Next, I want to reiterate our approach to 3-layer portfolio management, the core of our growth strategy, and explain the background of our related initiatives. Although the company deals primarily with electronic components, our approach to work and the required skills differ depending on the business.
In the 1980s, the company contributed to the miniaturization of televisions and transistor radios by making components lighter, thinner, shorter, and smaller.
From that came the standard-products business called the first layer (components). In the 1990s, the development of mobile phones resulted in differing customer requirements.
As a result, the second layer (devices and modules), the application-specific components business in which we coordinate technical aspects with each customer and develop new products, was established. In the 2020s, 5G was introduced and is used not only in smartphones, but in areas such as medical networks, preventative maintenance of factory equipment, and autonomous vehicles. For Murata to continue to demonstrate its presence as the use of electronics expands, it will be necessary to supply conventional hardware and provide solutions that incorporate software. In other words, we believe that the definition of components will change, and we are positioning this as the third-layer of business.
These 3-layer portfolios are closely related, influencing one another in terms of technology and sales as we aim to expand our business. As the value sought by customers changes, we will create synergies among each and aim for the further growth of Murata. The initiatives for each layer are as follows,
The first layer of capacitors and inductors/EMI filters is the company's core business. Future technological trends are clear. Products for the consumer product market, such as smartphones, must be lighter, thinner, shorter, and smaller.
Those for the mobility market need to be high-quality, highly reliable products that can withstand high-voltage, hightemperature environments. We believe that the market growth rate over the medium to long term will be approximately 10 percent, so it is necessary to increase production capacity in response to the anticipated growth. Annual production of the company's multilayer ceramic capacitors is over 1 trillion units and expanding that capacity will require significant human resources and capital investment. Since it will be difficult to rapidly increase capacity because of significant demand, we are proceeding with capacity expansion from a medium-to long-term perspective. To accelerate initiatives that strengthen these technological and supply capabilities, we will promote our vertically integrated production system and ensure our positioning as a leading company in the industry by improving our business efficiency.
In the second layer, we decide on our target customers for each application. The success or failure of that business depends on whether we can establish technology that differentiates us from competitors. Similarly to the first layer, we will utilize Murata's unique technologies and manufacturing expertise in the high frequency devices and communications modules category, such as RF modules and SAW filters. Looking ahead to 2030, we must also adopt measures such as acquiring technologies that the company lacks through M&A activity and undertake initiatives to demonstrate the superiority of our products in terms of characteristics and structure. Specific to customers in the smartphone market, we are gradually starting to see the fruits of our efforts to strengthen our support system at overseas sites. Although we are still increasing our market share, we would like to enhance our presence by promoting initiatives that customers will select for QCDS.※
With battery and power supply, we are reviewing our business portfolio of lithium-ion secondary batteries and have been focusing on high-capacity cylindrical batteries for power tools, gardening tools, vacuum cleaners, etc. Although demand in our focus markets is stagnant and an improvement in earnings is delayed, we aim to establish an environmental business foundation that includes storage batteries.
Our sensors' focus is on the mobility market. We are starting to see products with outstanding features, including MEMS inertial sensors that can measure vehicle position, attitude, and direction with higher precision and ultrasonic sensors for peripheral detection necessary for automatic braking and parking. We hope to capture business opportunities in the growing market by supplying products that our competitors cannot imitate.
The third layer targets new business areas, including solutions. As is the case now, not all customers will be familiar with electronic devices and design. Given that, we cannot respond with the technologies and experience we cultivated through conventional business models. What we need to do now is to create a business model from a long-term perspective. During the Medium-term Direction 2024 period, we would like to build small successes and determine what kind of value Murata can provide to our customers. As we move ahead with the third-layer business, we will implement these products within the company to allow customers to see and experience them, which will become a new way of selling.
Having customers come to us also creates a synergistic effect of increasing the motivation of employees working on-site.
Currently, the first and second layers are the pillars of our business, but we are highly dependent on the first layer for profits. This is one of our central management issues, and we need to develop multiple revenue sources. Firstly, we must improve earnings in the second layer. However, we will also take on various challenges in the third layer with a view to 2030 and beyond. By continuing to work to solve the issues faced at each layer and demonstrate synergies, we will strive to achieve higher level 3-layer portfolio management aimed at further value creation.
※Product assessment indicators referring to Quality, Cost, Delivery, and Service