Mitsubishi Electric to Terminate Mobile Handset Business

Mitsubishi Electric Corporation President and CEO, Setsuhiro Shimomura, announced that the company 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.” Approximately 600 employees, including R&D, manufacturing and sales divisions in the mobile handset business are basically to be repositioned mainly in the company’s other strategic businesses.

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. The company said it has become difficult these days, however, to expect growth in demand for the already matured domestic mobile phone market, with the increasingly diverse preferences of consumers leading 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, the company said.

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 said it will strategically shift its resources to other businesses the company plans to strengthen, thus continuously boosting the company’s business performance and further increasing its corporate value.

Mitsubishi Electric will therefore stop launches of newly developed models after the current models supplied to and sold by NTT DoCoMo. Even after the business restructure, however, the company said it will continue after-sales-service as well as the recall of D06 lithium batteries (announced in Japan on Dec. 7, 2006).

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

Mitsubishi Electric said it 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.

With the shift of resources, Mitsubishi Electric will strengthen mainly the Communication Systems Group and other business Groups that involve the communication-related business, which is expected to show continuous development in technologies. The company said it will also utilize the assets accumulated through the mobile handset business for its strong businesses, thus further accelerating the company’s growth strategy.

The company said its decision will cause a temporary loss of approximately 17 billion yen in income before income taxes for fiscal 2008. Although the forecast for fiscal 2008 may be assessed after the undergoing review of each business, Mitsubishi Electric expects to absorb the temporary loss with improvements in various fields.

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