TDK Corporation Announces Withdrawal From the Manufacturing of Recordable CD&DVD Accelerating the Restructuring Recording Media Business
TDK Corporation (NYSE:TDK) announced today that the board of directors decided at the board meeting held on March 8, 2006, to further accelerate the restructuring of recording media business, to withdraw from the manufacturing of recordable CD&DVD products in TDK group. Consequently, TDK decided to shut down the production facilities at its European subsidiary, TDK Recording Media Europe in Grand Duchy of Luxembourg. The shut down is planned to take place at the end of May 2006. This decision completes TDK’s withdrawal from the manufacturing of recordable CD & DVD products, coupled with the reorganization of plants in Chikumagawa area (Nagano, Japan) implemented at the end of last year.
TDK Corporation and its group companies (hereinafter called “TDK”) have been fundamentally restructuring the recording media business during this fiscal year. While reviewing the progress of the restructuring and future strategies of the recording media business, TDK has looked for ways to re-strengthen the manufacturing of recordable CD&DVD foundations from various perspectives. However, a sharp drop in market prices of recordable CD&DVDs as well as the increased cost of natural resources has led the recording media business in TDK to serious problems. After studies of measure for re-strengthening manufacturing, the decision of withdrawal from the manufacturing of recordable CD & DVDs that TDK management has made should lead to an improvement and reform of recording media business to change fundamentally the business model.
With this decision, TDK will accelerate ODM business model for the current generation of recordable CD&DVD products, or the third party supply.
In the domain of blue laser disc, a product much expected to grow in the near future, TDK will continue its R&D and manufacturing activities, the latter exclusively focused on highly value-added products, by utilizing the pilot production lines established at Chikumagawa Tecno Plan in Japan. TDK will also concentrate its resources on strengthening data storage tape business, which is another core business.
Through implementation of a series of restructuring activities, TDK will improve the business structure of recording media business all at once, seek improvement of efficiency and profitability for the future, and accelerate changes in the business structure and development of core products.
Estimated Impact to the forecast profit for this fiscal year
The planned expenses needed in relation to the announced withdrawal from the manufacturing of CD and DVD will amount to approximately 8 billion yen.
About TDK Recording Media Europe S.A.
- Location: Bascharage, Grand Duchy of Luxembourg
- President: Mr. Toru IDE
- Established: in 1990
- Paid-in Capital: Euro 82,846,016
- Parent and shares: TDK Europe S.A. 100%, TDK Europe S.A. is a TDK’s wholly owned company.
- Number of Employees: 431
- Products and capacity: CD-R 7 Million Pcs./month, DVD-R/+R 8 Million Pcs./month
Data as of end Feb. 2006
About TDK Corporation
TDK Corporation (NYSE:TDK) is a leading global electronics company based in Japan. It was established in 1935 to commercialize “ferrite,” a key material in electronics and magnetics. TDK’s current product line includes ferrite materials, electronic components, wireless computer networking products, magnetic heads for HDD, and advanced digital recording media. For more information about TDK, please visit http://www.tdk.co.jp/tetop01/index.htm