Sustainability | GovernanceDigital Transformation (DX)
Our Approach
Under its Long-term Vision "TDK Transformation," TDK aims to accelerate two cycles — contributing to social transformation (including Green Transformation (GX) and Digital Transformation (DX)) and continuously transforming TDK itself (contributing to the transformation of society as well as the sense of internal transformation) — to help realize a sustainable future. By leveraging IT (networks, cybersecurity, etc.), digitalization of workflows (digital), and AI (generative AI, data ethics, etc.), TDK promotes DX activities to improve operational efficiency, ensure information security and privacy, and enrich value creation through data-driven insights.
Looking at the macro trend of AI permeating and expanding across society, TDK defines the broad market related to AI as the "AI ecosystem market." Expansion of the AI ecosystem market is expected to generate wide-ranging demand such as energy-efficient, high-density data centers; HDD heads/suspensions; edge-AI devices; AI-equipped vehicles and infrastructure; semiconductor manufacturing equipment; and AR glasses. By leveraging TDK’s strengths in low-power, high-reliability, high-density technologies and sensor-software integration, TDK will contribute to societal transformation and drive sustainable growth not only by developing new products in existing businesses but also by creating new products, services, and solutions.
Message from the CDXO
Governance
DX Promotion Structure
TDK has placed a Chief Digital Transformation Officer (CDXO) directly under the Representative Director, President and CEO. The CDXO’s mission is to ensure consistent governance for IT, digital, and AI and to oversee concrete support across the TDK Group. The President and CEO and the CDXO promote company-wide DX through close collaboration between top management and the execution side. As the company-wide DX head, the CDXO shares DX policies and implementation plans to ensure enterprise-wide operations. Specifically, reports and discussions cover Management System HQ’s medium-term plans for DX/IT, progress of cross-company projects, organizational design/roadmaps/literacy improvement measures for AI usage, cybersecurity, and DX/IT talent development.
In April 2023, Management System HQ was established under the CDXO as a TDK Group corporate function to accelerate DX using IT, digital, and AI technologies. It also facilitates regular dialogue and community operations that connect strategy, field, and execution, enabling policy dissemination, case sharing, and monitoring/cooperation on implementation progress to drive internal DX.
TDK has established Global Common Regulations regarding AI use and defines compliance requirements within the Group so that AI can be used appropriately company-wide. An AI policy specifies organizational measures and concrete actions to comply with the global rules, and the Group enforces their operation.
Cybersecurity Structure
Strategy
TDK continues to strengthen DX by executing its proprietary three-layer approach, the "TDK DX Framework." Management System HQ executes the first, second, and third layers in a planned manner and implements strategic budget allocations to strongly promote DX realization.
Layer 1: DX Enablers
TDK builds IT systems through selection and concentration of infrastructure and data utilization technologies. For infrastructure construction, four priority areas are defined:
(1) Integration of internal data and AI
TDK’s broad business portfolio has produced business-specific datasets from accumulated experience and knowledge. To use these diverse datasets for AI, TDK is building a data environment using “data virtualization.” For example, manufacturing data from sites worldwide are aggregated and analyzed by AI to identify root causes of defects, accelerate resolution of factory issues, and reduce scrap costs.
(2) Building an in-house generative AI usage platform
TDK has built a generative AI service platform, TDK Generative AI (TDK GenAI), and provides this service across the Group. The platform has been developed in-house not only to enable agile improvements but also to strengthen our AI/DX/IT talent. Security and privacy are ensured through authentication and internal SQL servers, making it a safe platform for generative AI. It can be combined with internal TDK data, enabling the construction of domain-specialized AI based on in-house domain data.
(3) Robust cybersecurity and personal data protection
Based on the Information Security Basic Policy, TDK implements measures such as building TDK Zero Trust, strengthening supply-chain security, and evaluating externally exposed environments to enhance security.
(4) Strengthening IT infrastructure and compliance
Management System HQ ensures consistent governance for IT, digital, and AI and provides company-wide AI/DX/IT foundational technologies, thereby enhancing IT infrastructure and compliance. Policy development for AI and awareness activities about those policies are carried out in cooperation with the compliance lead department.
Global deployment and rapid, reliable response are essential for building IT infrastructure that supports DX; TDK has established structures to meet these needs. The regularly held Global IT Leader Meeting (once or twice a year) brings together IT leaders from major global sites to intensively discuss prioritized AI/DX/IT strategies and plans, enabling effective communication and global rollout. The Global IT Infrastructure meeting also convenes personnel responsible for building IT infrastructure to share implementation measures and check progress across the TDK Group, ensuring rapid and reliable responses.
Company-wide AI/DX/IT foundational technologies are provided to business companies as internal services. This standardizes platforms for data sharing (making them AI-ready) and aims to minimize IT infrastructure introduction costs.
Layer 2: DX Agentic AI
By using agentic AI and digitizing manual workflow processes, TDK examines reducing operational costs in factories and back-end management processes. As a focused strategic initiative to fully utilize agentic AI, TDK runs taskforce-style DX initiatives. Dedicated taskforces are rapidly deployed to operational sites for short periods (typically under one month, up to about two months) to identify and implement high-impact AI-driven solutions. Introducing agentic AI from back-office tasks to factory floors aims for substantial cost reductions and workflow efficiency improvements. Emphasis is also placed on upskilling/reskilling for agentic AI use and standardization of responsible AI and digital ethics.
Layer 3: DX Project
To strengthen DX promotion, the CDXO and Management System HQ lead three company-wide DX project initiatives:
- DX Initiative 1: Reinforcing sales & marketing capabilities
Strengthen market analysis to enhance sales and marketing capabilities. Use AI to analyze CRM data based on sales knowledge to improve sales approach precision. Combine new business creation activities with the generative AI platform to rapidly generate concrete business ideas. - DX Initiative 2: Enhancing manufacturing processes
Promote operational efficiency and process rationalization in electronic device manufacturing. Dedicated AI collects manufacturing measurement data automatically and centrally manages/analyzes key operational metrics such as equipment downtime and quality data to drive efficiency. - DX Initiative 3: Strengthening Sustainability Efforts
Drive decarbonization across the value chain through digitalization. Contribute to achieving decarbonization goals by automating CO2 emissions traceability and improving data accuracy.
These company-wide DX project initiatives contribute not only to operational efficiency but also to new value creation when integrated with business strategy. For example, TDK SensEI Pte. Ltd., which operates an Edge AI business, benefits from insights gained through TDK’s entire activities, creating synergies for new businesses. TDK positions the AI ecosystem market as a key growth driver and accelerates delivery of new solutions combining sensors, software, power supplies and rechargeable batteries.
Risk Management
TDK recognizes DX-related risks such as cybersecurity/data privacy, supply-chain risks, geopolitical risks, changes in laws/regulations, and AI fairness/explainability. In response, TDK has established the Information Security Committee reporting directly to top management, implemented phased Zero Trust adoption, and strengthened monitoring via external disclosure environment evaluation systems*1. For AI use, TDK emphasizes human-in-the-loop*2, and has established Global Common Regulation.
- External disclosure environment evaluation system: An initiative to continuously assess vulnerabilities in the company’s IT assets that are accessible from external networks such as the Internet.
- Human-in-the-loop: Incorporating human feedback into AI learning, decision-making processes, development, and operation cycles.
Measures for AI-related Risks
TDK has established a global common AI policy. The policy requires compliance with country-specific laws/regulations and with rules for AI system use, and stipulates that AI systems must not be used for purposes other than executing Group business. TDK defines five AI-related risks and requires cautious use to prevent them from materializing:
- Risk that AI outputs lack accuracy/fairness
- Risk that AI outputs infringe intellectual property rights
- Risk of information leakage due to AI use
- Risk of privacy invasion due to AI use
- Risk of impeding fair competition due to AI use
To operationalize the AI policy at each site, DX managers are assigned at each location. When introducing AI systems other than global AI common systems such as the TDK GenAI platform, DX managers and Management System HQ conduct reviews to prevent inappropriate or unnecessary AI systems from being adopted. If an event occurs that manifests AI-related risk, it must be reported through the designated AI system incident process and route.
The AI policy is reviewed and revised once a year. In addition, regular education is conducted in cooperation with HR to ensure awareness among team members and to build company-wide proficiency.
Initiatives
Empowering DX Talent
Training and Recruitment
Based on the digital skills standards formulated by Japan’s Ministry of Economy, Trade and Industry, TDK has developed and operates an internal skill evaluation framework. This company-wide digital evaluation index visualizes TDK’s digital skills and links to training and development activities.
TDK provides company-wide tiered training: mindset transformation for leaders, foundational DX knowledge for DX promoters, and IT skill enhancement for those aiming for IT roles or reskilling. Hands-on and accompaniment-style training for generative AI, no-code/low-code tools, and BI tools are provided regularly to support acquisition of essential DX skills. To raise digital literacy across all team members, digital courses ranging from IT skills to management are offered via an e-learning platform.
TDK has also encouraged the promotion of process transformation using digital technologies. Attempts have been made to solve process issues using DX/AI tools, and activities and case studies are widely shared through a DX community to encourage interdepartmental knowledge exchange and accumulation.
TDK is strengthening recruitment of DX talent. For new graduates, TDK offers internships specialized in DX/IT roles and has started role-specific recruitment, increasing hires into DX/IT-related departments. For mid-career recruitment, TDK actively hires DX talent who can contribute immediately, steadily increasing headcount in Management System HQ.
Communication & Encouragement
TDK accelerates DX by fostering deep, sophisticated communication—both strategic and operational—between operational sites, business units, and DX teams. Such high-touch, multi-channel engagement takes place in person, online, and in hybrid formats. An internal awards program encourages DX initiatives and facilitates the horizontal dissemination of outstanding DX practices across the organization.
External Communication
TDK considers fulfilling accountability to stakeholders, including investors and analysts, and building trust and credibility through two-way communication important. In addition to regular financial results announcements, TDK holds new IR events to increase annual dialogue opportunities. In addition to regular earnings announcements and investor briefings focused on financial information, TDK holds new investor relations events, such as pre-financial briefings. These events increase the number of annual interactions with investors. The President and CEO emphasizes active investment in the AI ecosystem market.
TDK is also strengthening hands on communication; for example, TDK Ventures — which serves as TDK’s venture capital arm — hosts an in-person event called "DX Week." Since 2022, TDK Ventures has organized DX Week to actively invest in new fields that contribute to the AI ecosystem and to promote collaboration and innovation with startups and global leaders from industry, academia, and government at the forefront of DX.
The CDXO also shares information on TDK’s DX at various international conferences and lectures, including a keynote at IEEE in the United States in October 2024. (External link) These activities promote collaboration with other companies and universities and interaction with business leaders and startups.
