SANKEN REPORT 2021
SANKEN ELECTRIC CO., LTD.
3-6-3, Kitano, Niiza-shi,
Saitama-ken352-8666, Japan
Tel: 81-48-472-1111
Fax: 81-48-471-6249
https://www.sanken-ele.co.jp/en/
Sanken Electric
Creates with Society
Slogan Meaning
Our slogan, "Power Electronics for Your Innovat!on," expresses the essence of our expectations for the medium-term management plan, as we start Medium-Term Management Plan 2018. The slogan embodies Sanken Electric's aspiration as a company to contribute through power electronics to the innovations of its customers, its individual employees, and society.
Corporate Philosophy
Our mission is to provide optimal solutions in our core semiconductor businesses for power electronics and peripheral fields, thereby contributing to the advancement of industries, economies, and cultures all over the world.
We will strive constantly to innovate our technological strengths and creative power as we pursue reliable quality.
Moreover, we will share our customers' values as we develop our business globally, leveraging our proprietary technologies.
We will respect each of our employees and treat all of them fairly.
Our employees will strive to grow as trustworthy individuals and as businesspeople.
We will carry out our duties with a highly ethical perspective as businesspeople who value technology and creativity. We will treat our customers and suppliers with fairness and integrity.
We will strive to maximize our corporate value for the sake of our shareholders,
while fulfilling our social responsibilities and striving for harmony with the environment.
Profile
In 1937, the Toho Industrial Research Laboratory was established by Yasuzaemon Matsunaga, then president of the former Toho Electric Power Co., Ltd., as a 50th anniversary project of the company intended to conduct industrial development that is realistically useful to society. Tetsuji Kotani, who was chief of the semiconductor laboratory of the Toho Industrial Research Laboratory, took over the engineers and facilities of the laboratory when it was dissolved at the end of World War II, and established Toho Sanken Electric Co., Ltd. in 1946. Later, in 1962, the company adopted its current name, Sanken Electric Co., Ltd.
The Company established a dedicated semiconductor factory based on results of work on copper oxide and selenium rectifiers that had been ongoing since the research laboratory days. In 1958, we succeeded in creating a prototype for an innovative heat-dissipating silicon diode, and subsequently a silicon power transistor. Thereafter, we grew in step with the electronics industry, establishing a strong position as a power electronics manufacturer. We have kept pace with the changes in the times and provided high-quality solutions in the power supply and peripheral business fields to meet the diverse demands of society and our customers. We will continue as we have done in the past to provide original, cutting-edge products and striving to be a leading innovator in the field of power electronics.
Sanken Report 2021 | 1 | |
To Our Stakeholders
In 2021, we began a fresh start as a specialized semiconductor manufacturer.
Sanken Electric Co., Ltd. is a company which has strong competitiveness in the global market by providing energy savings and solutions, based on our cutting-edge power conversion and motion control technologies. In FY2021, we began a fresh start as a specialized semiconductor manufacturer for products such as power modules, power devices, and sensors.
Electricity and electronics are indispensable to modern life. Power semiconductors are devices needed every time electricity is used. Sanken Electric products are used in familiar things like cars, air conditioners and televisions and also in places that aren't as visible. For over 70 years, our products have supported people's lives.
Addressing environmental problems and saving energy
on a global scale have become urgent challenges. With a large number of products and technologies that lead to high efficiency and energy savings, Sanken Electric makes a major contribution to global energy conservation through products for inverters used in air conditioners and for low fuel consumption and increased efficiency in automobiles. Additionally, we will promote activities such as carbon offsetting to reduce CO2 generated from business activities and aim to be a company that can achieve continual growth and social contributions.
While business opportunities will be successively generated by the new industrial revolution being driven by IoT, AI, big data, autonomous driving, and 5G, the sustainability of global society is at a major turning point, reflecting
the impact of the pandemic on the economy, society and other developments. Since its establishment in 1946, Sanken Electric has been constantly involved in research and development. We will continue to work on perpetually innovating technological capabilities and providing products of assured quality to help solve global environmental and social issues and further develop industries, the economy and culture. I thank you for reading this report and would be delighted should it deepen your understanding of our operations.
Hiroshi Takahashi
Representative Director, President
Contents
- Corporate Philosophy
- To Our Stakeholders
-
Special Feature:
New Medium-Term Management Plan
- Special Feature:
Toward a New Normal for Sanken Electric
- Net Sales and Core Products
- A Message from the President
- Business Overview
- CTO Interview
- CSR Vision
22 Sanken Group's Contribution to Society (Priority Measures in ESG Management)
24 Contribution of Sanken Electric's Products to a Sustainable Society
26 Contributing to Reductions in the Environmental Impact of Our Business Activities
28 Social Contributions Related to Business Activities
30 Corporate Governance 34 List of Officers
Takashi Wada | Hiroshi Takahashi |
Director, Chairman | Representative Director, President |
36 Messages from External Directors 38 Key Consolidated Financial and
Non-Financial Data (11 Years)
40 Business Risks
42 Consolidated Balance Sheets
44 Consolidated Statements of Operations
45 Consolidated Statements of Comprehensive Income (Loss)
46 Consolidated Statements of Changes in Net Assets
49 Consolidated Statements of Cash Flows
50 Notes to Consolidated Financial Statements
81 Corporate Information
2 | Sanken Report 2021 | Sanken Report 2021 | 3 | ||
Special | New Medium-Term Management Plan |
Feature |
Overview of Medium-Term
Management Plan 2021
The Sanken Group will complete restructuring and put development reforms firmly on track in fiscal 2021 (the year ending March 2022) and demonstrate the results of optimizing production and realizing growth strategies during Medium-Term Management Plan 2021.
We aim to drive a focused organization to become a highly profitable company that contributes to innovation for our society through the development and implementation of unique technologies.
Business Portfolio Rebuilding
Power modules, power devices, and sensors
Growth
Sales growth outpacing semiconductor market growth
KPIs
• Operating | ||||
FY2023 | ||||
profit margin: At least 13% | ||||
Consolidated | ||||
• Net sales: | At least ¥170 billion | |||
Targets | ||||
• ROE: | At least 12% | |||
◆ Overview of Medium-Term Management Plans | ||||
2017 | Medium-Term | Medium-Term | ||
Management Plan 2018 | Management Plan 2021 |
Overview of New Medium-Term Management Plan
◆ Initiatives to Enhance Corporate Value
Medium-Term Management Plan 2018 | Medium-Term Management Plan 2021 | ||||||||||||||||||||||
Fiscal 2017 | Fiscal 2018 | Fiscal 2019 | Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | |||||||||||||||||
Restructuring | |||||||||||||||||||||||
• Capital increase via third-party allocation | • Allegro IPO | ||||||||||||||||||||||
Restructuring Phase 1 | Restructuring | Phase 2 | |||||||||||||||||||||
• Discontinue unprofitable device products | • Domestic plant and overseas subsidiary | • Complete domestic | |||||||||||||||||||||
• Withdraw from non-strategic unit product | closures | production base | |||||||||||||||||||||
reorganization | |||||||||||||||||||||||
markets | • Transfer infrastructure business | ||||||||||||||||||||||
• Headquarters early retirement program | • Exit LED lighting business | ||||||||||||||||||||||
at Allegro | |||||||||||||||||||||||
Growth | Development Reforms | ||||||||||||||||||||||
• Develop Sanken Power-electronics | • Strategic partnership with STMicroelectronics | ||||||||||||||||||||||
strategies | Platform (SPP) | • Start of operations at the Production Development Center | |||||||||||||||||||||
• Establish overseas development | |||||||||||||||||||||||
Production Strategies | |||||||||||||||||||||||
bases | |||||||||||||||||||||||
• Dalian Sanken: Start operations at new module plant | |||||||||||||||||||||||
• Ishikawa Sanken: Start operations at new module plant | |||||||||||||||||||||||
Finish restructuring, optimize production and realize growth strategies via Medium-Term Management Plan 2021
Growth in the three pillars of power modules, | Target sales growth outpacing market | |||||
growth for the Sanken Group overall | ||||||
power devices, and sensors | ||||||
Power semiconductor market headed for full- | ||||||
Strengthen power modules by increasing sales | ||||||
fledged uptrend on tailwinds from eco-friendly | ||||||
for automobiles and industrial equipment | ||||||
vehicles and digital transformation | ||||||
Fiscal 2019 | Fiscal 2023 | Fiscal 2026 | Semiconductor | Growth rate by market envisioned in | ||
market scale (1) | the medium-term management plan | |||||
• Begin restructuring | • Execute restructuring | • Complete restructuring |
• Capital increase via third- | •Launch development reforms | •Realize growth strategies |
party allocation at Allegro | and growth strategies | A three-year period for com- |
• Allegro IPO | pleting restructuring, including |
production base reorganization, and demonstrating results from
Sales of Share
Power | Power | Power | Power | |
Modules | Power | Modules | Devices | Modules |
Power | Devices | |||
Devices | ||||
Sensors | Sensors | Sensors |
516.9 | |
433.1 | |
CAGR | |
6.1% | |
(Billions of USD) | |
2020 | 2023 |
(Calendar year)
Industrial Equipment and Consumer
White Goods
Automotive | |
6.5-8.5% | |
137.2 | CAGR |
6-8% |
development reforms
• Medium-Term Management Plan 2018 and Medium-Term Management Plan |
2021 continue with an integrated management strategy |
Aiming to realize a recovery of the Sanken Core over the six years they cover |
• Allegro continues to collaborate with technologies, development, and sales |
Market Module By
Power semiconductor | |||||
market scale (2) | |||||
Automotive | Automotive | 20.3 | |||
Industrial | 16.9 | ||||
Equipment | Automotive | ||||
White | CAGR | ||||
Industrial | 6.3% | ||||
White | Goods | ||||
White Goods | Equipment | ||||
Goods | |||||
Industrial | |||||
Equipment | (Billions of USD) | ||||
2020 | 2023 | ||||
(Calendar year) |
CAGR | ||||
4-6% | ||||
CAGR | ||||
9-11% | ||||
(Billions of yen) | ||||
2020 | 2023 |
(Fiscal year)
as a consolidated subsidiary |
Note: Sanken Core: Sanken Electric semiconductor business excluding Allegro
Source: (1) Prepared by the Company based on World Semiconductor Trade Statistics (WSTS) forecast released in December 2020
- Prepared by the Company based on Power Semiconductor Market 2020 by Yano Research Institute Ltd.
4 | Sanken Report 2021 | Sanken Report 2021 | 5 | |||
Special | Toward a New Normal for Sanken Electric |
Feature |
Toward a New Normal for Sanken Electric
Striving to Speed Up Management Through a Generational Change andAdvancing to a New Growth Stage
Takashi Wada
Director, Chairman
perspective. As part of my role as chair of the Board of Directors, I will strive to maintain and strengthen Group governance, including Allegro, which is a publicly listed company, along with focusing on advancing ESG man- agement. The president serves as chair of the Executive Committee and has final authority over management decision-making. The Board of Directors must be managed while considering how these management decisions will be evaluated externally. Moreover, opportunities have been provided to hold exhaustive prior discussions with external directors on important matters. Through these efforts, we have established a management structure that facilitates even more effective governance. Going for- ward, I'd like to support the Group's growth strategies, including the recovery of the Sanken Core, together with the new president.
Establish an Independent Business Model
and Steadily Seize Opportunities in the
Global Market
Currently, the power semiconductor companies that compete with us are becoming increasingly larger, thereby strengthening their market share and ability to control prices. In contrast, I believe that the final-product manufacturers who are Sanken Electric's customers are constantly seeking "independent medium-sized companies that have unique technological capabilities and that are not controlled by any specific company." These customers regularly approach Sanken Electric with requests to support their needs for modules and devices. I see this as proof of my belief. Since our foundation, we have established an independent business model that is not
I'd Like the New President to Steadily Advance Medium-Term Management Plan 2021, Striving to Realize the Recovery of the Sanken Core and Laying the Groundwork for the Future from the Next Medium-Term Management Plan Onward
In the process of selecting a new president, candidates were considered from a wide range of perspectives from both within and outside the Company in the voluntary Nomination Committee, which is chaired by an external director. Following repeated discussions, we ultimately decided to appoint Mr. Hiroshi Takahashi, who is highly knowledgeable about matters such as engineering, cus- tomers, and product development, as our new president. Mr. Takahashi has a background in engineering. He gained professional experience as a department manager in the motion control business field and played a leadership role in expanding business for current intelligent power module (IPM) products for white goods. Mr. Takahashi also possesses leadership experience in production departments and is expected to further enhance the product capabilities of the Sanken Core. In the near term, I'd like Mr. Takahashi to steadily advance Medium-Term Management Plan 2021. By executing our growth strate- gies, I'd like him to strive for the recovery of the Sanken Core and to lay the groundwork for the future from the next medium-term management plan onward. I also want Mr. Takahashi to envision what the world might look like even further into the future. From 2030 onward, there will be many issues such as carbon neutrality, digital transformation (DX), and work style reforms. In this context, I'd
Supporting the Sanken Group's Growth Strategies Together with the New President, Based on the Results of Simultaneous Restructuring and Growth Strategies Implemented to Date
Looking back at market conditions since my appointment as president in 2015, I believe that the markets experienced a tumultuous six-year period due to events such as intensified trade friction between the US and China, economic stagnation, and the spread of COVID-19 from 2020. Initially, when I was appointed as president, the Sanken Core was facing the issue of declining profitability. To break through this impasse, a new strategy was needed to create numerous attractive products. Under these condi- tions, we explored ways to put the Sanken Group back on a growth trajectory and decided to simultaneously implement restructuring and growth strategies. Since 2017, after we raised funds from a capital increase via third-party allocation at our US subsidiary Allegro MicroSystems, Inc. (Allegro), restructuring advanced from Phase 1 to Phase
2. Development reforms shifted from establishing overseas development bases to formulating a platform development
concept (the Sanken Power-electronics Platform (SPP)). In these and other ways, we steadily implemented management policies aimed at improving corporate value under Medium-Term Management Plan 2018.
However, the times have changed over the past few years. In this new era, corporate management must be guided by the assumption that paradigm shifts can-andwill-happen following unexpected changes. Therefore, I wanted to speed up management through a generational change. We now expect to complete restructuring, and we achieved the listing of Allegro's shares on the Nasdaq Stock Market in 2020. I also wanted to show both internally and externally that the Sanken Group is now taking a new step forward. For these reasons, I decided to proceed with a change in president. Personally, I have no regrets, and I believe that I have fully accomplished my duties as president. During this period, restructuring did entail some painful changes. However, under Medium- Term Management Plan 2021, which began in fiscal 2021 (the year ending March 2022), I believe the Sanken Group has now entered a phase when it can focus on realizing its growth strategies.
Looking ahead, we will clearly separate the roles of the chairman and president from a governance
affiliated with any corporate group. For example, in the automotive sector, we have built relationships with Tier 1 companies, which serve as sales channels that lead to various OEM companies, regardless of corporate group. In the white goods sector, we deliver Sanken Electric's products not only to the domestic market in Japan, but also to leading local companies in China and South Korea. In these ways, the Sanken Group's core strength lies in the fact that it has an expansive customer base in Japan and overseas. It is precisely because we have such a business model that we will have growth opportunities in the global market.
In addition, "For the Innovation of Our Customers and Individual Employees" has been adopted as the slogan of Medium-Term Management Plan 2021. To realize this slogan, power semiconductors will become the core of our future business model. Moreover, we will shift from our conventional business model of supplying customized products for specific customers to providing products based on platform development (SPP). I believe that this shift will allow the Sanken Group to achieve steady growth.
like him to strengthen our power semiconductors and the Sanken Group's strategic role in society.
Looking ahead, I believe that ESG management will be an essential requirement for the survival of companies. Activities such as reducing CO2 emissions and supporting environmental protection efforts have been inseparable from the businesses we have undertaken over many years. In fact, sustainability is the starting point for our activities. As we mark the 75th anniversary of our foundation in 2021, I'm determined to do my utmost to support our new management team based on the activities described above, with the aim of advancing the Sanken Group to an even higher stage.
6 | Sanken Report 2021 | Sanken Report 2021 | 7 | |||
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Sanken Electric Co. Ltd. published this content on 30 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 November 2021 15:50:04 UTC.