Since its foundation in 1974, Japan’s Circuit Design has been supporting the development of wireless technologies both in Japan and abroad. Looking to the future, the company has been developing Radio Frequency Integrated Circuits (RFICs) that integrate low-power wireless module technology, an innovation that will be shared with customers in 2023, while with the automotive industry in transition, however, the company has also shifted its focus to industrial wireless modules, having introduced its wireless systems to the German market in 1992. We sat down with president Yukinaga Koike to learn more about these developments, as well as the history and culture of innovation at Circuit Design.
Please give us a brief introduction to your company.
Regarding the name of the company, Circuit Design is a leading design manufacturing company for low power radio products. It was the idea of myself and our chairman Mr. Maruyama, back in 1972, in the period when Japan experienced the first oil shock. At that time, oil prices drastically jumped from USD 1-2 to USD 5 per barrel, and there was a deficit and scarcity of many things in Japan. Economically, this was a very difficult period for Japan. At this time, it was very hard to find a job, so Mr. Maruyama and I, who were experienced with high frequency circuit design, approached the companies that were manufacturing printed circuit boards (PCBs). However, we were not very successful, so we told the companies that they did not need to pay us money, just give us an opportunity to do something useful for their company. At that time PCBs were not as we imagine today. Everything was designed by pencil and paper, whereas today everything is done by computer. The PCBs were produced based on this artwork design. People needed to be artistic to be capable of introducing their ideas on an engineering level. Our company focused on the PCBs and chose the word “Circuit”, which means circuit diagram, and “Design” which represents the engineering design for the company name.
Mr. Maruyama and myself were enthusiasts of amateur radio back in the day, and we tried to introduce more and more products as times evolved. In Suwa-city, in Nagano prefecture, there was a local company called Chinon. This company manufactured 8mm cameras. Their cameras also contained sound recording features. However, there were intermittent sounds coming from the 8 mm camera when it was being operated. These sounds were affecting the sound quality of what was being recorded. A wireless microphone came in handy as it recorded the sound from a distance. This greatly increased the clarity of the sound, and as a result, Kodak made an order with that local company in Nagano. The next was from tractors, as tractors had to be equipped with ploughing equipment. We developed a device for the affiliated company of IHI, that could be installed on tractors so the rotaries of tractors could horizontally process the land. Another success was in relation to the American company SAMSON. In the age of electric guitars, wireless microphones began to be used by top stars such as Mariah Carey and Madonna.
As a specialized manufacturer of wireless products and modules, what does monozukuri represent for you and your company? What do you believe to be some of your strengths that allow you to compete in a globalized economy?
In 1989 we employed an outside auditor to analyze the company’s activities. They found that the company was capable of doing many different kinds of layouts for the PCBs, such as PCBs for high-scale electrical power plants. We also had done instrumentation of power plants using jet engines. However, we realized that we could not only concentrate on being an OEM business, so we slowly started shifting to the development and production of our own products. We began to produce our own brand remote engine starters. In cold regions such as Hokkaido, it can be very difficult to start car engines parked at outdoor. The car needs to be pre-heated as the engine wouldn’t start due to the oil being cold. At that time, the remote engine starters were not authorized by the government in Japan, so we proposed our design to the Ministry of Transportation. The Ministry of Transportation received the request from Circuit Design and approved the use of the remote engine starters in cold district. As a result, we became OEM products supplier for Nissan, Honda, Mazda, Mitsubishi and the other large car manufacturing companies. That was the beginning of the remote engine starters, and as time progressed, the company began to supply more and more remote engine starters to many car manufacturing companies.
As a company with connections to the automotive market, and with a strong production capacity for wireless communication, what opportunities do you see for your company in the changing automotive market?
The transition of the industry has affected the company’s activities. Thirty years ago, the engine starters accounted for around 80% of the overall turnover for the company. This has of course changed. As time has gone by, profit from the engine starters has dropped due to the expenditure for the production site. As the automotive industry changes, we now have patents for many security device products, such as the immobilizer for cars. Currently the company has several product line-ups that are used other than in the automotive industry. Today, our top sales products are industrial wireless modules. We are getting large amounts of orders from customers for these products, and this industry itself seems to be very promising.
How did you first get involved in the German market?
In 1992 the company opened its office in Germany. The opening of the business there was difficult. Today Germany applies to the European frequency standards which are known as ETSI, however, back then, Germany was different and had the harshest radio standard. This was known as FTZ. To overcome this obstacle, we brought a student from Bremen in Germany over to Japan, and we educated him in the way Circuit Design operates and the radio technology. He brought his research engineering back to Germany and started doing market research for radio module products. He also researched how our company and products are useful for that market. This proved to be a great success. We got the radio certification needed to make our business there, and we began to introduce our wireless systems to the German market, and then to the other countries in the European Union. In 1998, we brought this radio module business to Japan. The current company is considered to be a fabless company, a company that doesn’t have a manufacturing location. Other local companies provide services for us. We design the circuits for them. They operate the production sites, and when the product comes out, it is submitted to the final user of that product.
What would you say are your main competitive advantages? What differentiates you from your competitors?
First of all, the wireless industry is a very competitive sector to operate in. This is due to the stiff price competitiveness of this industry, especially in regards to competing with the companies that already have Wi-Fi and Bluetooth manufacturing process. It is very difficult to compete against those companies. However, we do have an advantage when it comes to wireless industrial construction manufacturing solutions, as the regulation is strict, our prices are more reasonable when compared to other conventional companies. This is due to the fact that this segment of the market is not very big, which means that many of the larger companies wouldn’t find it profitable to enter this market. Our company’s objective is to enhance the reliability and competitiveness of our radio link applications by providing necessary radio products. Each country has its own frequency ranges and regulations. Therefore, it is important to know all of them in order to manufacture solutions for all countries. Circuit Design is capable of introducing the application of wireless module systems and matching the expectations of the industrial segment in each country. Furthermore, we provide them with a less-expensive option, which distinguishes us from our competitors.
What has been your experience in collaborating with firms in these foreign markets?
Japan is a country that has a scarcity of natural resources. To obtain natural resources, Japan needs to look to off-shore areas close to its coast line. Specialized research ships need to be employed. Japan did not possess these ships, however, a research ship was brought to Japan from the Norway. This ship used large cables to pulse the area, in order to investigate what natural resources each specific areas had. The results were recorded on computer. This was part of a nation-wide project. In order to continue the research project for a certain period, the Japanese government decided to purchase this ship. The Japanese flag was raised on the ship, and the marine research continued. High frequency wireless transmitters needed to be applied, and to their surprise, when they checked the transmitter box that was installed on the ship, they found that it had been designed by Circuit Design in Japan. As a result, we provided our support to upgrade the wireless transmitters that it used. We told them that we did not need any fees for research and development (R&D), as long as Circuit Design’s involvement was well-known. We hope that we will see the benefits from this.
This is a perfect to story to spread the name of Circuit Design overseas. Having such a unique technological know-how in your specific field, are you looking for co-creation partners to tackle overseas markets, in order to continue the spread of Circuit Design’s name overseas?
Currently, electronic components such as semiconductors are in a tight state. Circuit Design has been developing RFICs that integrate the low-power wireless module technology that we have cultivated so far, and we plan to share it with our customers in 2023. We are confident that this RFIC will have performance specialized for industrial wireless equipment and will be a device that can build wireless devices with the safety and reliability, as well as wireless performance expected in industrial applications.
Can you please share with us what markets and countries do you view as key for your international development?
The immense investment required prevents us from expanding to some other foreign countries, as it takes a large amount of capital to establish a facility or distribution office overseas. We do have a new line-up of products coming up, such as the RFIC mentioned, and see new markets like IOT. The global wireless sector in the industry right now is focused on vast amounts of consumer user products. On the other hand, industrial wireless equipment work on a high-end level and usually comply with the local governmental regulations. The company needs to know all of this information to be able to operate in new markets. That is both time-consuming and expensive. Therefore, it is difficult to predict which areas would be more applicable for future expansion. If a market is ready and equipped, and has its own regulation bills passed which would allow us to operate there, then we are ready to target that market, although it would also have to be financially feasible.
Are you looking for distributors or local partners that would enable you to mitigate the amount of investment and risk involved when going overseas, yet enable you to tackle these new countries?
If the market is not a necessity for a country, or if a country is not ready or does not have the means to introduce top-notch high frequency industrial purposed wireless solutions, then there is no necessity to go there. Device R&D is also very costly, therefore our expansion into other markets depends not only on the necessity of that market, but also the financial feasibility of the venture. For example, the cost of R&D when introducing a new RFIC in our module is approximately the same cost as a HondaJet. Of course, the cost of the usual conventional wireless modules does not cost that much money, but when talking about RF semiconductor devices, R&D investment is immense. Currently there is a deficit of electronical component parts in Japan as many companies are quitting the business. This had led to a growth in investment flow into module R&D fees.
Mr. Koike, thank you for this interview. I do have one final question. Your company is celebrating its 48th year anniversary this year. Imagine that in two years for the company’s 50th anniversary, we have this interview again. What would you like to tell us? What are your dreams for this company, and what goals would you have accomplished by then?
This is a map of the Japanese archipelago. In these areas here, you can see where our base stations are located. In Japan, there are around one hundred areas like these, where we have installed the base station. Their purpose is for wild animal tracking. GPS transmitters are installed to wild animals like monkeys in areas across Japan, and they track the paths of these wild animals. Look at these red dots here. They show where the locations of animals are denser. You can project the travel of them and their relocation around forested areas can be monitored. These transmitters are located from Kyushu all the way to the north of Hokkaido. These devices are LPWA (low-power wide-area) devices. Today, these devices are used for animal monitoring, however, our aim for the future is infrastructural monitoring. Currently, the wireless telecommunication providing companies are focusing on wireless services for their customers. People are getting higher speed internet connections with the introduction of 4G and 5G. However, these communication systems are not optimal for data transmission for infrastructural and agricultural purposes. The Ministry of Land and Transport has also installed water level monitoring systems for first-class rivers, but monitoring of upstream rivers in mountainous areas have not been sufficient. Circuit Design intends to develop a wildlife monitoring system "Animal Map" system installed in mountainous areas and expand the application of this technology such as water level monitoring of upstream rivers. Global warming has become a major issue now, but it is important to monitor the water conditions and levels of lakes and rivers in Japan. We would like to continue to provide our services and technologies to the Ministry of Land and Transport.