TDK to Invest ¥40B in AI Server Components

According to reports, Japanese electronic components manufacturer TDK plans to expand production capacity for products used in AI servers as it seeks to capitalize on rapidly growing demand from the artificial intelligence industry.

TDK executives said the company plans to invest approximately ¥40 billion ($260 million) over the next three years at two factories in Japan to increase production of thin-film inductors. Inductors are compact electronic components that help regulate and stabilize processor current by suppressing sudden changes in electrical flow. This function helps maintain stable voltage in power circuits supplying processors.

As new power delivery architectures are adopted to supply semiconductors more efficiently, TDK expects thin-film inductors to see broader use. AI server GPUs are becoming increasingly powerful, but their rising power consumption is creating new challenges for efficient power delivery and energy management.

As part of the investment, TDK will allocate ¥35 billion to its factory in Yamanashi Prefecture and ¥5 billion to its factory in Yamagata Prefecture. The Yamanashi facility will manufacture thin-film inductors for AI chips, while the Yamagata facility will produce components for optical transceivers. Optical transceivers convert electrical signals into optical signals and vice versa, enabling high-volume data transmission between servers and other equipment.

TDK plans to begin mass production of high-performance thin-film inductors compatible with new server power architectures during the fiscal year ending March 2027. The company is expected to begin supplying these products to major chip manufacturers from the following fiscal year.

One of the key challenges facing AI servers is the rapid increase in GPU power consumption as computing performance continues to advance. Chip manufacturers and electronic component companies are therefore developing more efficient power delivery solutions for next-generation GPUs, with thin-film inductors expected to play a greater role in these designs.

Vertical power delivery technology is attracting particular attention. Unlike conventional planar layouts, the approach places power components beneath the GPU, shortening the electrical path between the GPU and its power delivery components. This can reduce resistance and other forms of energy loss, with estimates suggesting that the configuration could cut power losses by approximately 30% to 50%.

TDK expects demand to increase for thin-film inductors embedded in package substrates beneath GPUs, as the components are well suited to vertical power delivery architectures.

Embedded inductors are approximately one-tenth the thickness of conventional products while offering dimensional precision at the micrometer level. Only a limited number of companies currently have the capability to mass-produce such embedded inductors. TDK has leveraged thin-film manufacturing technologies developed through its production of hard disk drive (HDD) components to develop these products.

TDK's passive components business, which includes inductors, performed strongly from April through June, with revenue rising 28% year over year to ¥176.8 billion. The business accounted for approximately 24% of TDK's total sales and about 20% of its operating profit, making it one of the company's core business segments.