A small company playing a big role in shaping electronics

“We’re calling on foreign investors to support the expansion of our global operations.”

Futoshi Ishii, President, Kohoku Kogyo Co., Ltd.

With the demand for aluminum electrolytic capacitors and fiber-optic devices driven by the needs of fields such as 5G/6G internet, CASE (connected, autonomous, shared, electric) vehicles, industrial automation, and smart electronics, the future certainly looks bright for Kohoku Kogyo.

Established in 1959, Kohoku Kogyo – now listed on the Tokyo stock exchange following its IPO in December 2021 – is a leading manufacturer of lead terminals for aluminum electrolytic capacitors as well as optical components devices. Producing some 50 billion pieces annually through its seven production facilities worldwide, the Japanese enterprise boasts a 40% global market share for lead terminals for aluminum electrolytic capacitors and 50% global market share for optical components and devices. This relatively small company, therefore, plays a hidden yet essential role in the growth and advancement of the aforementioned technologies.

In Japan’s electronics heyday, there were up to seven companies producing lead terminals, however, Kohoku Kogyo is one of only two that have survived. What sets the company apart from its competitors at home and abroad is the fact that it produces all the machinery and equipment to manufacture its lead terminals independently.

“No company in the world can do this, and we are a very unique presence in that sense,” president Futoshi Ishii proudly declares. “Our ability to develop and manufacture not only the lead terminals but also the equipment and machinery needed to produce lead terminals puts us in a very dominant position. We do have competitors in China, Taiwan, and Malaysia, but obviously, we are a major player in this market, and those competitors use equipment and machinery that are duplicates and copies of our older and more obsolete machinery.”

Kohoku Kogyo puts strong emphasis on protecting its technological edge and know-how, and has secured an ever-growing number of patents over the years as part of its IP strategy. “In fact, we have more than 60 patents now and I think this is a key advantage of our business,” adds Mr. Ishii.

When it comes to the Shiga-headquartered firm’s competitive advantage in the field of optical components and devices, design technology is key. “We have a technology to design devices, and we are the only company in this industry to be successful in designing the key material composition as well as devices,” the president explains. “I think that the strength of Japanese manufacturers is that they produce the materials themselves. It isn’t a glamorous or fashionable job, but it is essential.”

‘Essential’ is indeed the key word when describing the work of Kohoku Kogyo, whose optical components and devices are found at the backbone of the global fiber-optic communication network, particularly in undersea cables which require especially high reliability.

The company’s high-quality and highly reliable lead terminals are also essential to some of the world’s biggest carmakers such as Toyota and Tesla. “What I have heard from our customers is that they only need Kohoku Kogyo terminals, and nothing can replace ours,” says Mr. Ishii. “Even though we are a small company, it is gratifying that these massive companies consider us a vital part of their business.”

Crucial to Kohoku Kogyo’s reputation for high quality has been its ability to minimize defects through strict quality control measures. The company is in fact the only one in its field to hold  IATF 16949 certification, a technical specification focused on “the development of a quality management system that provides for continual improvement, emphasizing defect prevention and the reduction of variation and waste in the automotive industry supply chain and assembly process”, Mr. Ishii explains.

Following its successful introduction on the Tokyo Stock Exchange, Kohoku Kogyo hopes investment and collaboration with new partners will help to strengthen its continual product development, which is currently focused on areas such as high purity quartz glass and multi-core optical fiber. Again, the company’s proprietary equipment and machinery, and longstanding know-how, has seen it lead the way in these new fields. “In the lead terminal manufacturing process we use precision molds, and this precise shaping technology and know-how are used in the manufacturing of optical components. I think that is a great synergy we have realized.”

While the company is currently seeking collaboration in the field of laser device manufacturing, it also aims to find partners to support its global expansion efforts, with the U.S and Europe being top priorities in this regard. “We are trying to establish sales offices in both locations and may look to some forms of joint ventures to assist in penetrating those markets,” Mr. Ishii reveals. “I can’t disclose more information at this time, but needless to say, exciting things will be happening in the not-so-distant future.”