The 'Kyocera Group' Supporting Japan, a Strong Nation in Materials and Components [Hidden Industry Story]

Ceramic Material Leader 'Kyocera'
"Employee Happiness, Contribution to Humanity" Emphasized by Chairman Inamori
Invented 'Amoeba Management' Key to Large Organization Separation and Independent Accounting
Never Recorded a Loss Since Founding, Known as the 'God of Management'

Kazuo Inamori, Honorary Chairman of Kyocera Group. / Photo by Kyocera website capture

[Asia Economy Reporter Kang Juhee] It is no exaggeration to say that Japan's economy has been supported by the materials and components industry alongside the automobile industry. Since the 1960s, Japan has been known as a powerhouse in the materials and components sector, alongside the United States, based on its long-standing high technology and expertise.

In particular, the 'Kyocera Group,' a representative Japanese company, is regarded as the world's leading materials company producing advanced ceramic components used in electronic devices and semiconductors. Kyocera, which started in 1959 with a capital of 3 million yen and 28 employees, has now grown into a global company with 298 subsidiaries in 40 countries and about 75,000 employees worldwide. Last year, the group's total sales reached approximately 16 trillion won.

The background behind Kyocera's growth into a global company lies in the firm management philosophy of its founder, Chairman Kazuo Inamori. How did Kyocera become one of the most respected companies in Japan?

◆ Growth from a Small SME to a Leader in the Ceramic Field

Chairman Inamori was born in 1932 into a poor rural family in Kagoshima Prefecture, Japan. He studied at Kagoshima University’s Faculty of Engineering and, after graduation, joined Shofu Industry, a company producing high-voltage vacuum tubes. It was there that Inamori first stepped into research and development of high-performance ceramic components used in advanced electronic devices.

However, the company soon faced financial difficulties, and Inamori eventually left to found the predecessor of Kyocera, 'Kyoto Ceramic,' in 1959 at the age of 27. He and his employees devoted themselves to research and development day and night. In the early days, the company gradually expanded by supplying parts to Mitsubishi Electric.

After strenuous efforts to enter the U.S. market, Kyocera passed the notoriously difficult IBM standards in 1966 and secured an order for 25 million circuit boards for IBM’s large computers. This deal with IBM led to a surge in orders not only from overseas but also from major Japanese corporations. As the semiconductor industry boomed, especially in the U.S., the company experienced significant growth.

Kyocera’s business did not always proceed smoothly. IBM ordered high-performance precision products far exceeding existing standards, and competitors, seeing the complex specifications, all gave up on supplying.

Inamori saw this as an opportunity. After receiving the order, he mobilized Kyocera’s full technological capabilities to develop new technologies. He personally engaged in experiments and even lived at the factory to dedicate himself fully. Ultimately, Kyocera successfully delivered to the demanding American company.

Furthermore, in 1969, Kyocera attracted global semiconductor market attention by independently developing packaging technology to protect semiconductor chips from external shocks and moisture. That year, Kyocera achieved an astonishing profit margin of 42%.

Kyocera was listed on the Osaka Stock Exchange in 1971 and, in 1996, surpassed Sony to become the most profitable Japanese company. Over decades, Kyocera maintained its position as the world’s number one in advanced ceramics and has never posted a loss in its 59 years since founding, becoming a top-tier company.

Stacked IC package manufactured by Kyocera. Photo by Kyocera website capture.

◆ "A Company Where Employees Are Happy" ? Chairman Inamori’s Management Philosophy

The foundation of Kyocera’s global success lies in Chairman Inamori’s firm management philosophy that values 'people.' Inamori made it his management mission to ensure that "all employees achieve happiness."

In his 2005 book, Karma Management, Inamori emphasized, "The rise and fall of a company ultimately depends on the character of its entrepreneur," adding, "While pursuing profit is natural, having the conviction and philosophy to walk the right path is crucial." He believed that no matter how passionate or capable a leader is, if their values are not upright, they will negatively impact both the company and society.

To this end, Inamori developed his unique management method called 'Amoeba Management.' He recognized that as a company grows, it becomes impossible for a single leader to manage the organization systematically. To solve this, he divided the large company into small units and appointed leaders for each, operating the company in a form of joint management.

The organization was divided by technology, processes, products, and sales regions, establishing a system where each unit operated as an independent profit center. This created an environment where all employees could understand the company’s profits, sales, and costs themselves and work accordingly. By enabling a clear view of group productivity, the organization and employees could collaboratively improve problems and grow.

Using this management philosophy, Inamori was called the 'God of Management' after he was brought in as a savior to Japan Airlines (JAL), which was on the brink of bankruptcy in 2010, and turned it profitable within a year. At that time, Inamori also gained attention as the 'chairman who worked without receiving a salary.'

In 2010, Kazuo Inamori, Honorary Chairman of Kyocera, took charge of rebuilding Japan Airlines (JAL). Photo by Yonhap News

◆ Kyocera’s Second Leap Forward through Entry into the Telecommunications Industry

Today, Kyocera operates not only in the materials sector but also in electronics, information devices, solar power and batteries, and telecommunications. In particular, expansion into the telecommunications field is regarded as a representative success case of Kyocera Group’s business diversification.

Inamori founded KDDI (Daini Denshin Denwa Kabushiki Kaisha) in 1984, entering the telecommunications business, which was completely unrelated to its core ceramic parts production. At that time, NTT monopolized Japan’s mobile communications market, making communication fees very expensive. Inamori sought to solve this problem.

In an interview with the media, Inamori explained, "I thought that competition rather than monopoly would lower communication costs, which would benefit the public. I started with that sense of mission," revealing his reason for challenging a new business.

Even in business diversification, Inamori adhered to the principle he always emphasized: becoming a company that pursues the happiness of all employees and contributes to the progress and development of human society. Thanks to Inamori’s conviction, KDDI has grown into Japan’s second-largest telecommunications company.