Company history

Oki Kibataro was born in 1848, the youngest son of a farming family in Hiroshima. He disliked farming, apprenticed himself to a silversmith cousin, and spent his youth making metal fittings for armour and horse tack; the only capital he carried to Tokyo was that handwork. Through a fellow Hiroshima man who ran the telegraph training school he got taken on as a labourer at the government telegraph works at Shiodome — the story goes that he submitted a silver hairpin of his own making along with his résumé. Nobody in Japan had yet built a telegraph set, so Kibataro and his colleagues formed a study group to reverse-engineer the Bell telephone; in 1879 he began taking subcontract work from the telegraph bureau in a rented rowhouse with two treadle lathes. In January 1881 he left government service and founded Meikosha in Kyobashi — today’s Ginza — with three lathes, a few apprentices and four men.

Two months later Meikosha exhibited a telephone it called the kenbionki at the Second National Industrial Exhibition. Built into a tooth-powder box with carbon powder and a thin cypress diaphragm, it used a carbon transmitter on the same principle as Edison’s — developed in Japan before Edison sets were imported — and was far clearer than the Bell type. The Meiji Emperor, visiting the exhibition, heard a pocket watch through it distinctly; the prize that followed made the firm’s name. Renamed the Oki Electric Works in 1889, it delivered Japan’s first domestically built series multiple switchboard to a Tokyo exchange in 1896 and the first magneto parallel multiple board to Nagasaki in 1902, and painted its brass gold to match imported equipment rather than be thought inferior to it — the badge of “Oki, the domestic maker” mattered that much.

Kibataro died in 1906 and the firm passed to his widow Take and his son, but the money came from outside the family. Asano Soichiro — a relative by marriage who had risen from selling water in the street to cement and shipping — brought in Shibusawa Eiichi and Yasuda Zenjiro; a sales company, Oki Electric Co., was set up in 1912 and absorbed the family partnership in 1917. The family workshop had become a joint-stock company backed by the financial establishment. It made wireless sets from 1915, delivered Japan’s first fully domestic common-battery switchboard in 1918, tied up with Britain’s GEC and put the first automatic exchange into the Nakano office in 1930 — though by then it had slipped to third among the Ministry of Communications’ suppliers, behind NEC and Fuji Electric. From the 1930s it ran joint research on underwater acoustics with the Imperial Navy, the source of the defence business it still has. Designated a munitions company, it ended the war with more than twenty plants burnt or scattered and some 22,700 workers, and consolidated down to five; in 1946 Yasuda Bank and its holding company held 31% of the shares — the start of a long relationship with Fuji Bank.

On 1 November 1949, under the Enterprise Reconstruction and Reorganization Act, the old Oki Electric was dissolved, and on the same day a “second company” — Oki Electric Industry Co., Ltd., capitalized at $500,000 (¥180m) — took over the entire business. That is why the company carries two dates: founded 1881, incorporated 1949. The old debts were settled against shareholders and general creditors, a liquidation that ran until 1952 and left the new company clean. Its president, Kambe Suteji, came from Yasuda Bank with no experience of the telecommunications trade but a following among the younger staff, and stayed sixteen years. Under him Oki began mass-producing the Model 4 telephone in 1950, listed on the Tokyo Stock Exchange in November 1951, and delivered crossbar exchanges to the state telephone corporation from 1956.

From there it widened out. A transistor computer, the OKITAC-5090, and a semiconductor plant at Hachioji arrived in 1961; a joint venture with Sperry Rand followed in 1963; integrated circuits, OKIDATA terminals and online deposit terminals for Fuji Bank came in 1967, and the first online cash dispenser — the ancestor of the ATM business — went to Fuji Bank in 1971. The breadth did not turn into profit. Lecturing to securities analysts in March 1969, executive vice-president Yamamoto Masaaki set out the arithmetic: dependence on the public telephone corporation swinging between roughly a third and 45% of sales; over six years sales had more than doubled while profit rose 23%; the labour-cost ratio had gone from about 15% to 20%. He had already conceded the structural point — with so much of the range made up of public-interest equipment and machines sold to rationalize a customer’s costs, high margins could not be expected — and admitted that all three long-range plans to date had come in below target.

The 1980s answer was to invest in two capital-hungry businesses at once. Miyazaki Oki began making 64-kilobit DRAM in 1980, the year the if800 personal computer appeared; in 1982 Oki launched the world’s first recycling ATM, the AT-100, which handed back the notes it took in. One-megabit DRAM followed at Miyazaki in 1986 and at a new Miyagi plant in 1988, an Oregon fab started up in 1990 with four-megabit parts for the open market, and a European printer arm set up in Britain in 1987 began building the LED page printers that became the MICROLINE line. A telephone-equipment maker was now funding a memory business and a printer business simultaneously — and the memory business would shake its earnings for the next twenty years.

In fiscal 1992 Oki posted a consolidated net loss of $259.7M (¥33bn). Two presidents ran a “Management Rebuilding Plan” and then a “Part 2” back to back, and still fiscal 1998 brought the largest loss in the company’s history, $328.5M (¥43bn). Shukan Toyo Keizai asked in October 1998 how many rebuilding plans Oki could possibly draw up, and named DRAM — whose earnings swung violently with supply and demand — the root of the trouble. The mechanism was plain enough: the 1994–95 upswing turned the same memory business into the profit engine and produced record recurring profits, the complacency of “we seem to make money anyway” blunted the restructuring, and the next down-cycle dropped the company straight back into a huge loss.

Shinozuka Katsumasa, president from June 1998, wrote the plan that finally cut. DRAM volume production would stop at 64 megabits and go no further; semiconductor capital spending fell from ¥33.4bn in fiscal 1997 to ¥12.4bn and then ¥10.0bn; the Oregon plant closed, and about ¥30bn a year came out of semiconductor costs. He said the reason without decoration: staying in required ¥80–100bn of investment a year, Oki had ¥30–40bn, and on that gap it could not win. Group interest-bearing debt had reached ¥430bn and the long-term rating was cut from A− to BBB in September 1998; 2,700 jobs went by March 2001. He was equally blunt about the culture — one PDCA cycle stalls, the company gives up and writes a new plan, so what it had actually practised was “PDCACACA.” Thirty years after Yamamoto Masaaki reported that every long-range plan had missed, the diagnosis had not changed.

Around that, the portfolio was cut and traded. Printers and fax machines went to a subsidiary, Oki Data, in 1994; Toshiba’s domestic financial-terminal business was bought in 1999 and made the first plank of a narrower strategy — Shinozuka spoke of considering the sale of some twenty businesses and halving the R&D agenda; an ATM company was set up in Shenzhen in 2001; the group was reorganized into three segments in 2005. Stability did not follow. Consolidated net losses of $309.1M (¥36bn) in the year to March 2007, $481.1M (¥45bn) in the year to March 2009 and $338.4M (¥27bn) in the year to March 2011 bracketed profits of a few billion yen in the good years, while sales fell from ¥719.6bn to ¥443.9bn in two years and the share price drifted in the ¥50s, the lowest since listing. In October 2008 Oki sold the semiconductor business — roughly half a century after the first transistors came off the line at Hachioji.

Kawasaki Shuichi, president from 2009, described the company he inherited as standing on the very edge of the ring — and found a workforce unbothered, reassured by a customer list of big domestic banks and telecom carriers. His 2010 structural reform recapitalized the damaged equity, consolidated plants and took out early retirements amounting to a tenth of domestic permanent staff. The subtler fix was managerial: exchanges and cash-handling machines belonged to one division while the plants that built them belonged to another, so business results never showed what production actually earned. In October 2011 the plants were placed under the business units and the profit responsibility handed to their heads — “a kind of amoeba management,” he said, modelled on Kyocera. Through an earthquake, the Thai floods and accounting fraud at the Spanish sales subsidiary, the operating plan for fiscal 2013 came back to ¥24bn, up 80% and the highest since 2004, with the first dividend in eight years. ATMs carried it: 33,000 units sold in 2011 rising to 45,500 in 2013, mechatronics at about ¥90bn — a fifth of sales — at roughly a 10% margin, won by tuning recognition for worn banknotes and sealing machines against yellow-sand dust, which brought in three of China’s four largest banks.

The Honjo plant told the harder story. Built in 1962, it had supplied exchanges and transmission gear to the telephone monopoly for forty years inside the oligopoly of four “telephone family” makers who co-developed with NTT. When NTT decided to buy from outside that circle, and the newest node switch proved no match for Cisco’s routers, Honjo halved its workforce in 2001 and saw output more than halve again in three years; closure looked settled. Shimizu Koichiro argued that the plant’s real asset was neither its buildings nor its headcount but the changeover skill built up on exchange boards, where every board differed in capacity and specification and the money was lost or made in the setup between runs. Senior colleagues took him aside to tell him to drop it. Shinozuka let him try on the condition of profit within a year — all the people he wanted, no money — and Oki’s contract manufacturing began at ¥2.5bn of sales against a ¥7.0bn breakeven. It broke even in year two, turned a profit in year three on elevator control boards, and then went shopping: a circuit-board plant bought from Tanaka Kikinzoku in 2012, Yokogawa’s Ome plant in 2015, a business from Nippon Avionics in 2016, and margins of around 5% — above the 3% of Hon Hai, the largest contract manufacturer in the world.

In March 2016 the last core node switch shipped, and president Kamagami Shinya observed that nobody would be writing “OKI, the telecommunications veteran” any more. Overseas expansion had its own bill: ¥21.5bn of unpaid invoices from a Chinese OEM partner went to arbitration in 2015, and the Brazilian acquisition arrived just as that economy turned, prompting a new group governance function in 2016. The pillar that grew instead was the oldest technology in the house — the underwater acoustics begun with the Imperial Navy in the 1930s and developed ever since at Numazu, where defence sales for fiscal 2023–25 are set to run at twice the level of 2020–22, a new building comes on line in fiscal 2027 to lift capacity half again, and OKI towed passive sonar will go aboard the Mogami-class frigates Australia has selected. Meanwhile the group has kept trading businesses: Oki Electric Cable consolidated in 2017, Oki Data absorbed in 2021, the printer development and production business passed to a joint venture in 2025. Consolidated sales, once above ¥700bn, bottomed at ¥352.0bn in the year to March 2022 and have recovered to ¥452.4bn. Presenting a new plan in March 2026, president Mori Takahiro put the reform at the third or fourth station of the climb and called its 2031 targets — sales above $3.8B (¥600bn) and an operating margin above 7% — a floor on the way to a trillion-yen company. A hundred and forty-five years after it made Japan’s first telephone, Oki has still not settled what replaces NTT.