Kyocera Corporation

5-22 Kita-Inouecho, Higashino
Yamashina-ku
Kyoto 607
Japan
(075) 592-3851

Public Company
Incorporated: 1959
Employees: 12,762
Sales: ¥300.4 billion (US$2.4 billion)
Stock Index: Tokyo Osaka Kyoto New York

Kyocera, founded in 1959, was one of the first companies to produce fine ceramic components. It has grown into one of the world’s preeminent manufacturers of electronics, optical equipment, and other products that use sophisticated ceramics technology. These products, many of which are manufactured outside of Japan, are sold around the world by the company’s own sales force, as well as through a comprehensive network of distributors and dealers.

Ceramic components are used extensively in electronics and electrical equipment, industrial and automotive machinery, and in medical and energy-related fields due to their ability to resist heat and chemicals. They also serve as effective electrical insulators and perform more reliably in environments of extreme temperature change than other materials.

Kyocera produces communication, audio, and business equipment, such as facsimile machines, radio equipment, hard disk drives, calculators, 32-bit personal computers, and cordless telephones. Kyocera is a leading manufacturer of quartz oscillators, which are widely used in such electronic devices as microprocessors and mobile telephones, and has recently developed a compact laser printer.

In addition, Kyocera produces a variety of audio-visual equipment, including single lens reflex (SLR) and 35mm cameras, and video camcorders, through the company’s merger with Yashica Company in 1983.

Finally, Kyocera puts its fine ceramics technology to work in a line of consumer-related products including cutting tools, orthopedic and dental implants, jewelry, and solar heating systems.

Kyocera has two research laboratories that serve as repositories for the technological expertise developed since the company’s formation. Each division of Kyocera is encouraged to make use of the knowledge and experience of these laboratories throughout the product development process.

The Kagoshima Central Research Laboratory was opened in 1979 to engage in fine ceramics research, particularly in the areas of applied and processing technologies. In 1984, Kyocera established its second research facility in Tokyo to study the areas of electronics, opto-electronics, and other new media.

Although over the years Kyocera has been known more for its individualistic spirit than for a typical Japanese communal character, the company’s corporate culture reflects a standard Japanese dedication to the manufacture of superior products. This philosophy was established and carefully cultivated by the company’s entrepreneurial founder and current chairman, Kazuo Inamori.

Upon graduation from Kagoshima University, where he studied applied chemistry, Inamori went to work as a ceramics engineer. When he was asked by his employer in 1959 to transfer to Pakistan and become the manager of an insulator factory, Inamori chose instead to take advantage of an opportunity offered by an outside investor to start his own company.

The Kyoto Ceramic Company benefited from creative research ideas and methods that produced discoveries as much through accident as through pure scientific method. For example, during the development of an insulator made of magnesium oxide, a very dry, loose powder, the challenge facing the ceramics industry was to find a way to hold the magnesium oxide together during firing, a problem that leading researchers around the world had been unable to solve.

When Inamori accidentally tripped over a block of paraffin wax as he walked across the lab, it struck him as he removed the wax that had stuck to his shoes that the wax might hold the key to the magnesium oxide problem. Inamori successfully mixed the magnesium oxide and the wax together using what is now humorously referred to in company annals as the “Inamori fried rice powder molding method.”

From the very beginning, Inamori instilled a corporate philosophy that emphasized product excellence. To ensure the company’s ability to grow without incurring further debt, since Inamori found debt unacceptable, all efforts were directed toward paying off the debt from the company’s start-up. The pressure of meeting such ambitious objectives often required salespeople, production staff, and development personnel to work around the clock to fulfill product orders before deadlines.

Kyocera has since grown through a calculated series of mergers and acquisitions to become an international organization of 40 subsidiaries and affiliated companies, 25 of them outside Japan.

In 1969, ten years after Kyocera’s birth, Kyocera International, Inc. was established in the United States. Only two years later, this subsidiary entered into an agreement with Fairchild Camera and Instrument of San Diego, California to acquire one of its factories to make ceramic components. On the other side of the ocean, Feldmuhle Kyocera Elektronische Bauelemente GmbH was established in the same year as a joint venture with Feldmühle AG of West Germany for manufacturing semiconductor packages and electronic components.

The late 1970s were a time of intense growth and expansion for Kyocera both inside and outside Japan. In 1977, it established Crescent Vert Company, Ltd. to manufacture recrystallized jewels and Kyocera (Hong Kong) Ltd. to supply electronic components and equipment to Southeast Asia. American Feldmühle Corporation and Cybernet Electronics Corporation became affiliates in 1979. The acquisition of Cybernet, a Japanese manufacturer of citizens-band radios and audio equipment, was stimulated to a large extent by Inamori’s desire to expand the company’s base of business beyond ceramic packaging. Unfortunately, the merger created intense and conflicting company loyalties among the labor union workers inherited from Cybernet and hampered, for a time, the smooth transition Inamori sought.

In 1982, Kyocera Corporation was founded by merging five subsidiaries, including the original Kyoto Ceramic Company.

In 1984, Inamori formed a private telecommunications company called Daini-Denden Kikaku Company, Ltd. to enter into competition with Nippon Telegraph and Telephone (NTT). Funded by Inamori and twenty-four other institutional investors, this venture, NTT’s first competitor, was launched in part in retaliation for NTT’s successfully blocking an attempt by Kyocera to market its own line of cordless telephones in Japan the year before. NTT had been the only legal supplier. When Kyocera shipped 30,000 of its own units, rated superior to NTT’s, NTT lodged an immediate complaint with Japan’s Ministry of Ports & Telecommunications and forced Kyocera to recall its product.

Since that time, Daini-Denden, with Inamori as its chairman, has rapidly expanded its business by adding public telecommunications services to its private network and by establishing subsidiaries to institute cellular mobile telephone services in several regions of Japan.

Subsidiary development continued in both North America and Europe during 1985 and 1986, culminating in the 1987 formation of Kyocera America, Inc. and Kyocera Electronics, Inc. to take over for Kyocera International, which became a holding company for seven other U.S. affiliates.

In 1987 Kyocera’s Yashica subsidiary successfully introduced the Samurai SLR camera, a breakthrough product integrating advanced technology, ease of use, and reasonable cost. Also in 1987 Kyocera Mexicana, S.A. de C.V. was incorporated, bringing the number of Kyocera’s overseas manufacturing facilities to six.

Kyocera’s growth has not been free of setbacks. Many have resulted from its chairman’s continued resistance to the unspoken tenets of Japanese commerce as, for instance, his duel with NTT in 1984 shows. The following year, Inamori was criticized in the press for ignoring government exportation regulations and directly selling components to a leading U.S. defense manufacturer. A 1980 incident in which Kyocera began marketing a bioceramic medical implant prior to obtaining the official approval of Japan’s Ministry of Health returned to haunt Inamori in 1985 when the company was accused of illegal activities by a member of Japan’s parliament.

Inamori has often been a target of the Japanese press, which has questioned both his strict managerial style and his judgment in doing things like establishing a company cemetery.

Kyocera’s partnership with the California-based Lapine Technology was another deal that brought bad press. In 1986, Kyocera invested more than $10 million to fund the manufacture of 3.5-inch hard disk drives for the Silicon Valley company. This arrangement enabled LaPine to obtain the necessary financing it sought from the Prudential-Bache Trade Corporation. Within months, however, the three-way partnership began to crumble, reducing all three companies to arguments over costs and shipment quantities. As this battle wore on, LaPine customers transferred their orders to other suppliers and employees were laid off in substantial numbers. In the end, Kyocera and Prudential-Bache squared off to fight over what little was left.

Nonetheless, Kyocera has been an active participant in its local and national community. The Inamori Foundation, established in 1984, awards the Kyoto Prize annually for achievements in science, technology, the creative arts, and the humanities. The foundation also funds a number of domestic research projects throughout Japan in a range of technological and cultural specialities.

Kyocera continues to expand its research and marketing activities outside of Japan, while developing new products and technologies. In the future, Kyocera will have to overcome the constraints of increased price competition and the appreciation of the yen, both of which threaten profitability in several areas of the company’s activities. In other businesses, such as industrial ceramics, Kyocera’s growth may be curbed somewhat until the market achieves more widespread use of the applications that demand these products, or until technological breakthroughs like an all-ceramic diesel engine come.

Although the demand for ceramic and electronic packages appears to remain strong, Kyocera will need to continually monitor the market and enhance its services to overcome increasing competition and keep abreast of the rapid changes in customer needs and the continual demand for cost reductions.

Principal Subsidiaries:

Kyocera International, Inc. (U.S.A.); Kyocera America Inc.; Kyocera Feldmühle, Inc.(U.S.A.); Kyocera Northwest, Inc.(U.S.A.); Kyocera Unison, Inc.; Yashica Inc.(U.S.A); Kyocera Electronics, Inc.; Kyocera Canada Inc.; Yashica do Brasil-Industria e Comercio Ltda.; Yashica do Brasil-Exportacao e Industria Ltda.; Feldmühle Kyocera Europa Elektronische Bauelemente GmbH (Germany); Yashica Kyocera GmbH; Kyocera Electronics Europa GmbH; Kyocera (Hong Kong) Ltd.; Universal Optical Industries Ltd. (Hong Kong); Kyocera Electronic Equipment Co., Ltd.; Tomioka Optical Co., Ltd.; Daini-Denden Inc.; Japan New-Media Systems, Co., Ltd.; Kyocera Finance Co., Ltd.; Taito Corp; Kyocera Electronic (U.K.) Co., Ltd.; Yashica Kyocera GmbH (Germany); Kyocera Mexicana S.A. de C.V.; Kinamed Inc. (USA); Kyocera Building Co., Ltd.; Kyocera Asia Ltd.; Yashica Hong Kong Co., Ltd.; Kyocera Europe GmbH; Yashica A.G.; Yashica Handelsgesellschaft mbH; Kyocera Yashica U.K., Ltd.