CHIBA Japanese electronics components supplier Murata Manufacturing Co Ltd wants its enlarged battery business to help double automotive-related revenue when the years of rapid expansion in the smartphone market have passed, its chief executive said.
Murata is adding to its small battery operations after agreeing in July to buy most of Sony Corp's battery division by the end of March 2017 for an undisclosed amount. In the business year through March 2016, that division generated sales of about 160 billion yen ($1.56 billion).
"We want to enter the automotive battery business through the acquisition," Tsuneo Murata said in an interview on Tuesday.
Components makers have seen profits soar in recent years due to the rise of smartphones. Murata, which earns about 60 percent of revenue from smartphone parts, expects operating profit to have grown six times over the four years through March, helped by business from customers such as smartphone leaders Apple Inc and Samsung Electronics Co Ltd.
The company is currently benefiting from a trend toward higher-performance smartphones that use more of its components, such as capacitors and frequency filters. But to guard against any future slump, it aims to boost other sources of income.
"I believe batteries will be a powerful weapon," said Murata, one of the sons of the founder of the Kyoto-based firm.
The CEO said he wants batteries to help the automotive proportion of revenue to reach 20 to 30 percent in about 10 years, from 13 percent in the year ended March.
In the Sony deal, Murata has bought the division responsible for selling the world's first lithium-ion battery in 1991, but which Sony said in a July earnings briefing was losing money partly because it could not supply a major smartphone maker.
Murata intends to apply Sony's battery technology to automobiles, the CEO said.
"South Korean battery makers may look dominant in the market right now," Murata said. "But there are many purposes in the automotive industry alone and I think various battery makers will grow by focusing."
($1 = 102.3300 yen)
(Reporting by Makiko Yamazaki and Kentaro Hamada; Editing by Christopher Cushing)