Japan’s electronics manufacturer TDK is confronting severe workforce shortages at its high-tech facilities in Akita Prefecture, a region experiencing one of the country’s fastest population declines. The company, which evolved from a cassette and videotape producer to a supplier of miniature components for smartphones, data servers, and automobiles, is struggling to maintain production amid a shrinking and aging local population.

Akita faces a stark demographic challenge, with five deaths for every baby born and an average resident age of 54—the highest in Japan. The prefecture’s depopulation has been accelerated by young graduates leaving for opportunities elsewhere, resulting in a shrinking labor pool. Yurihonjo, a town within Akita, has lost more than 20% of its population over the past two decades.

In response, TDK has partnered with local authorities to construct a dormitory-town complex on 10 hectares of former rice fields to attract workers. The development offers 350 residents spacious, modern apartments—a significant upgrade from the traditional basic dormitories common in postwar Japan. Amenities include a public canteen, gym, DIY room, barbecue areas, and surrounding infrastructure such as schools and a care home, with plans for medical facilities and shops. The initiative aims to create a community space where different generations can interact, according to Yoshikazu Nakasugi, who oversees the project.

This effort is critical to TDK as Akita hosts its “mother” factories, where manufacturing processes for global production are developed. The region also plays a strategic role for Apple as part of efforts to reduce reliance on Chinese supply chains. Prime Minister Sanae Takaichi has promoted building regional industry clusters across Japan to reinforce economic security and strengthen the country’s position in global tech supply chains, with the Akita project cited as a potential model, including for emerging sectors like offshore wind energy.

Despite advances in automation and digital efficiency, factory managers acknowledge human labor remains essential. However, TDK’s workforce in Honjo, a nearby city, currently includes no foreign employees. This contrasts with other industrial centers such as Hamamatsu, which have embraced immigration to address labor shortages. Akita itself has the fewest foreign residents among Japan’s 47 prefectures—just 6,000 people in a population of 865,000.

The region’s historical isolation and conservative social attitudes have contributed to this cautious stance toward foreign labor. Hiroaki Wakizumi, head of Azuma Denka—a TDK supplier that coats electronic components—describes Akita as “extremely conservative or exclusionary.” His company has hired 25 Vietnamese workers who constitute nearly 20% of its workforce and has built a dormitory for them, but retention remains a challenge as many seek better-paid jobs in major cities after a few years.

Local officials recognize the issue and are beginning to support foreign labor integration. Akita’s government has established a center to assist companies in recruiting overseas workers. Staff involved with these efforts believe TDK may begin to incorporate foreign labor in the next two years, based on ongoing consultations and exploratory visits to companies with foreign employees.

Nevertheless, integrating foreign workers into the broader community remains difficult. Workers frequently report limited social inclusion outside the workplace, which hampers long-term settlement. With an upcoming rule change allowing migrant trainees greater job mobility, companies like Azuma Denka are increasing wages and bonuses to improve retention. Some foreign employees, like 23-year-old quality control worker Vu Hoang Quynh Nhu, have opted to extend their contracts, but social integration challenges persist.

TDK, which now employs approximately 100,000 people worldwide with nearly 90% based outside Japan, has reinvented itself as a key global supplier amid demographic and economic shifts. In Akita, its efforts to address population decline and labor shortages illustrate the complex interplay between local traditions, economic necessity, and evolving immigration policies in Japan’s rural regions.