Kaga Electronics - Company History

Kaga Electronics began in February 1968 as a one-man parts dealership in Kanda, Tokyo, started by the twenty-four-year-old Tsukamoto Isao on $1,389 (¥500,000) borrowed from his father in Kanazawa. He had left home at sixteen for a motor works in Yokohama, spent roughly two years in manufacturing and six in sales, and quit his second employer after half a year to go out on his own. In September the business was incorporated with ¥1 million of capital in a two-tsubo office — about seven square metres — in Sotokanda, Chiyoda-ku. The name came from his mother’s remark when the loan was being discussed: Kaga province was known as “the million-koku domain,” so perhaps the company might one day turn over ¥10 billion a year.

The founding capital was gone within months, spent on rent and fittings, and the component makers wanted cash. Tsukamoto explained the position to his customers and asked them to pay in advance, then used that money to pay his suppliers. From this he built the method that defined the company: take the order first, only then choose the maker and place the purchase, and settle with the supplier after the goods are delivered and collected for. It meant a trading house that carried no inventory and, apart from bonus and dividend funding, no borrowings. “Inventory is the child of sin” became his standing phrase and the firm’s working discipline.

Owning nothing left it free to sell anything. Kaga moved with whatever the electronics industry wanted — CB radios in the 1973 boom, ICs for arcade Invader machines from 1978, cartridge production for Nintendo’s Family Computer from 1983 — deliberately refusing to specialise while the rest of the trade was organised into captive distributors owned by the semiconductor makers. Consolidated sales passed ¥10 billion in 1980, twelve years in. Its own brand, TAXAN — from the Japanese takusan, “plenty,” with the X and N thrown in for the American superstition that they make a name famous — appeared around 1982; TAXAN USA had been set up in 1981, and the RGB Vision colour monitor became a hit in the American market. In 1985 the company moved its head office back into the Akihabara electronics district and registered its shares over the counter.

The Tokyo Stock Exchange second section followed in December 1986, a year after the OTC registration and two years ahead of the twentieth-anniversary target Tsukamoto had set; the first section came in September 1997. What the 1990s added was reach. As Japanese set makers moved assembly offshore, their suppliers were expected to follow them and deliver locally, and Kaga built that network itself rather than buying into it — Hong Kong in 1992, Singapore in 1994, Taiwan in 1995, Shanghai in 2000, Thailand in 2002. In 1993 it took over the Apple products sales division of Tomoe Shokai, and in 2001 consolidated sales passed ¥100 billion, ten times the figure its mother had once imagined.

Alongside the trading business it kept a second line of its own: TAXAN-branded PC peripherals, monitors and, from the 2006 purchase of Plus Vision’s projector business, projectors. Group companies were spun out by specialism — Kaga Devices in 1991, Kaga Solnet in 1995, Micro Solution in 2002 — and from 2005 the group grew by acquisition as well, taking in Kashimura, Otsuka Denki, and ADM by tender offer in 2008. Sales reached ¥291.3 billion in the year to March 2008. Tsukamoto had moved up to chairman in April 2007.

Then the crisis. In the year to March 2009 sales fell 6.1% to ¥273.6 billion and the company posted its first net loss, of ¥800 million, on ordinary profit of ¥2.2 billion. Across the components trade, revenues fell twenty to thirty per cent as semiconductor demand collapsed; Kaga’s loss was mild by comparison, for the simple reason that a house which buys only against orders has almost nothing to write down. The discipline improvised in 1968 out of having no money turned out, forty years later, to be a limit on how much a downturn could cost.

Chairman Tsukamoto read the wreckage as an opportunity rather than a threat, and said so: the crisis was “the greatest chance since we were founded.” The logic was arithmetic. A strong yen was pushing Japanese manufacturers to move production to China, Southeast Asia and Mexico — which was demand for exactly the local-supply network Kaga had spent the 1990s building — while the same crisis had cut the price of everything Kaga might want to buy. Having neither inventory nor debt, it had the equity to act. Within months it opened Kaga Europe in Britain and KD TEC in the Czech Republic, and in June 2009 bought Tokyo Denden Kogyo at home. Sales recovered to ¥237.9 billion in the year to March 2011.

Tsukamoto had already moved to chairman alone in April 2007; the presidency passed first to Tsukamoto Tomoku, who held it for about seven years, and then, in April 2014, to Kado Ryoichi. Kado had joined in 1980 and come up through sales, the special-equipment division and the components unit — an insider promoted from within. At an early internal meeting he held up a ¥100 coin and told staff to remember it every time they saw one: ¥10 billion of ordinary profit, against the ¥5.8 billion the company had just earned. In January 2017 TAXAN MEXICO was established, the first node of what would become the group’s contract-manufacturing arm for North America.

On 10 September 2018 Kaga announced it would take 70% of Fujitsu Electronics for about ¥20.4 billion, with the remaining 30% to follow by 2021 — roughly $185.7M (¥21bn) including fees. The deal closed on 1 January 2019 and the target was renamed Kaga FEI. It carried the Fujitsu group’s semiconductor and component distribution channels, including Socionext products worth some ¥84 billion of sales in the first year alone. Group revenue jumped to around ¥500 billion, level with the industry leader Macnica Fuji Electronics. Paying for it pushed interest-bearing debt to ¥32.5 billion at March 2019, 3.8 times the previous year — the point at which the debt-free rule of the first fifty years was set aside.

Acquisitions continued: Towada Pioneer in 2019, Excel and Kyokuto Denki in 2020. A negative-goodwill gain from Excel helped lift the year to March 2022 to record figures — ¥495.8 billion of sales and ¥15.4 billion of net profit — and the global semiconductor shortage carried the following year to a peak of ¥608.1 billion. Consolidated headcount rose from 5,092 in 2014 to 8,560 in 2024 as the acquired companies were absorbed. From 2023 the cycle turned and the semiconductor inventory correction pulled profits back from the peak.

The answer to that volatility, set out in Mid-term Management Plan 2027 in May 2025, is to stop being only a middleman. Contract electronics manufacturing — the assembly capability that came with Fujitsu Electronics and took five years to integrate — is to grow from ¥134.5 billion to ¥230.0 billion, an increase of about ¥100 billion, across four production regions: Japan, China, ASEAN and Mexico. Beyond that sits a ¥1 trillion revenue ambition for the sixtieth anniversary in 2028, to be reached by organic growth and further acquisitions; Kado has described consolidation in blunt terms, buying rivals to reduce the number of competitors and accepting that one plus one may only make 1.8. A firm that began by asking its customers to pay first now grows by purchasing other people’s customers.