Elematec in unique position to serve customers in EV field

In the recent decades there has been stiff price competition between the Japanese electronics manufacturing companies with those in Taiwan, South Korea, and China. We know that your strategy is to separate the use of functional Japanese materials with those of emerging countries with superior price competitiveness. Can you tell us more about this strategy? In general, what should Japanese companies do to face this stiff price competitiveness?

We believe that many Japanese companies are not looking to compete with low-cost products manufactured by other countries. Instead, they are looking to combine low-cost processes in other countries with Japan's unique, high-quality products and technologies; technologies which are not found in other countries. Technological and technical acumen is one of the main advantages of Japanese companies. The core advantage of our Asian counterparts is their experience and ability to mass produce effectively and lower the unit-cost of their products as a result. At Elematec, our strategy is to combine Japan’s advanced technology with the low production cost and high-volume capacity of our Asian peers.

Your company was founded in 1947 and you had your 70th anniversary in 2017. You are now an integrated service provider and much more than just a trader. Can you run us through some of the key dates of your company’s development?

In the past, the merger of Takachiho Electric with Ohnishi Denki and the business alliance with Toyota Tsusho were major turning points, but the major changes to how Elematec evolved are as follows:

Previously, we were a trading company specializing in only selling individual parts and materials, but we felt that it was difficult to add value to a business relationship simply by selling individual parts. Thus, we began to provide module products and sub-assemblies. We have been doing this for around 10 years, and in recent years we began providing finished products (OEM / ODM) and are also now providing software development and support services with our products for our customers.

On top of selling module products, finished products, and software, we have additionally set up our own factory in China for various production and assembly capabilities and lastly we established an in-house design, technology, and quality assurance department to build an organization that enables us to meet our customers’ needs no matter what they might be.

Toyota Tsusho Corporation owns around 50% of Elematec's shares. What are some of the synergies that you have created with Toyota Tsusho throughout these years and what advantages does this alliance bring to your company?

Through our business alliance with Toyota Tsusho in 2011, we were able to build a wealth of information on trends in the automotive industry and connections to build our customer and supplier network. As a result, automotive related sales went from 8.2 billion yen in 2011 to 24.4 billion yen in 2021. Through our interchanging staff (to/from Toyota Tsusho) we were able to build a specialized automotive group. In that same way, we were able to set a much better foundation for our software side of the business by having Toyota Tsusho send members with specialized knowledge and experience in software. Finally, we were also able to effectively utilize Toyota Tsusho's global distribution base to better expand our network and capabilities.

The automotive sector is experiencing tremendous changes. Driven by government regulations, car makers are required to reduce the C02 output of their vehicles. Consequently, the demand for lighter materials, such as magnesium, aluminium or carbon fibre reinforced polymer (CFRP) is increasing, as the consumption of ferrous and heavy metal decreases. Furthermore, the transition to EV and the increasing popularity of BEVs, PHEVs and other hybrid alternatives are redesigning how engines function. How are you adapting to these changes?

There is no doubt that the shift to EV will continue to grow. We have experts looking over each one of the vital parts in EV such as inverters, motors, batteries, and sensors and they are always monitoring the market status. A lot of those parts were not previously implemented into vehicles before switching to EV and thus are newly being adopted by automotive OEMs and their tier 1s, so Elematec is in a unique position to quickly assist our customers with the technology, know-how, and information cultivated from our experience with these components’ use from other industries/markets outside of the automotive realm.

Regarding environmental friendliness, this is a topic not limited only to automotive, but can and should be considered for all industries. Our company, as a whole, has been strengthening our product line-up for environmentally friendly and carbon neutral products & solutions. We have a number of different biodegradable materials, additives that aid in CO2 reduction, and molding & production technologies, to name a few, that all serve to aid in saving the environment with better practices.

Research suggests that seventy-five billion devices will be connected to the IoT by 2025. We know that the Internet of Things (IoT), 5G technology are the latest trends that are sweeping all industries. Could you tell us, with these changing trends in mind, how are you leveraging 5G and digital technology in your midterm growth strategy?

We are already making various efforts. For example, with IoT products, we are already developing, manufacturing, and selling smart home OEM / ODM finished products for home appliances and electronics. We also manufacture communication-type dash cams which we have connected to our own servers where we can offer operation and management of their systems to our customers.

In regards to the shift to 5G, we are building a base of solutions to allow more information and functionality using high-capacity data transfer communication to make good use of 5G speeds. We think that it will take some time for the whole world to implement 5G, but we believe that local 5G will become widespread in the near future, so we have been developing various high speed data transfer devices to add to our line-up. We are also providing many different components that help build new 5G base stations.

As an electronic component manufacturer and trader, the miniaturization trend taking place in the electronics industry is obviously something that you must think of. We are seeing increasing amounts of system on chip (SIC) applications, higher transistor densities and more passives with added functionality too on single PCB substrates. How are you adopting to this miniaturization trend and what added functionalities are able to offer your customers?

First, for our semiconductor-related customers, we are proposing circuit boards made by and that support microfabrication as many of the components become smaller.

In addition, semiconductor microfabrication is approaching its technical limit, and as a response to this, we are thoroughly investigating 3D mounting (stacking technology).

We are also proposing materials used in these applications and developing products ideal for the needs of this customer base.

Additionally, the miniaturization of semiconductors means that we must also work to develop and advance the capabilities of semiconductor manufacturing equipment.

Japanese companies have a huge advantage in the global market for semiconductor production equipment; particularly equipment directly related to miniaturization and development in areas such as polishing, cleaning, and inspection equipment used during the exposure, coating, and development processes for semiconductor production. These technologies are indispensable for improving and developing miniaturized components.

We are providing, to these device manufacturers, products such as control panel systems, high-speed communication materials/devices, heat resistant materials, chemical resistant materials, and interface components all specifically to further development of product miniaturization.  

In 2021 you signed a distribution partnership with Nevada Nano Ink and in your midterm strategy you aim to create synergies and find new partners overseas as well as here in Japan. Can you tell us more about the type of partnership strategy you’re looking to create in the years to come?

Elematec has a large number of R&D/marketing staff in Japan and overseas to watch 22 different markets, where they are following the latest trends in each industry. In line with that trend, we are constantly researching manufacturers who have innovative technologies and ideas whom we can partner with.

With each partnership we look to create a unique and/or market competitive product lineup or service that Elematec can propose to its customers by acquiring sales rights, contracting production (ODM / Licensing), technical business alliances, etc. This is our strategy.

You are obviously a very international company with a huge presence worldwide, more than forty locations, with a huge presence in China, and a presence in Czech Republic and the USA. Can you tell us more about your international growth strategy and which markets you are going to be targeting?

We will continue to develop globally, but we are particularly looking to strengthen our presence first in the US market being the world's 1^st largest GDP, and second in East Asia.

We have five different bases positioned to win the North American market. Currently, the amount of work we do in the automotive related business is high in the US, but we believe that there are many more opportunities with companies creating new and advanced technologies in the US to work outside of automotive. For example, Big-tech companies, advanced medical technologies, and the aerospace industry that are continuously challenging themselves to create state-of-the-art technologies. Elematec is targeting these markets in particular.

In order to bolster our efforts to further enter into these markets, we opened the San Jose office / Showroom in 2021 to exhibit and promote Japan's unique, excellent, and often one-of-a-kind technologies. Our goal for the showroom is to have everyone feel free to drop in at any time to experience Japan's excellent technologies.

In addition, we are looking into expanding into the South American market for our US operations in the future. We are planning on starting by providing services similar to what we do in North America to help our Japanese customers as well as many of our North American customers.

The second target market is in East Asia. Our company has been expanding across East Asia for a long time, as it is the second largest area for sales after the Japanese market. However, despite our long presence there, there are still many major companies that we have not yet entered into business with.

To further expand our presence in Asia, we dispatched staff with specialized knowledge and backgrounds to Asian companies that are active globally, and to them we are introducing Japan's many excellent one-of-a-kind products and technologies.

If we were to come back in five years’ time what vision or objective would you like to have achieved by then?

In order to further expand our business globally, we will have greatly accelerated our local decision-making speeds by actively hiring and training talented human resources in each region and promoting them to the top of national staff focusing first on US and East Asian companies.

By taking root in each region, we believe that we can accelerate the economic revitalization of each country through our business activities, which in turn will better contribute to society.