Nitto Denko - Company History

The First World War cut Japan off from European electrical insulating materials, and in October 1918 Inamura Tojiro took over a small insulation workshop in Osaki, Tokyo and incorporated it as Nitto Electric Industrial with ¥200,000 of capital and fourteen employees. It made varnished cloth and varnished paper for the heavy-electrical makers — above all Hitachi. The company existed because an import had stopped, which meant its demand was, from the first day, one product sold to a very few buyers.

That structure came due around 1930, when Hitachi began making its own varnish. Orders collapsed; Inamura died the same year. In May 1937 the customer rescued the supplier by buying 100% of the shares, and Nitto became a wholly owned Hitachi subsidiary — an independent maker turned into an arm of its own client within twenty years of founding. In December 1941 it bought a varnish-paint works at Ibaraki, near Osaka, its first foothold outside Tokyo.

War then decided the geography. An air raid in May 1945 destroyed the Osaki works, leaving Ibaraki as the only plant; the head office followed to Ibaraki in July 1946. In July 1948 the zaibatsu dissolution forced Hitachi to sell its holding, and Nitto was independent again — not by its own choice, and owning little beyond the ability to make insulating paper and coatings. The task it carried out of the war was to stop being a one-product company selling to one customer.

Rebuilding, Nitto pushed its coating know-how outward. Dry-cell batteries began in August 1950 under the Maxell name, followed by recording tape; in April 1951 the company developed Japan’s first vinyl tape, and in 1957 black tape. The chemistry of the pre-war varnish had been carried onto petrochemical polymers, and adhesive tape — a technology with almost unlimited end uses — became the second pillar beside insulation.

Then, in February 1961, it separated the consumer side. The battery and magnetic-tape division was spun out as Maxell Electric Industrial and sold to Hitachi; renamed Hitachi Maxell in 1964, it grew into a cassette-tape brand every household knew and listed its shares in 1977, with Nitto keeping a 6.7% stake. Nitto had built a consumer business and handed it to its former parent — the cost of building a retail sales channel from nothing, traded for depth in industrial materials.

The direction was then fixed. Nitto listed in Tokyo and Osaka in August 1962 and became, permanently, a business-to-business materials maker: semiconductor encapsulation compounds (1965), a US sales arm in 1968, flexible printed circuits under licence from Sanders of the US in 1973. It sold what only its customers’ engineers ever saw — and when the 1973 oil shock hit, sales fell in the year to March 1975, showing again how completely its results depended on other manufacturers’ cycles.

The answer to that dependence was a rule. From about 1975 president Hijikata Saburo ran the “three-new” programme (sanshin): products launched within the past three years had to account for at least 30% of sales, and R&D had to hold near 5% of revenue. It was not retrenchment but the opposite — a permanent, self-imposed obligation to generate growth internally rather than wait for the customer industries to recover. In 1978 the search was narrowed to four fields: electronics, medical, anti-corrosion and membranes, which framed the portfolio for the next forty years.

The new products of these years were started long before their markets existed. Polarizing film for liquid-crystal displays began in April 1975 and polymer separation membranes in April 1976, when seawater desalination was still dominated by evaporation; high-priced ultrapure water for semiconductors and LCDs carried the membrane business until desalination arrived. The 1987 purchase of Hydranautics in the US bought an international brand in reverse-osmosis membranes, and in September 1988 the company dropped “Electric Industrial” from its name to become simply Nitto Denko.

Then the display boom made the 1975 bet the main business. The Onomichi works opened in January 1999 as a dedicated LCD-materials plant, and subsidiaries followed the customers across East Asia — Korea (1999), Taiwan (2003), Shanghai (2005) — with a flexible-circuit plant in Shenzhen in 2004. Building next door to the panel makers won on delivery and quality, and it became Nitto’s standard overseas pattern. Consolidated sales roughly doubled from ¥338.9bn in the year to March 2002 to ¥745.2bn by March 2008; the head office moved to Kita-ku, Osaka in January 2006.

Concentration in electronic materials proved as dangerous as concentration in one customer had been. Under Nagira Yukio, appointed in April 2008, the Lehman shock cut sales 22.4% to ¥577.9bn in the year to March 2009 and operating profit from ¥77.9bn to ¥13.8bn. Recovery came, but not back to the peak, and reducing dependence on LCD polarizers became the central question. The answer was bought rather than invented: Avecia Biotechnology of the US in February 2011 took Nitto into oligonucleotide contract manufacturing — nucleic-acid medicine — and a 2016 exclusive global licence with Bristol-Myers Squibb for an organ-fibrosis drug deepened the pipeline.

Takasaki Hideo, president from April 2014, gave the reflex a name: the niche-top strategy. Enter the volume zone, he argued, and you are in a price war; so stay with top-tier customers in niches you lead. In November 2017 Nitto acted on it in the starkest possible way — licensing its large-panel polarizer manufacturing technology to China’s Hangzhou Jinjiang Group and affiliates for up to five years and roughly $133.7M (¥15bn) in fees, and withdrawing by stages from the commoditised product in which it held roughly 40% of the world market. Sales of ¥857.4bn and operating profit of ¥125.7bn in the year to March 2018 were records set as the company was walking away from what produced them.

The proceeds went into the next mountains. Bend Labs (flexible sensors) and the personal-care business of London-listed Mondi plc were both bought in 2022, adding nonwovens and functional films and thickening the European base. In the year to March 2025 consolidated revenue passed ¥1 trillion for the first time, at ¥1,013.8bn, with a record ¥185.7bn operating profit — in the company’s 107th year. Whether each handover pays still depends on the same race: at the time of the polarizer licence, optronics supplied about 70% of operating profit and the medical business only ¥44.4bn of sales against a ¥300bn goal.