I think what differentiates us from other competitors is that our compound technology uses different types of ceramics and now we are kind of enhancing some solvents with something like additives. For example, if 0.1% or 0.2% of carbon is added to iron, then that makes the iron harder and more fragile. So that is a kind of enhanced solvent material. Adding something like 100 PBN could make a big difference in the performance of the materials and we have a lot of recipes for that. For example, for aluminum nitrite, we have a sample benchmark and it has a great impact on heat exchange and also heat dissipation. Researchers around the world produce aluminum nitride, but for the property of heat dissipation we have the world’s leading recipe, though we haven’t been able to mass produce this yet. Perhaps we need to continue working on our equipment, but once there is a large demand, we can be ready. We have assembled an office for joint research and development to pursue kaizen. So if there’s something we can do, let’s say a drastic innovation like a change in the binder that we use to be more environmentally friendly, we are seeking better materials, perhaps plant-based ones. So we work on R&D. Once we get information about new materials, then we try to evaluate. Plastics are actually hated by the world right now, but plant-based materials or resins are disposable and work better for carbon recycling, so now we are continuing to search for and try the materials. We are committed to reducing the environment load. That is not something startling or flashy but that is our unique initiative that differentiates us from other companies and we can also deliver that nice message to customers and society. So the innovations are actually something quite low profile, troubling and time consuming.

And the second group to consider is the PIM business and we expect perhaps an exciting, big league, growth. For the MIM (metal injection molding), there are a lot of players in the business, but with ceramic injection molding, there is a big player who can cover 100 million items per month of capacity. That’s a big player, but there are a few mid-sized players like us that can cover some areas that the big players cannot, like small and medium-sized loads, say 10,000 or 100,000 per month. Actually, we have some offers from customers for joint development so if we can mass produce some of the items, I think that could push our sales and profit drastically but now we have invested more on the metal side so perhaps it’s time to restructure our equipment mix.

Now, there are only 21 items that are reserved for the SSI sector. These include bread, pickles, wooden furniture, wax candles, exercise books and registers, safety matches, incense sticks, fireworks, and stainless steel and aluminium utensils.

As a result of decreased demand due to tightened monetary policy, the semiconductor industry experienced a significant downturn last year. In recent months, however, reported increases in revenue and profitability among the major players have led to renewed optimism. The latest report of the World Semiconductor Trade Statistics expects 2024 to be a rebound year, with a projection indicating a 13% increase in the market size. How do you see the evolution of this industry in the next 12 months?

Actually, our Chinese subsidiary is not active right now because before the time of President Trump, the Japan-China relationship was very good. So the subsidiary was not necessary and without it we were able to do business successfully. We often visited China, Taiwan, and South Korea, like every other month. Now it’s possible to have direct sales with local sales companies in China. So having a subsidiary isn’t something very big, especially in the Chinese market. We perceive China as a big market and a customer base.

I think that is the take of some economic analysts and I agree with this sentiment but I think boosting the semiconductor industry can definitely push the GDP of Japan, though I am not sure it will make a drastic change to the economy in general because Japanese semiconductor companies are big players in the world market. I think what we have to pay more attention to is the side effect, or halo effect, brought by semiconductors because if the semiconductor industry is boosted, then there will be more workers and then more orders for related businesses, and those businesses could flourish. For example, now TMSC is building a factory in Kumamoto and making a huge investment. Of course, there will be some boost in manufacturing activities there. In addition, there will be more active businesses around residential areas, including food and even recreation businesses. I think what is happening in Kumamoto has synergies for other businesses, so we have to understand these synergies as well. Not just the semiconductor business, but the surrounding businesses. So, I think domestic demand will determine the future of the Japanese economy, whether it’s going to be bright or not. But if we just go as subcontractors, we cannot maintain a position as a leading country and that could be a start of a decline.

When we look at your company’s history, you mentioned the importance of diversifying your activities and it’s interesting to see that at the start of your company you made buttons for clothes, for example, you worked on the development of submarines, made objects from plastic molds, and now you’ve diversified your activities around three main pillars, which are the semiconductor industry, sanitation testing equipment, and more recently, the power injection molding (PIM) business. Among these three different businesses you are involved in, which one would you regard to have the most growth potential? And are there any other businesses or fields you would like to incorporate into your portfolio in the years to come?

In July 2022, the US and Japan decided to launch a new joint international semiconductor research hub and agreed to work in a collaborative research effort for the next generation of semiconductors. The US also enacted the CHIPS and Science Act in August 2022, investing roughly USD 280 billion in new funding to boost research and semiconductor manufacturing in the United States, with the dual aim of strengthening American supply chain resilience while countering China at the same time. Do you think international collaboration is necessary for the advancement of Japan’s semiconductor sector? And how does this trend impact your business directly?

The objective of the policy is to increase the competitiveness of the industry, facilitate flow of credit, promote technology and achieve economies of scale.

Well, perhaps the simple answer is increasing sales. But when I look at the company, I believe that a company that doesn’t seek the happiness of its employees should not exist. To make that happen, I want to find a new business to support this philosophy. In five years, PIM will no longer be a new business, so I want to find the seed of the next new business. It’s only been one year and eight months since I joined his company, but it has 55 years of history and we have the founder and also the second generation. The founder had a tagline, which is “a new business incubator” to describe our company. So we shouldn’t be just a player, but we should be an incubator that develops businesses. I think that elevates our profile. I believe this is the mission of the company and that’s why we have to go niche. So, to achieve this tagline, we need to find a new business seed and perhaps that is something different from the growth of the company. I think by doing so, it raises our profile and also the customer will have higher expectations of us, so that’s the branding I want to do in the next five years. Unfortunately, I cannot say I’ve found the seed for the next business yet.

This is the second time in this calendar year that the government has taken items off the list. As many as 79 items were de-reserved in February this year.

I think the speed of the increase in advancement of technology will not stop, but the demand will increase linearly. From the perspective of an equipment manufacturer like ourselves, we, of course, make an investment, but our supply increases step by step, like a ladder. There is always something like a five-year cycle of excessive supply and a drop in supply, but compared to ten years ago, the semiconductor industry has learned a lot. So if the 13% growth you mention is close to the world’s GDP, then perhaps that prediction will be accurate, I believe. If that 13% is an excessive number, then things might not be as bright as predicted, but I’m certain that there will be growth in the semiconductor business. Of course, the increase or decrease could be different in each region.

We cannot expect some big leap in all the business groups, but perhaps certain groups, such as the sanitation testing equipment business. We provide Petri dishes to some other countries such as South Korea, Taiwan, Indonesia, but the volume is low, so it doesn’t make a big difference to our sales, even though we are big in the Japanese market. But demand for the sales of sanitation testing, especially with food, is increasing. That’s not the case just for us, but for other competitors, too. Right now, on your table, you have two bottles of water, but you see two different types. I think if society grows to a certain point, people will start to seek more diversity in products and foods, so different preferences. In that case, the volume remains the same, but there is more variety, a high mix volume, which involves more inspections. Now, Japan as a society is mature, and the population is declining, but even though it is declining, we still want to make our lives richer. So more types of foods come in lower volume, but that requires more inspections and testing and the suppliers diversify their services for the customers’ satisfaction. That’s why we can expect a growth in the sanitation testing equipment business.

In a move aimed at boosting the competitiveness of Indian industry, the government has taken off 14 items from a list of goods that can produced only by the small scale industries (SSI) sector.

In the 55 years since it was first established, manufacturing company Atect Corp. has produced buttons for clothes, made objects from plastic molds and even worked on the development of submarines.

I have one final question for you, which will be personal. Your company is celebrating its 55th anniversary. Let’s imagine that we come back five years from now, for your 60th anniversary and we interview you again. What would you tell us? What are your dreams for this company and what goals will you have accomplished over the next five years?

I think that the collaboration trend is not something very new to the semiconductor industry, to be honest. If you look at manufacturers such as Tesla and Toyota, they have vertical integration. Unlike them, the semiconductor industry has a tradition of the division of work, so a lot of different companies have their own strengths and those companies work together to form the supply chain and deliver products to the customers. That’s why I have to say that collaboration in the world is not a new trend for the semiconductor industry because now TSMC is having a lot of success and also Samsung is trying to catch up with them. And so in the semiconductor industry, it’s the division of work that’s a successful business model and I think that this model will accelerate. We are the manufacturer of transportation materials and we also don’t have a vertical integration system; we employ a division of work program so we work with different companies which have different strengths. So I think we need to value this type of business model and we can work together with different companies. If I look at this model from a different perspective, it is a system that employs excessive dependence. If there is a big change in the demand, that creates more resilience and resistance because we have a group of companies to achieve the business. So I think the semiconductor industry has a good relationship amongst the companies. If I look at the business models employed by Nvidia and TSMC, from my perspective, I have to describe it as being like a single leg style because they do just one thing. I wonder if this is really okay to focus on just one thing because they spend all their resources, their money, on just one business. I think it’s better to develop new business for a well-balanced management.

Japanese manufacturing is at an exciting time. Although the last few years have seen large supply chain disruptions due to COVID, the Japanese government launched a strategic measure to revive its industries. Japanese makers of semiconductor materials have a combined 50% share of the global market and are set to experience significant benefits from industry, ongoing development and innovation in connectivity, communication, the automotive industry, and data centers, all of which indicate growth of the semiconductor industry. Known for its R&D and advanced technology, Japanese firms have maintained a competitive advantage. Combined with a weakened yen, some experts believe that the situation presents a unique opportunity right now. Do you agree with this sentiment and what are the main advantages of Japanese makers in chip and semiconductor materials in this current macro environment?

According to government estimates of 2006-07, there are 13 million SSI units in the country which produce goods worth Rs 5,87,196 crore.

It’s impressive to see how in each area that you invest, you are able to become indispensable to some extent. Developing such a variety of businesses as you do requires a lot of different types of skills and knowledge very specific to each business. When we interview other key players of each industry, they always emphasize how finding local partners in overseas markets in order to collaborate and co-develop some products is essential to access these international markets by leveraging their expertise and that’s what you did also in the different fields that you have invested in. You mentioned you are working with other companies to leverage their expertise and you also talked about a joint venture for one of your businesses, for example. So what role do these partnerships play within your business model and are you searching for new partnerships, especially in these overseas markets that you are targeting?

Experts said the move would help tackle cheap imports and at the same time boost exports. “Today everyone recognises that de-reservation of the SSI items is the need of the hour. Imports of many items that have been de-reserved (today) are already taking place, impacting the SSI sector. Moreover, the move will lead to scaling up of operations as large corporates will now be able to invest in producing items that were earlier reserved,” said Anil Bharadwaj, secretary general, Federation of Indian Micro and Small and Medium Enterprises.

The government has been progressively removing items from the SSI list since 1990, when around 800 items were reserved for SSI sector.

Talking about these exciting fields, which are progressing, your PIM business uses a new manufacturing method that combines metal, fine ceramic powder, and organic binders to produce sintered products with exceptional precision and processing resistance. A key challenge is achieving mass production of high precision components from materials with extremely high melting points, such as titanium, for example, and the environmentally friendly PIM binder technology eliminates the use of hazardous solvents, contributing to sustainable and safe production. Atect’s PIM technology is further applied to address challenges in heat dissipation for electronic devices, showcasing its versatility across the industry. Achieving high dimensional accuracy is crucial in PIM. Could you elaborate on the specific technological aspects or innovation in the context of Atect’s PIM process that contribute to the production of sintered products with exceptional precision and processing resistance?

We welcome partners as long as they have the same philosophy or the same business direction. We want to move forward with partnerships; we are not negative with partnerships at all, but it’s difficult to find good partners. There was an offer we got from a customer. There was some specific performance they wanted to achieve in their product, but they were not able to find a supplier who can achieve that performance so that’s why they came to us. We developed samples and now that company is evaluating them. We have no infrastructure to test that sample, so our customer is doing that. So apart from the PIM, we are seeking North American companies who have a manufacturing sales site because, considering our scale, we do not have enough human resources to build a new site outside of Japan to do some sales or manufacturing. The Fabless business is sometimes described as a success model, but I think there is a different answer. For example, we are more like TSMC, whereas the US company that has a big sales network is Nvidia, but we are capable of doing designs as well.

And a second thing. Of course, more people started to work because of the increased number of businesses and more people means more food, so more business for sanitation and inspections. I think it’s the same in France and other Western countries, but a lot of hygiene is required for the restaurant industry, so I think that there is a chance for expansion in the hygiene businesses. So, I want to look at things from a different perspective.

A commerce and industry ministry statement said the de-reserved items included ground and processed spices, PVC sandals and shoes, polyethylene films, electrical wiring accessories other than switches, plugs and sockets, barium carbonate, electrical motors in the 1-10 HP range, and some moulding thermo-plastic products.

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The next area we are looking at is Japan because now we have hubs near Hokkaido, Kyushu, Kumamoto, so now we are looking at what’s happening there, especially in the semiconductor industry.

So there are two stories I want to share with you. The first one is something very shocking to me. About 30 years ago, a Japanese company launched a factory in Taiwan and Taiwanese government officials were there at the launching ceremony. The president of that company gave an address to the people of Taiwan, saying that they want to contribute to the Taiwanese economy so that there would be great success there. And now, 30 years later, the chairman of TSMC came to Taiwan and gave an address with the same message to Japan. So, now our positions have been reversed. Japan is in a good position but now the positions are reversed. Compared to the past, we are still declining, so we have to accept that reality. We should not get carried away too much.

You just mentioned the USA and also overseas. You have had operations in Korea since 2006, in China since 2010, and about 40% of your sales are through exports of your products globally. So where are you planning to go specifically to further expand internationally? What specific location do you have in mind?