Mitsubishi Electric to Exit Mobile Handset Business

(Top News, 4 Mar 2008)

Mitsubishi Electric Corp. has decided to no longer continue its mobile handset business in Japan in order to strategically shift resources to the communication-related business and other businesses the company plans to strengthen. This decision has been made with a view to further accelerate the company's growth strategy under the management policy of "making strong businesses stronger".

Mitsubishi Electric started supplying car phones in 1983 to Nippon Telegraph and Telephone Public Corp. and since then, the company has been involved in the mobile handset business in Japan, with the recent products supplied to NTT DoCoMo Inc. (NTT DoCoMo). However, the increasingly diverse preferences of consumers as well as the intense competition in the already matured domestic mobile phone market led to severe business conditions. Consequently, Mitsubishi Electric's mobile handset business has recently suffered shipment decreases and it has become extremely difficult to expect improvement in this field.

Under these circumstances, Mitsubishi Electric has considered the course of action involving the mobile handset business from every aspect and decided to no longer continue the business. The company will strategically shift its resources to other businesses the company plans to strengthen.

Mitsubishi Electric will therefore stop launches of newly developed models after the current models supplied to and sold by NTT DoCoMo.

However, even after the business restructure, Mitsubishi Electric will continue after-sales-service as well as the recall of D06 lithium batteries.

Meanwhile, Diamondtelecom Inc., which is a mobile phone sales dealer and a subsidiary of Mitsubishi Electric, will continue and work to further expand its business.

Mitsubishi Electric will also work to maintain and further strengthen the partnership with NTT DoCoMo through the communication related business it aims to expand.

Summary of Mitsubishi Electric's Mobile Handset Business

1) Shipment forecast of approximately 2.1 million handsets in fiscal 2008 (April 1, 2007-March 31, 2008).

2) Sales forecast of approximately 100 billion yen in fiscal 2008.

3) Approximately 600 employees, including R&D, manufacturing and sales divisions. These employees are basically to be repositioned mainly in Mitsubishi Electric's strategic businesses.

Mitsubishi Electric will strategically shift resources of the mobile handset business to fields that can make best use of its technologies and know-hows, and is also expected to show further development and expansion. For example, the company plans to strengthen its businesses in the following fields: the communication infrastructure business which involves next generation network (NGN) related equipments and base transceiver stations for mobile phones, as well as closed circuit televisions (CCTVs) and other total security businesses, car multi-media business, factory automation system business, train information management systems business and others.

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