expertise through TDK United, working cross functionally across divisions technologies and products to share knowledge capital. When you combine these together, you build software capability that solves customer needs. From an employer branding standpoint, Rosa Chow, who you can see at the bottom here, she becomes the story. Rosa was named Woman of the Year at Sensors Converge Conference. She began her software career at InvenSense, software engineer progressed to manager, progressed to software executive. She adapted with TDK's sensor system business company. developing not only motion sensors, but also microphones, temperature, pressure, magnetic, creating different and then connecting the technology for more value. She leads teams in Korea, Japan, China, San Jose and throughout Europe as part of our technical software community. Expertise, adaptation, connection. We have real stories like Rosa's for marketing, for manufacturing, for information technology and. And we're building capability and creating that impact from within. This is the employer brand from concept through implementation. TDK is a platform for careers to flourish and to create value. And this is what happens when you align the HR and the business strategy together. Thanks for your time.

Let me summarize and let me close with what matters most. Rendo aligns every people decision to our corporate strategy. Our engagement is up with a 92% response rate. Our people trust us, our GMDP successor readiness is beyond target. Our leadership bench is deep. The same pipeline produced real business like SensEI. Our employer brand has increased, and we are actively building AI and software talent that will power TDK's NEXT solutions. We are not only running HR programs, we are building the human foundation of TDK's future. Thank you very much.

That concludes the HRO session. Thank you very much to both gentlemen. And now we would like to start the CTO system. Hashiyama-san, the CTO; and Jim Tran-san, please come to the podium.

So I'm in charge of CTO. My name is Hashiyama. And so with Mr. Jim Tran, we would like to give the CTO session, please. So as being introduced by 2 gentlemen, I have spent my entire career at TDK. However, I started as an engineer in R&D center and subsequently gained a lot range of experience in sales, overseas assignments, leadership of business vision and the Corporate Strategy HQ before assuming my current role as CTO. Our long-term vision, TDK Transformation, embodies 2 aspirations contributing to the transformation of society and continuing to transform TDK itself and there are 2 aspirations. In the prefinancial capital represented by the roots of the Ferrite tree, we have added software technology. By strengthening softer cleanability, including AI we aim to further enhance corporate value. For this reason, we are focusing on recruiting and developing the software talent that TDK needs to continue its transformation. To provide solutions that are unique to TDK, we need not only software expertise based on a deep understanding of the characteristics of devices and as sensors, but also the ability to connect people and business at ability to address security and regulatory requirements. TDK's business mobile is built on diverse talent base and we differentiate ourselves by combining the capability to engage in the future to bring new technologies to market ahead of others while choosing the optimal strategic position for each technology and product. So that's our TDK business model. For example, in the sensor business, by continuing sensors with edge AI and software, we aim to contribute to the AI ecosystem with higher value-added solutions at the module and system tool. TDK has transformed its business portfolio through M&A over the years. More recently, we have stepped up the acquisition of the complementary technologies in order to provide higher value-added solutions to the AI ecosystem for smart assets, examples, including the acquisition of SoftEye, which has an eye tracking and the acquisition of assets from OQmented, which has a system technology for smart glass displays for AI data centers, we have made the energy of subsidiary in order to produce a medium science batteries in Malaysia. And we are pursuing the acquisitions of Fabric8Labs, which owns ECAM technology needed to manufacture coal plates. And the Fabric8Labs acquisition is expected to close after receiving the regulatory approvals. We will use these newly acquired technologies to further enhance cooled value and provide to the society. Materials development has traditionally. So therefore, shown here, there are 4 areas in the AI. So on the right-hand side, so using the we are going to contribute towards the business execution and they have been already touched upon by many corporations. On the left-hand side, so this is AIS market. That is by AI advancement, the AI ecosystem will expand, and we will have a good opportunity to grow our new technologies. On the right-hand side, sales solutions and some products in order to add value to our TDK products and also for the SensEI and for the growth opportunities. So the smart eye glasses are these areas. For that, we are going to have a detailed explanation by Jim Trans later. On the left-hand side, this is to accelerate R&D using AI. And here, for the new materials development, there is material informatics is also becoming increasingly important. So in the past, the materials development has traditionally been set to take a long time because the development process relied on the results of experience. accumulated through repeated trial and error. Today, by making use of the large amount of data we have accumulated over the years and applying AI, we aim to accelerate development and improve material properties. The use of MI, the materials informatics and therefore, in order to establish a sustainable material design methods it is important to use the AI. So therefore, we will continue to pursue materials development that is unique to DK. So as physical AI moves into a full-scale adoption, we believe TDK's opportunities within AI ecosystem will become even greater. AI cannot be utilized without data. and the necessary data cannot be obtained without facing technologies. As shown here by combining technologies that was through our own R&D with new technologies acquired through M&A and other means, we will continue contributing to infrastructure such as data centers while pursuing medium- and long-term technology development to maximize our contribution to physical AI through new technologies. I will now hand over to Jim Tran, who will provide a more detailed explanation of our contribution to physical AI and one of the 4 areas, AI for value enhancement. We are going to invite Mr. Jim Tran, please.

Thank you. Good afternoon, everyone. My name is Jim Tran. I'm the GM of Americas HQ and the DGM of Tech and IP headquarters. I've been at TDK for a little more than 5 years now. Prior to that, I was an engineer, a long time that I started as an electrical engineer at Boeing and then at Sony. And then I moved my way up. I was a Vice I was a Vice President of Broadcom. And prior to joining the TDK, I was Senior Vice President at Qualcomm. Today, I will focus on my discussion regarding physical AI. But at the end, I'll give a quick update on AI data center. Physical AI spans across many markets from robotics, smart glasses, AI edge devices, autonomous vehicles and drones. As physical AI ramps to a TAM of almost $1 trillion components and solutions will be a part of this growth. And in the next few slides, a I'll explain how TDK will be part of this ramp. 2 years ago, we created a company called TDK SensEI, whose goal was to provide edge AI solutions to improve the efficiencies of factories and warehouses. We started with CDM or so-called condition-based monitoring, where our EdgeRx devices can tell you what in when the machine went down in the factory. This was our first entry into edge AI. Since then, we've now partnered with AWS or Amazon Web Services to add cloud computing capabilities to our solution. This is now -- this now allows TDK to bring predictive and prescriptive maintenance to the market, enabling our customers to plan ahead for failures happen. Not only we'll be able to predict the failure, but we will also be able to prescribe what to do before that failure happens. We expect this market to grow by 35% in the next few years. I want to give a little more color about the market landscape. Many others have tried to do deliver solutions in this space. But they focused either only on the cloud or a sensor device with some limited capabilities. But here at TDK, we believe that in order to bring competitive solutions to the market we need to bring together edge devices that is easy to deploy with multimodal sensing and leverage the compute power of the cloud and provide a total system solution, and that's what we're doing. All factories want to maximize the uptime of their machines. This is the goal of our edgeRX and edgeRX vision solutions. By helping our customers maintain the uptime of their machines, which can help improve the efficiencies of their factories. As you can see in the graph, edgeRX aims to alert the factory management of the potential failures as early as possible to avoid downtime alter. This will reduce costs, maximize throughput and provide AI power visibility throughout the factory. Next, I want to -- next topic I want to touch base is Smart Glasses. Last year, we announced the acquisition of SoftEye and formed an AR platforms business division. SoftEye is a provider of low-power eye-tracking technology together with other TDK technologies like full color laser module, MEMS mirror, advanced battery technology and sensors we will provide platforms that will enable smart glasses that smart glasses market. By optimizing these components in the system, our platforms will enable smart glasses that is usable for lasting all-day battery life, lightweight such that it can be more uncomfortably all day, electronics are a small size that allows for fashionable designs. And with TDK's direct retinal projection technology, it can be scalable such that the prescription lens no longer need to be dependent on the electronics manufacturing. This market is expected to grow by 35% in the coming years. So this technology, we believe, brings has -- brings a different type of human machine interface, or HMI, to the computing world. It will be a seamless way for humans to interact with AI. With the fusion of the various sensors on the glasses, we will be able to provide contextual awareness for AI to be useful. For example, the AI will be able to use the sensors on the glasses to know where you park your car, for instance, it will recognize as you step out of the car and close that door, that will trigger the glasses to take a picture of where you parked. And later, as you come out of the shopping mall, you can ask, where did I park my car and it will pull up where do you park. There are many more such examples like this, and I'd like to go through a few of them in the next page. Here are some other examples that you can see that the smart glasses with eye tracking can enable. For instance, you can receive a business card from somebody. And by having that AI train, it all magically takes a picture of their business card because they know you're trying to you just met somebody knew and received the business card. You can also navigate while walking or riding a bike and have eye-tracking invoked functions on the UI while giving you a truly hands-free experience. I won't go through the rest of the examples, but I think you get the idea. Now let me draw attention to something exciting in coming out of R&D labs called SensorGPT. Just for background, every AI application requires data to train the models. 80% of creating an AI application is actually spent in collecting curating and labeling the data. This poses a huge challenge to getting AI apps into the marketplace quickly. SensorGPT technology aims to reduce that amount of data that needs to be collected. With just a small sample of data, SensorGPT will augment or synthesize enough data to produce similar accuracy as collecting real data. This will vastly improve the time to market for AI applications that require a lot of sensor data. Our goal is to make this scalable to support a wide range of sensors. In addition, we will be sensor agnostic and provide a user experience that's simple to use as other LLM in the marketplace, and we see this market growing very rapidly in the coming years. Lastly, I want to showcase a newly acquired technology called ECAM, Electrochemical Additive Manufacturing. We recently announced the acquisition of fabricate Labs which has created a 3D printer capable of printing metal like copper. There are many applications for this type of technology like thermal management, RF antennas and passive components. This technology allows for the ultra fine pitch printing of metals like copper to create unique structures. One of the near-term applications is thermal management in data centers. power and thermal management are some of the biggest challenges for AI data centers. With this technology, we can print inserts or of these coal plates with these micro channels that allows for efficient flow of fluid to promote better heat dissipation. This technology allows TDK to further participate in the growth of the AI data center market. We are awaiting regulatory approvals, and we look forward to giving you update as we get clearance. This is the end of my presentation, and I'd like to hand this back to [ Ito-san ].

This concludes the CTO session. Thank you very much. Now we would like to start the Q&A session. Please come to the podium.

Now we would like to the Q&A session. And during the Q&A session, we invite Mr. Saito, Mr. Keller, Mr. Hashiyama, Mr. Tran and also outside Director [ Mariama-san ] , and Mr. Katsumoto. Also Mr. Yamanishi, Mr. Brower, Hiraoka-san will participate. [Operator Instructions] So we would like to invite any questions from the floor, please. In the center, in the front row, please.

From Morgan Stanley Securities, Sato. A year ago during the Investor Day, so you mentioned about the battery [ ATL ] so the culture and how you're going to deploy to other business or how you're going to align your corporate concert businesses? And during this fiscal year, so Energy Power acquisition and also Fabric8 for M&A. And therefore, they have been a large scale M&A. So therefore, for the energy power. So this is the batteries technology. However, this kind of got strategy, how are you going to transport these kind of core cultures? And for the Fabric8Labs, so you wait for the authorities' approval. However, going forward, so how you're going to nurture the HR within the Fabric8Labs and how you're going to utilize within TDK? And therefore, I would like you to explain the progress? Thank you.

So thank you very much for the question. So first of all, I myself is going to respond. So for the batteries business, so because this -- we do have a long history. So Group ATL to that group. So this is the electronic components and also the other business companies' leadership. All trying to learn from that business and therefore, from the ATL members, they're all learning from each other. So that is that counter the thing of United from integration to Rendo and therefore, talking about the energy. So of course, we are going to integrate. And also that has started to work in moving to Rendo. For the batteries business, has been mentioned and also the energy. It's under our TDK Group. And therefore, we have started the rental activity already. And also for the second question for the Fabric8Labs. So therefore, well, because during the presentation, they have mentioned about this company. This company -- so a few years ago, so the corporate venture capital, debentures have started investment a few years ago. And from that period, we have been collaborating from that period. And therefore, at the beginning, it was only a collaboration between the electronic components. However, recently, we have expanded to other applications with such a huge growth potential, and therefore, it is necessary to scale up the business. And therefore, to that challenge. So because we do have a long relationship -- and therefore, as a basis, we have invited the company to participate with the TDK Group. However, we are waiting for the approval -- so talking about the collaboration. So we -- they do have the unique apologies, not only the electro components. However, they have such a growth potential. And therefore, not only the technology, so the production technology, and therefore, talking about scaling up. So we have the electronic components and sensor business. And therefore, we do have the capability to turn it and transform into the mass products. And after the approval, we are going to swiftly move to the TDK United to Rendo. And therefore, we are going to accelerate the Rendo business. So thank you very much for the question.

Now we would like to move on to the next question. Person on the left-hand side of the stage, please.

From Bloomberg, my name is [ Motizuki ]. In your presentation, you talked about the smart glasses said that you have already launched some products in smart glass market. I was so positively surprised it was quick. So could you review with us your growth so far in the smarts business? Compared with your initial expectation, is the trend faster or slower? And what is your expectation going forward?

Thank you for your question. On this question, Mr. [indiscernible], could you respond?

Yes. Thank you very much for the question. From the demonstration, maybe there was some misunderstanding about the information. Yes. The smart glasses are available in the market today. And earlier, Mr. Saito talked about his own use of smart glasses, but however TDK, it's not commercially available yet. We are still developing the technology. What we have today is the one with display and one without display. So whether you can get the information from the screen or not, there are 2 types. What is more promising is the one with the display. So what you have experienced in that exhibition is the retina based laser injection projection-type clear image technology as well as eye tracking to tell whether the U.S. is looking at. And I can give you the correct information. That kind of technology is almost ready for the commercial launch. So that's what you have experienced today in the display. So today, how user is using. There are some use cases we explained. But once smart glass is available, there are different applications and users can get the information from AI in different applications. So that's why we are expecting a lot from this market. Let me supplement. In the recent years, sensors and our main business segment, like sensor business, electronic parts segment and the battery business. In the recent short term, we have a lot of potential from these. And as Hashiyama said, we have a long-term view as well. And from the long-term perspective, there are different types of potentials that we are looking forward to. When it comes to smart glasses, [indiscernible], what do you think were smart classes? Do you have any views on Smart Glasses?

Yes. When I was with Sony, I was involved in something similar to this. For TDK, smartglass for TDK, in my opinion, it's great because you can tell where the is looking at. So if somebody is looking at something and at what -- exactly at what time, and you can tell what happened at that time. So this is a very significant cause you can enter information into computer with the keyboard and so forth and images. But as soon as you look at something, it's all down. So it's a new possibility of inputting information into AI. So your eyesight and without a lot of consumption of energy or electricity, you can get a lot of information. That's the secret. So we have promising opportunities for the short term, medium term and long term.

So we would like to invite other questions, please. In the front room, the right-hand side.

From Nova Securities, Akizuki speaking. So this is a great opportunity. And therefore, I'd like to ask Mr. Tran. So in the Qualcomm, so you have worked for Qualcomm. And from Qualcomm, so the smart glass and the sensors. So I think that 1 are great business opportunities for Qualcomm as well. So going forward, so the future approach, so you do have the processors. And therefore -- so therefore, you do have the relationship with the operating system companies. And therefore, you're going to create an ecosystem for example, thinking about the cloud connection in the future. So that's the opportunity. However, for DK smart glass approach. So how -- what are the differences? So what's the advantage for the TDCs. And I'm sure there are some challenges for TDK. Of course, you are going to have a different pot. So therefore, the TDK is a unique approved. So could you elaborate on this point, please?

Okay. I think the question was elaborated on TDK's unique approach to smart glasses versus what I was doing at Qualcomm. So yes, I spent many years at Qualcomm. I was -- previously, I was the GM of Qualcomm Snapdragon, so I know very well. So one of the things that if you look at other companies, Qualcomm and others, they come from mobile phone and mobile phone has a different power profile. That is their mindset. And TDK, we are coming from a different angle from optimizing the components but it requires both a total system from components to even the host processor. So if you looked at the company we acquired SoftEye, the key -- the reason that we acquired there is many different eye-tracking companies in the world, but this one is ultra-low power. The ability to focus your eye on an object and to do it really low power is the key because I think I've outlined there's things that allow -- that will drive the consumer market to adopt smart glasses. One, all-day battery life, your glasses only lasts for 30 minutes, no one will use it, right? In the old days, the smart watch in the last very long -- until it last for 1 day, then people started using it. Second, it has to be very comfortable you can put a giant battery to make it last all day, but it will be so heavy that you can now wear comfortably for more than 10 minutes. And then the other thing is it has to be fashionable. It must -- the electronics must be so small and light that it allows the glasses to be like a regular pair of glasses. So it's fashionable because the first thing you see on a person is what's on their face. If it was ugly, then nobody will wear it. And then lastly, which is really key that separates TDK from other companies attempting to do this is our direct retinal projection technology. So Saito-san has experienced it with his glasses and many of you who ever tried glass the glasses today, the majority of glasses today is dominant -- dominated by a projection technology called waveguide. So the image is projected to guide the waveguide is laminated onto your lens. Every one of us has a different prescription. I work glasses for reading, but nothing for far sight. So everyone is different. So that imposes another step in the manufacturing of just regular glasses. Somebody has to put the late wave guide on. So this prevents the ability. So by using direct retinal projection, we don't have to worry about your prescription or his prescription or her prescription. We avoid that. This is TDK's advantage.

We suppose that such advantage from a Qualcomm perspective, would Qualcomlook at the TDK as a competitor or a collaborator?

We are focused on the host processor. We are focused on eye tracking with the camera, and we also focused on the most efficient display. So together, we have to collaborate to make a true optimized system.

Thank you very much for the question. So we would like to invite other questions, please.