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Group CEO Message Archive - 2024

“Beyond Testing, Beyond Limits, for a Sustainable Future Together” Anritsu Will Continue Evolving to Become a ¥200 Billion Company in FY2030

Values Consistent Across the Anritsu Group

Anritsu places importance on the value of pursuing the latest technologies. As new technologies are unmatured and have numerous issues, overcoming them and providing support are the roles of test instruments. This is the value of our testing technology.

However, demand for testing technology, Anritsu’s competency, will shrink as the market matures. For Anritsu to survive, we must promptly capture cutting-edge technology and support the spread of these latest technologies. The testing technology that we have been cultivating for years has been constantly shifting toward the cutting edge. We believe it is our mission to support the spread of new technologies promptly and smoothly.

Markets Anritsu Is Involved in and Recognition of Their Environment

Anritsu selected the mobile communication test field to focus its investments and aims to achieve greater growth. However, this strategy has two issues. Firstly, the business lacks stability because the mobile communication test market is extremely volatile. As such, performance may rise and rapidly fall like a roller coaster.
These changes greatly impact the motivation of stakeholders and employees. When the performance is good, the Company is seen as a “good company,” but evaluation drops if the performance drops, and it takes time for that evaluation to recover. To achieve a stable growth trend, this volatile status needs to be improved.
Secondly, focusing on mobile communication test instruments will lead to relying on a limited, niche market. Furthermore, as there are only few competitors in the market, competition will become extremely severe in order to expand market share. Under such circumstances, growth in sales would be limited.

 

The market for the Test and Measurement Business is distinctive because the investment cycle repeats as the technology advances, and we expect large-scale investments will be made for the transition to 6G, similar to those made for the transition from 4G to 5G. The current size of the mobile-related test and measurement market is approximately ¥200 billion and this market is mainly occupied by two companies which include Anritsu.

 

What is interesting is that the size of investments for the transition between each generation such as 3G, 4G, and 5G are almost the same. This is because mobile operators are reinvesting their profit, so that funds circulate to smartphone manufacturers and other related companies. Even if the number of subscribers increases, the price of devices drops and funds allocated for capital investment stay constant, and the amount of investment does not greatly change. Meanwhile, as the development of test instruments requires technological expertise cultivated over the years and large-scale facilities, new entries are difficult and easier for existing companies to maintain their market share and make stable business expansion possible.

 

The Test and Measurement Business has been conducting business by constantly incorporating cutting-edge technologies. Anritsu has been a specialist in testing throughout the evolution of communication technologies. However, it is uncertain how long this state will continue. For example, computers have continued to evolve at the cutting edge for a long time but have become a commodity in the current era, and demand for the latest technology is diminishing. This also goes for smartphones, whose demand for cutting-edge functions is on the decline. As technologies become commodities, opportunities for testing will decline and the continuity of our business will be at risk.
We need to continue searching for the next technological field and are searching for testing needs in different fields such as automobiles and food products.

Future Value That Anritsu Will Create

For Anritsu to grow, we need to widen our possibilities by applying our competency of testing to a wider market. I believe the technology of testing can be used in a wider area. The message “Beyond testing, beyond limits, for a sustainable future together” does not mean forcing excessive efforts that exceed human limits, but to eliminate preconceptions and challenges toward new markets. In other words, it means to reassess what we thought were limits and expand the possibilities to build a path for new growth. Anritsu will maintain testing technology as its foundation while also expanding its range of applications to sustain its growth. This is Anritsu’s vision for the future.

The strength of Anritsu is the ability we have as a group of engineers. A characteristic of the Company is our ability to understand the behaviors of both the hardware and software and the ability to keep track of new standards, allowing us to plan and design products by ourselves. We pride ourselves on our ability to materialize new technologies and products and create any product when given a clear direction. I hope to respond to future testing needs by utilizing these technological and manufacturing capabilities.

On the other hand, despite being able to support the market by specializing in testing, it is difficult to create a market by ourselves. For example, the smartphone market consists of various of our customers such as chipset vendors, device vendors, telecommunications operators, and other entities, but we cannot create that market itself. That is why we need to continue searching for growing markets.

Requirements for Anritsu to Continue Evolving

GLP2026 6G and 3 new business areas

Review of GLP2023

In GLP2023, we did not achieve a consolidated revenue of ¥140 billion due to many external factors such as the COVID-19 pandemic and the Ukraine-Russia conflict, and the impact of investments related to 5G peaking earlier than expected in around 2020, leading to a downward trend. Despite this, we were able to headstart businesses in new areas having drawn a growth strategy based on an estimate that 5G-related investments will peak in 2023. We expect the effects to appear a year or two years earlier than initially planned.

GLP2026 and the vision for FY2030

GLP2026 and Beyond

In GLP2026, we have set the target for consolidated revenue at ¥140 billion again.

We think that the Test and Measurement Business can achieve ¥80 billion considering its market size, and have increased the target by ¥10 billion to ¥90 billion. We aim to achieve this by further horizontal expansion and cultivation of new areas through M&A. After achieving an upper trend in the three years going forward, I think accelerating the growth by responding to 6G is the path for the Test and Measurement Business to achieve the target of ¥110 billion in FY2030.

The PQA Business is on a growing trend, but the profit ratio is an issue. In addition to food products, which is our current focus, we are expanding into pharmaceuticals. As there are many barriers to entry into the pharmaceutical market, we are considering M&A to overcome such barriers and accelerate entry.

The vision for FY2030

Under these circumstances, we have built a system to achieve results in the short term by promoting the growth strategy by focusing talented human resources in the management strategy division. We are aiming to grow the entire Company by advancing business through M&A. After finding a market, it is important to approach the players in that market. However, it is not easy to introduce new products at an optimal time. The key to success is to effectively develop new products that will be required by the market before they are actually needed by forecasting technological development. CTO Noda and the Advanced Research Laboratory are in charge of making these forecasts and are conducting investigation and making forecasts on new technologies.

If we miss the timing, we will implement the strategy of accelerating the entry into the market through M&A. It is crucial for companies to sensitively detect the changes in the market and implement a flexible strategy to survive. A year or two pass by in an instant considering the time frame of M&A. We recognize that GLP2026 is a growth stage for the new seeds we planted in GLP2023 to become pillars of our businesses.

 

GLP: Global long-term management plan

Human Resources Strategy That Supports Growth

Human capital is also the most important asset for Anritsu. When considering the human resources strategy, I indicated two things: to think in anticipation of 2030 and to think globally.

Anritsu has traditionally been developing human resources on a business unit level through OJT but continuing conventional methods will not achieve net sales of ¥200 billion in FY2030. For example, when enhancing the EV/battery test business, growth in that field would be difficult if there were no human resources with the required expertise. We established A-SKILLs, an internal training organization, in April 2024 as we thought it was necessary to take on new challenges. The system is to invite internal and external instructors to pass down their knowledge and conduct systematic training until trainees receiving the certificate of completion. The aim is to train human resources that will be the foundation of the Company. Specifically, participants are trained on the principles of testing, advantages we have over our competitors, and knowledge required for sales as well as learning how to accurately answer customer questions through role-playing. We will not only utilize external instructors but also internal engineers to pass down the knowledge of senior human resources who have advanced skills.

In addition, we have formulated a human resources strategy that considers allocation of human resources that are necessary to achieve the ¥200 billion target in 2030. In the past, we asked each business unit about the required number of personnel, but we have now planned recruitment and training plans for the number of personnel and skills by calculating backwards from the FY2030 target. This is our first attempt, but we will strive to achieve our targets.

We are also considering changing our evaluation system. We are planning a system where participants can take tests so that the acquisition of skills is recorded, and activities using those skills are properly evaluated. Maintaining a record of skills acquisition is also an important element from the perspectives of skillsets required for the human resources and human resources portfolio.

Furthermore, we are hoping to increase our overall competitiveness by having the participants learn about our products in various businesses as well as promoting cross-sales and partnerships.

Future Envisioned Through Sustainability Management

In terms of sustainability, we focused on fundamental activities that benefit the Company and society and avoided purely performative activities. There was distance between activities for business and sustainability, but we are aiming to integrate sustainability into business within the next three years. To be precise, we will focus on activities that help realize a circular economy, such as reducing the use of plastics in our products and promoting recycling.

To increase the recyclability of products, building a waste recovery system is required. This initiative includes collecting products from our customers and is a new challenge for us. As there is a division at Anritsu that generates sales by reusing disposed parts, we will effectively coordinate these activities. In addition, we aim to provide high-quality services by cooperating with partners with the same mindset in the supply chain as well. Through these initiatives, we plan to increase our corporate value by balancing sustainability and business.

We are promoting private power generation to reduce greenhouse gas emissions under “Anritsu Climate Change Action PGRE 30.” Many companies are planning to utilize renewable energy with the aim of realizing a carbon-neutral society. For procuring electricity from natural energy, there is also a method of purchasing certificates for electricity derived from natural energy, which does not require capital investment.

Anritsu aims to use sustainable energy in the true sense of its meaning by promoting power generation on our premises and, in FY2023, the ratio of private power generation was 10.4%. We have set a target to increase this ratio to about 30% by 2030.

To Our Stakeholders

To become a ¥200 billion company by FY2030, we need to increase society’s awareness of our Company and their trust in us. The U.S., Germany, and Japan have leading test instrument companies, and these companies are the foundation of the technological strength of these countries. I strive for Anritsu to also be recognized as an important test instrument company that supports the technological strength of Japan. For example, many Japanese technologies are used in the manufacturing of semiconductors. I hope to make Anritsu widely recognized as a similarly indispensable company. Our goal is to clarify our raison d’etre by making Anritsu widely known as an indispensable company throughout society by 2030.

FY2024 is the starting year of GLP2026. We hope to leverage what we learned and the seeds we planted during the three years of GLP2023 and grow them into a solid business in the next three years. I will share this process with our employees and shareholders and materialize the strength we cultivated through steady implementation with the understanding of all our stakeholders, and achieve revenue of ¥200 billion in FY2030.

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