Key Business Growth Strategy: Micro Devices

Satoru Taji
Director and Executive Managing Officer
Nisshinbo Holdings Inc.
Chairman and Director
Nisshinbo Micro Devices Inc.

Increasing Our Presence with the Three SINKAs Aimed at Becoming an Analog Solutions Provider

First Year of the New Company: Post-integration Progress

It has been over a year since the January 2022 launch of Nisshinbo Micro Devices Inc. In the Integrated Report 2022, you mentioned that you wanted to facilitate the integration process—what progress has been made?

Integration is progressing in development, production, sales and a variety of other areas, and synergies are also being created. Having established a new development flow incorporating the best aspects of the different development flows and systems maintained by the former New Japan Radio Co., Ltd., and Ricoh Electronic Devices Co., Ltd., we have been able to achieve development efficiencies and increase design quality, with some products already advancing to the mass production stage. This integration has increased the number of manufacturing plants to three, two of which are engaged in front-end processes, and one in back-end processes. Internal projects are underway to incorporate mutual advantages that will lead improvements at each plant, and productivity and production quality are on the rise. In terms of sales, as there was little overlap between the two companies with regard to individual products and customers, we are promoting cross-selling, including to overseas customers.

Of course, a little more time is required to fully integrate human resources and other systems. That being said, we deepened mutual understanding during the pre-integration preparatory phase and share the same mindset regarding work and how to proceed, which in my estimate, has led to a smooth integration process. As the business environment continues to change at a rapid pace, it is important that companies and people also continue to change. We view integration as an opportunity to clarify the positive points and challenges facing both sides and achieve significant changes.

Position in the Semiconductor Market

What is your current position in the semiconductor market and what is your outlook for the future?

Within the semiconductor industry, analog semiconductors used in a wide variety of IoT devices are a broad industry comprising two or three US and European companies with sales over ¥500 billion, and more than 20 companies with sales between ¥100–200 billion. Targeting sales of ¥100 billion in 2025, we are third place among Japanese companies, and intend to further increase our presence going forward on the strength of numerous product lines boasting high market share.

Some of our strongest products include operational amplifiers, comparators, power supply controls, and lithium-ion battery protection ICs, which are indispensable for preventing heat generation and combustion due to over-charging or overdischarging lithium-ion batteries used in electric vehicles (EV) and smartphones. We have a more than 20% share of the market for mobile lithium-ion battery protection ICs.

In addition to semiconductors, we are Japan's leading company in microwave-related products, with a commanding 80% share in the global market for magnetrons, a key component of shipboard radar. We will further increase the number of competitive products such as these and expand our business domain beyond vessels to include satellite communications and highly sensitive motion sensors.

Further, one of our major advantages is the ability to obtain product feedback and industry trends from semiconductor users within the Nisshinbo Group, including Japan Radio, Nisshinbo Chemical and Nisshinbo Brake, and utilize this information in various industry networks. In Japan in particular, many customers place great importance on support systems, with the support capabilities we have cultivated in Japan constituting a major edge on overseas competitors.

Strengths: Analog Technologies

What are Nisshinbo Micro Devices’ strengths in analog technologies?

Analog semiconductors are a general term for semiconductors that amplify continuous, non-quantifiable physical information (analog signals) such as sound, light, temperature, and human heartbeats, then convert them into digital signals that can be processed by computers, and conversely, they also convert digital signals into analog signals. In this area, we are particularly strong in signal processing ICs, including sensor ICs for which the market is expanding, and power supply control ICs, where demands for lower power consumption and other features are on the rise.

This integration has enabled us to cover the entire flow from sensors absorbing analog data in the real world (physical space), conversion of that data into digital data for processing by computers, and computer-processed data fed back again as analog data in physical space. This is a major technological strength. Further, in providing analog solutions, the digital processing function referred to as digital signal processing (DSP), the last aspect of analog solutions provision not facilitated by the integration of these two companies alone, was incorporated with the addition of D-CLUE Technologies Co., Ltd., to the Group in February 2022. This company has strengths in DSP development including mixed signal LSIs and an integrated development system comprising modular printed circuit board design to software development indispensable for the provision of solutions. Despite our having previously specialized in single-function devices, with the addition of D-CLUE Technologies, we can now substantially expand business opportunities as an analog solution provider.

market share
What is a typical analog solution that combines multiple functions?

One example is the combined power supply IC for automotive CMOS image sensors announced in January 2022. One feature of this product is its ability to suppress noise, which has a greater impact on sensors with performance enhancements as CMOS image sensors become more sophisticated, resulting in a product solution combining conventional low power consumption technologies with low noise technologies.

In May 2022, we announced a broadband low-noise amplifier (LNA) that supports a wide range of frequencies for devices that require highly accurate positioning information. With an expanded product lineup that improves the positioning accuracy of GPS and other applications by an order of magnitude or higher compared to conventional products, we expect this technology will spread to even more applications in telecommunications and other industries.

Another analog solution for which we received many inquiries during the pandemic as a technology contributing to infection countermeasures are touchless sensors facilitating the hands-free operation of elevators, vending machines, and other equipment. Optical technologies used in optical sensors facilitate operation even when wearing rubber gloves, and we expect this solution will be used in a wide range of applications. We are already receiving inquiries from dentists.

Further, in terms of solutions incorporating MEMS technologies, we have developed devices used as ultra-compact microphones that are being shipped as new sound sensors for laptops, smartphones, and smart speakers. Solutions using small microwave sensors are expanding to a wide range of industries and applications as motion sensors used to open and close toilet seats, as well as high-precision sensors that detect sleep apnea and sound an alarm. In 2022, we introduced a mounting line at subsidiary Nisshinbo Micro Devices AT Co., Ltd., to modularize the combination of sensors and ICs, thereby enhancing our ability to mass-produce small modules.

Growth Strategy in Light of 2025 Targets

In 2025, Nisshinbo Micro Devices is targeting sales of ¥100 billion and an operating margin of 10%. What is your strategy for achieving this growth?

Although some assumptions, such as exchange rates, have now changed since we first announced these targets in 2021, setting clearly defined numerical targets gives us an initial waypoint to aim for in our goal of becoming a global top 20 company in the analog semiconductor industry. At the same time, we want to move up from our current ranking at third-place among Japanese companies to an even higher level. My sense is that we are moving swiftly forward to achieve this goal.

Our growth strategy is driven by the keywords“ three SINKAs.” The first SINKA is“ deepening,” which represents efforts to push our existing strengths even further and dig deeper. The second SINKA is“ evolution,” which represents efforts to combine our strengths and create new things. Both of these are aimed at achieving our 2025 targets in the shortest time possible. We will then promote further growth through the third SINKA“ renewal,” which represents our aim of transforming into an analog solutions provider.

To achieve“ deepening,” in addition to utilizing our own production lines, we will tap external partners such as foundries (companies specializing in front-end processes) and OSATs (companies specializing in back-end processes and testing services) with the aim of expanding our production capacity. Through“ evolution” combining our strengths, we will increase the value we provide to customers, which will lead to higher sales and profit margins. Further, to achieve“ renewal” will require our strengths in analog technologies, as well as digital technologies, processor technologies, and the software technologies that drives both. We must also listen more carefully to customer feedback and the problems they face, strengthening our solutions mindset leading to the resolution of customer issues. There are many skills required of us and many challenges to overcome, but above all, we must prioritize and strengthen signal processing technologies, which include sensing and digital technologies. We will incorporate the knowledge of D-CLUE Technologies Co., Ltd., while strengthening modular and software technologies as well as our ability to envision usage scenarios from the perspectives of hardware and software.


Research and Development

What are your R&D policies regarding the development of new products and services?

An enhanced R&D structure is essential for the promotion of the three SINKAs. In addition to conventional R&D, we will deepen dialogues with external educational institutions and venture companies while proactively promoting new approaches to R&D. In January 2023, we completed development of a 0.18-micron device process and are prepared for mass production on miniaturization lines. We will link R&D enhancements to the creation of new products.

Human Resource Development

What are your human resource development polices and what specific initiatives are underway?

Since we are a technology-oriented company, we are strengthening the development of human resources with so-called technical and specialized skills, as typified by R&D. For example, we are considering the introduction of AI technologies as part of our technological development toward becoming an analog solution provider, which is one of our business strategies, that includes both the improvement of technological development capabilities as well as the internal promotion of DX. From the perspective of technological development, we expect AI to be used as a tool for implementing AI in solution products and developing new businesses, and from the perspective of the internal promotion of DX, we expect AI to improve technological standards and productivity. To this end, we have incorporated an educational program for the development of personnel with AI skills that includes both developers and members of various other professions.

Further, to make it easier not only for developers, but also personnel in sales, marketing, quality assurance, human resources, and management positions to take on the challenge of learning the specialized skills required in their respective fields, we have established professional courses within our Human Resources system to run parallel with promotion courses for generalists. We will also further expand and enhance the Human Resources Development Program launched in 2022 to facilitate new business creation. In addition to human resource development for new employees and management candidates, we are creating development systems and programs that provide ample development opportunities for mid-career employees, who are expected to grow the most, so that each employee can gain awareness and motivation leading to individual growth and organizational development.

Contributions to the Environmental and Energy Field

How does Nisshinbo Micro Devices contribute as a member of an Environment and Energy Company group?

“Low power consumption” and“ high efficiency” technologies are both our strength and our product catchphrase. Almost all our products contribute to improved energy efficiency and reduced environmental impacts. Going forward, we will continue to strengthen this concept in an attempt to improve the global environment through the use of our products.

In terms of corporate activities, since 2022 we have participated in a TCFD- compliant project aimed at achieving carbon neutrality by 2050, which is the stated goal of the Nisshinbo Group. In fiscal 2022, the first year of this project, we installed solar panels covering an area of approximately 7,300 m2 on the roof of our manufacturing plant building in Thailand, generating electricity equivalent to approximately 8% of the plant's annual electricity consumption. In the future, we will expand similar initiatives to domestic plants and accelerate decarbonization efforts to achieve the Group's medium-term environmental targets for fiscal 2030.

Group Synergies

In what ways do you create synergies with the Nisshinbo Group?

The Nisshinbo Group comprises a very diverse range of companies. Synergies are easily created between our business and Nisshinbo companies involved in semiconductors and electronics, such as Japan Radio, Nisshinbo Chemical, Nisshinbo Mechatronics, and Nisshinbo Brake.

In the area of“ sound,” which is one of our strengths, we are engaged in high-precision, high-quality sound operational amplifiers for audio equipment under the MUSES brand, and we are also taking on the challenge of creating various new businesses focused on sound in conjunction with other Group companies. For example, wouldn’t it be helpful to have predictive maintenance systems that use sound to rapidly detect cracks in tunnels or abnormalities in motors and other equipment? Could we use sound to detect brake pad wear? Or is it possible to use sound for the detection of defective products inside factories? In asking such questions, various ideas are emerging from Group company networks and knowledge, expanding the areas in which we can utilize our technologies.

In the healthcare domain, we have also begun to develop a new type of stethoscope business with Ueda Japan Radio Co., Ltd. We are developing a“ super stethoscope” that uses sound processing to remove the sounds of crying so infant heartbeats can be heard. In the telemedicine domain, we are also engaged in the development of a solution combining AI and wireless technologies to create a stethoscope equipped with vital sign sensors that, in addition to heartbeats, enable doctors to ascertain blood pressure and other patient information. Additionally, we are working with Nisshinbo Textile to jointly develop a new business venture comprising throat microphones that use bone conduction to facilitate clear conversations on construction sites and in other noisy environments.

We will build on our achievements in analog solutions comprising the core of our“ renewal” efforts through synergies with Nisshinbo Group companies, while further collaborating with companies outside the Group to create new businesses and contribute to the Group as a whole.