Fanuc - Company History

Fanuc did not begin as a company but as a research assignment. In 1956 Hanzaemon Omi, the executive in charge of technology at Fujitsu, laid out a plan to build the firm on three pillars — communications, computers and control, the so-called “3C” vision — and named a young researcher, Seiuemon Inaba, to lead the control side. Inaba took up basic work on numerical control (NC): using a computer to command the motion of a machine tool. In 1959 he invented and immediately patented his own electro-hydraulic pulse motor, the device that first made precise positional control possible and gave Fanuc the technical footing for the oligopoly it would later build.

But as a business, NC lost money for roughly a decade. Computers then cost millions to tens of millions of yen apiece and the market itself was immature; inside Fujitsu the years were half-jokingly called the “age of the gods.” NC turned its first profit only in 1965, and in May 1972 Fujitsu carved the division out into Fujitsu Fanuc, a company in its own right. The paradox that a large parent could absorb ten years of red ink so a small team could bury itself in development became the origin of the competitive edge Fanuc kept long after it stood alone.

Independence brought an immediate shock. The 1973 oil crisis turned users against Fanuc’s electro-hydraulic pulse motor, whose high output demanded a bulky hydraulic power source. Inaba bet on an all-electric pulse motor but could not tame its noise, and in June 1974 signed with America’s Gettys to make and sell DC servo motors — wholesale-switching his main motor. Through it all the strategic core held: Fanuc would not build machine tools, staying a component supplier to the machine-tool makers who were its customers, so that avoiding competition became the foundation of their trust. A tie with Siemens begun in 1965 and upgraded to an equal mutual-aid pact in 1975 seeded its move into Europe.

The decision that underwrote Fanuc’s extraordinary margins was to pour resources into generic NC devices rather than bespoke, custom-spec units — reaping mass-production cost cuts and spread-out development costs at the same time. By 1985 Fanuc held about 70% of Japan’s NC market and, at an ordinary-profit margin of 36.6%, was named the most profitable listed company in the country. Its 1980 wholesale move of headquarters and factory to the village of Oshino, in Yamanashi — unconventional for an electronics maker — compressed land costs and anchored engineers in one place, the concentrated model that would define it.

In 1982 the company formally became Fanuc Corporation, and in 1983 it listed on the Tokyo Stock Exchange’s First Section. Yet Fujitsu still held 38.9% of Fanuc in March 2000 — its largest shareholder. From that year it ran a staged sell-down, cutting the stake to 8.7% by September 2006 and, with it, completing Fanuc’s historic passage from group subsidiary to a standalone public company that now faced institutional investors on its own.

Founder Seiuemon Inaba moved up to chairman in 1995, and in 2003 his son Yoshiharu Inaba became president, entrenching two generations of family management. A 2006 “management council” that included the honorary chairman institutionalised the Inaba family’s single decision-making axis, pairing founder-family speed with the governance a listed company owes. The 2009 Lehman shock cut profits as world demand evaporated, but Fanuc’s oligopoly in generic NC held firm, and its high-margin frame came through the cycle intact.

Around the Oshino headquarters plant Fanuc kept a deliberately concentrated production model, adding the Tsukuba plant (Ibaraki, 1989) and the Hayato plant (Kagoshima, 1991) and, in 1994, Beijing Fanuc to supply China’s manufacturers ahead of rivals. Every site sat pointedly away from cities — cutting land costs, retaining engineers and guarding trade secrets — and its “automated factories,” where robots build robots, turned productivity itself into a source of cost advantage.

Around 2010 demand exploded worldwide for Fanuc’s Robodrill, the compact machining centre used to cut Apple’s aluminium iPhone bodies with precision. In 2011 the management council committed to ramp Robodrill output, pouring an unusual $572.8M (¥46bn) of annual capital spending into the Tsukuba plant; parallel demand from Samsung’s smartphones pushed Samsung-bound sales alone to $887.2M (¥94bn) in the year ended March 2015. The windfall lifted the oligopoly’s earnings a further notch.

But Robodrill concentrated demand on one customer’s one product, tying Fanuc’s whole result to Apple’s and Samsung’s phone cycles. In 2013 Robodrill demand stalled abruptly, founder Seiuemon Inaba stepped down from the board, and twelve directors were demoted at once. A strong 2015 followed, but by the year ended March 2020 waning iPhone demand halved net profit, from $1.4B (¥154bn) to $687.4M (¥73bn) — laying bare, in the accounts themselves, a two-faced structure: stable generic-NC income and volatile, product-linked income.

In 2019 Kenji Yamaguchi, a Fanuc career man from outside the founding family, became president — the first non-family chief since independence. The next year Seiuemon Inaba died at 95, closing a founder’s era that had steered both Fanuc’s technology and its management for the sixty-four years since the NC research began in 1956. The measured build-out of capacity continued — a Mibu plant (Tochigi) in 2016, a robot-only Tsukuba plant in 2018 — but the strategic question now is where the next big demand source lies as smartphones mature, and whether to loosen the concentration itself: a second CNC plant at Mibu splits NC production outside Oshino for the first time, hedging the risk that a disaster at one site could halt all supply.