Factory Automation Systems
Business Strategy Briefing～ Overview of FA Systems Business and Growth Strategy ～Yoshikazu Miyata
Executive Officer and Group President
Factory Automation Systems
March 27, 2018
Mitsubishi Electric Corporation© Mitsubishi Electric Corporation

Table of Contents

1. Business Overview
2. Growth Strategy
 e-F＠ctory
 AI Utilization
 Product Strategy
 Regional Strategy

3. Mid-term Business Target

1© Mitsubishi Electric Corporation

1. Business Overview: Positioning within the Company
One of the Growth-driving Businesses
Energy & Electric Systems
Power Systems

Information & Communication Systems
Space Systems
Defense Systems

Transportation Systems

Communications Systems
Video Monitoring Systems

Building Systems

IT Solutions

Public systems

Electronic Devices
Power Devices

Industrial Automation
Systems

High Frequency and
Optical Devices

Factory Automation(FA)Systems

Home Appliances

TFT-LCD Modules

Air-conditioning &Refrigeration Systems
Automotive Equipment

Housing Equipment
Kitchen and Other Household
Appliances2© Mitsubishi Electric Corporation

1. Business Overview: Product Portfolio
Comprehensive FA Manufacturer Offering a Wide Rangeof Products, Services and Solutions
Programmable Controllers

Controllers

HMIs*1
AC Servos

Drive Control
Devices

Inverters
CNCs*2
Electrical-discharge Machines

Mechatronics
Products

Laser-processing Machines
RobotsThree-phase Motors, Geared Motors,

Rotating Devices
Power Distribution
Controllers

Industrial Fans
Circuit Breakers, Energy-saving Devices,Electromagnetic Switchgear, Transformers*1 HMIs: Human-Machine Interfaces*2 CNCs: Computerized Numerical Controllers

3© Mitsubishi Electric Corporation

1. Business Overview: Advantages of Products
Creating Value by Utilizing Technological Assets
Technological Assets

Controllers/Drive Control
Devices/Rotating
Devices/Power Distribution
Controllers

Control (motion, heat, fluid,
electric power)

Mechatronics Products

Power electronics
HMIs
Communications
Incor-porated
into systems

Electromagnetic analysis
Devices
Encryption
Information processing

Utilizationof assets

In-house development/manufacturingof key parts

Sensing

Power modules

Laser oscillators

DesignEncoders

ASICs

Speed reducers…

…

4© Mitsubishi Electric Corporation

1. Business Overview: Where Our Products Are Used(1)Contributing to Improving Customer Product Competitiveness, andFacilitating Automation and Adoption of IoT*1 at Production Sites

Liquid-crystal/Organic EL

Smartphones

Semiconductors

Automobiles/Automotive
Components*1 Internet of Things

5© Mitsubishi Electric Corporation

1. Business Overview: Where Our Products Are Used(2)Widely Used Outside of Production Sites as Well

Logistics/Transportation

Power Distribution Facilities

Building Air-conditioning

Waste Processing Plants

Tunnel Excavation/
Ventilation

Ports & Harbors/Shipping<Production Volume of Major Products>
4

AC Servos
370,000 units/month

Programmable Controllers
Inverters(CPUs)
150,000 units/month 200,000 units/month© Mitsubishi Electric Corporation

6

1. Business Overview: Trend in Consolidated Sales
New Record Sales Expected Thanks to Strong Capex Demand(JPY Billion)
100.0%

90.0%

80.0%

Accelerated shift
70.0%
towards automation
and IoT
60.0%

600
Overseas
ratio
Europeand US

Cultivation of
new fields/markets
50.0%

300

Other
Asian
regions*
China,
South
Korea,
Taiwan

42%

47%

49%

47%

52%

40.0%

Increased market share

35%

30.0%

20.0%

Japan

10.0%

0

0.0%

FY12

FY13

FY14

FY15

FY16

*Other Asian regions: India, ASEAN Countries, Oceania, etc.

FY17
Forecast

7© Mitsubishi Electric Corporation

1. Business Overview: FY17/Q3 Consolidated Sales
Sales Expanded in All Regions, Driven by China, South Korea and Taiwan(JPY Billion)

Other
Asian
regions

EuropeandUS

123％
yearonyear

450

Japan

China,
South
Korea,
Taiwan300
Apr-Dec/16

Apr-Dec/17© Mitsubishi Electric Corporation

8

1. Business Overview: FY17/Q3 Consolidated Sales
Sales Expanded in All Product Categories, Driven by Drive Control Devices(JPY Billion)

Mechatronics
Products

Rotating
Devices

Power
Distribution
Controllers

123％
yearonyear

450

Controllers

Drive
Control
Devices300
Apr-Dec/16

Apr-Dec/17© Mitsubishi Electric Corporation

9

1. Business Overview: Trend in Quarterly Consolidated Sales
Maintained at High Levels, Mainly for Smartphones,
LCDs/OLEDs, Semiconductors and Automotive Components
1,900
Consolidated Sales

134

134

130

1,600

126

111

113

1,300
100

1,000
Apr-Jun/16

Jul-Sep/16 Oct-Dec/16* Index (Apr-Jun/16 = 100)

an-Mar/17

Apr-Jun/17

Jul-Sep/17 Oct-Dec/17
10© Mitsubishi Electric Corporation

1. Business Overview: Production Network
Production in Overseas Consumption Areas Expanded as Well as in Japan
Second factory
became operational(Mar 17)
Second factory to be
expanded(Oct 18)

Mitsubishi Electric Low-Voltage
Equipment (Xiamen) Co., Ltd.

Mitsubishi Electric Automation
Manufacturing (Changshu) Co., Ltd.

China
China
(Changshu) (Dalian)
India(Pune)
Mitsubishi Electric India
Pvt. Ltd.

Mitsubishi Electric Automation(Thailand) Co., Ltd.

Mitsubishi Electric Dalian Industrial
Products Co., Ltd.
Mother Factories

China(Xiamen)Thailand(Bangkok)Vietnam(Ho Chi Ming)

Oriental Electric Industry Co.,
Vietnam Ltd.

Nagoya Works

Fukuyama Works© Mitsubishi Electric Corporation11

1. Business Overview: R&D Network
Maximizing Comprehensive Strengths and Overseas Hubs
Corporate Research and Development Group’s Research Centers

Information Technology R&D
Center (Kamakura City)

Industrial Design Center(Kamakura City)

Germany(Dusseldorf)
India(Pune)

Advanced Technology R&D
Center (Amagasaki City)

Mitsubishi Electric ResearchLaboratories (US)China
(Dalian)China(Changshu)

San Jose

Mitsubishi Electric R＆D
Center Europe(France/UK)

ChicagoBostonFA Development
Center No.2 completed(July 2017)

Nagoya Works

European FA
Development CenterNorth American FA Development
Centers
Functions of Overseas Hubs
 US & Europe: R&D of cutting-edge
technologies
 China: Improvement in competitiveness of
locally made products India: Locally-tailored development activities

China FA Development
Centers

India FA Development Center

Fukuyama Works

12© Mitsubishi Electric Corporation

1. Business Overview: Sales/Service Network
Extensive Sales/Service Network Covering 94 Countries Worldwide
Business Sites Added in FY17

Overseas Service Functions

 Mexico Queretaro FA Center (17/5)

 Product training Mexico Monterrey FA Center (17/5)

 Response to technical inquiries
 Supply of parts for repairs and service

13© Mitsubishi Electric Corporation

2. Growth Strategy: e-F@ctory
Concept Advocated Since 2003

FA-IT Integrated Solution Proposing solutions for manufacturing that stays
one step ahead by reducing total cost ofdevelopment, production and maintenancethrough the utilization of FA and IT technologies

Programmable Controllers
MELSEC Q Series
Programmable Controllers
C Controllers withMES
C Controllers MELSEC iQ-R Seriesedge computing
Interface Module
CNC
support functions
GOT-MESMES interfaces

2005

2006

2007

2014 20152003
Concept
announced

2016

2018
2010
e-F@ctory
Alliance
formed14© Mitsubishi Electric Corporation

2. Growth Strategy: e-F@ctory
Expertise Accumulated Inside/Outside of the Company,
and Alliances with a Wide Variety of Partners
Track Record of Introducing to MELCO Production Lines and Customers’Model Lines
Over 7,700 cases

Changshu Innovation Center for Green& Intelligent Manufacturing (China)

Examples of introducing various applications

2013
Nagoya Works
substrate
mounting line

2017

2018

Mitsubishi Electric
Automation
Manufacturing(Changshu)Co., Ltd.

Power Distribution
Systems Center
vacuuminterrupters (VI)and vacuum circuit
breakers (VCB) factory

servo motor assembly line

Mitsubishi Electric Corporation production lines

Wide Variety of Partners
Approx. 610 participatingcompanies*1
 Software partners (approx. 150)
 SI partners (approx. 310)
 Equipment partners (approx. 150)

Approx. 3,300 participating companies*1
Approx. 1,800 connectable products*1

CC-Link Partner
Association*2*1 No. of partner companies and connectableproducts as of March 2018.
*2 Organization promoting industrial network, CC-Link 15© Mitsubishi Electric Corporation

2. Growth Strategy: e-F@ctory
Edge Computing – The Key to Using IoT
IT System Domain

Primary processing of shop floor data
Feedback made close to shop floor(including cloud)Necessary data
Edge Computing
DomainEdge
Real-time
response

Shop Floor Domain(Devices)Primary processing(data management/
Processing)

Shop floor
data①Simultaneous operationsimproved② Security ensured③ Communication volume reduced

２

Reference: Ministry of Economy, Trade and Industry/Commerce and Information Policy Bureau/Information Economy Subcommittee/Industrial Structure Council’s“Working Group on Distribution Strategy (First Session)”Open Software Platform for Edge Computing Domain
Edgecross is an open software platform for the edge computing domain, which
originated in Japan. It was created by Edgecross Consortium members, whointeract outside the boundaries of corporations and industries with the aim ofachieving FA-IT collaboration.
Operates on any industrial-use computer regardless ofmanufacturer
All data on shop floor collected
Real-time diagnosis and feedback

Source: Edgecross ConsortiumModeling shop floor
Seamless connectivity between FA and IT systems
Utilizing wide variety of applications in the edge computing
domain16© Mitsubishi Electric Corporation

2. Growth Strategy: e-F@ctory
Enhance Solution Proposal Capability through Utilization of Edgecross
IT Systems(including cloud) Strengthening partnerships through ourInformation Systems & Network Service Groupand partner IT companies
 Development of Edgecross-equippedindustrial-use computers
MELIPC

Edge
Computing Development of application software
Real-time data
analyzer

AIembedded

SCADA(MC Works64)

Shop Floor(devices) Enhancing connectivity between
products
 Improving networks and theiQ Platform Improving compatibility
among products, MELIPC,MELCO edge-computing applications
 Equipping products with AI
17© Mitsubishi Electric Corporation

2. Growth Strategy: e-F@ctory
Mitsubishi Electric Service Solution That Takes Advantage of IoT
Production/Maintenance Support Service for Electrical-discharge/Laser
Sheet Metal Processing Machines Offered through IoT Utilization

Dashboard Function
Visualizationof operational/
maintenancestatusRemote Diagnostics Function
Remotediagnosis ofprocessing
machine status
by support staff

Customer’s
officeMELCO
Call Center

Shop
floor

Customer

Service launched in Japan (April 2016)
Total applicable machines: 600 units

Service to be introduced overseas
beginning FY18
18
© Mitsubishi Electric Corporation

2. Growth Strategy: AI Utilization
Create “Smart Factories” Utilizing Mitsubishi Electric
AI Technologies and Shop Floor Knowledge
Mitsubishi Electric AI Technologies

Shop Floor Knowledge
Manufacturing
Production
technologies

Deep Learning

Reinforced
Learning

More compact
algorithms

More efficientlearning throughutilization of device
domain knowledge

Big Data Analysis
More efficientchronological data
analysis throughutilization of device
domain knowledge

Service life
prediction

Production
preparation

Drive
Control
Process-ing

Setup/
Production

Machinerymechanisms…

Operation/
MaintenanceApplied to 7 models in FY18

◆Advantages of AI embedded Systems
Quick start-up

Reduces start-up time: Set-up time for facilities and production lines

Lean
無駄がない
operations

Improves yields/utilization rates by analyzing test results and operational status

No disruption

Advises optimal maintenance timing by predicting possible equipment breakdown© Mitsubishi Electric Corporation

19

2. Growth Strategy: Product Strategy
Enhance Product Lineups and Connectivity between Products
Product Development Policies

Controllers

 Enhance lineups of programmable controllers, MELIPC and HMIs
 Improve engineering environment in pursuit of user-friendliness

Drive Control
Devices AC Servos: Develop next series and improve basic performance CNCs: Enhance functions by utilizing cutting-edge technologies andimproving operability
 Inverters: Enhance the range of large-capacity products

Mechatronics
Products

 Electrical-discharge machines: Enhance product appeal in the areaof high-precision processing
 Laser-processing machines: Enhance product appeal in the fiberarea Robots: Develop robots capable of working with humans in pursuitof user-friendliness

Rotating
Devices
Power
Distribution
Controllers

 Three-phase motors: Strengthen ability to meet overseas
regulations for high-efficiency operation
 Circuit breakers/Electromagnetic switchgear: Enhance productlineups for overseas markets
 Transformers: Enhance product appeal through improved efficiency

MELIPClinks
Enhanced iQ
Platform
Connectivity
betweenproducts
Enhanced
networks
Improvedsafetyfunctions
Maisartequipped・・・
20© Mitsubishi Electric Corporation

2. Growth Strategy: Regional Strategy (Japan)
Reinforce Business Networks for the Base-load Market◆ East Japan FA Solution Center (tentatively named) to be opened (July 2018, Akihabara)
Exhibit products/solutions, Users’school, User application testing◆ New division dedicated to solution business established(April 2017, approximately 150 staff members)
1. Solutions Business Division
2. Dedicated sales teams (7 locations throughout Japan)◆ Strengthen partnerships with sales partners/customers
1.

Equipment Distributors Association(celebrating 50th anniversary in FY18)① Equipment distributors: approx. 200 companies② Equipment dealers: approx. 400 companies<Exterior/User school (illustrative purpose only>

2. 「RyoBankai」(celebrating 50th anniversary in FY19)
Switchboard/Control panel manufacturers:
approx. 500 companies
3. FATEC Club
User members: approx. 16,000
4. Mitsubishi Electric FA Product Information Site
Registered users: approx. 300,000<Equipment Distributors Association nationwide meeting>© Mitsubishi Electric Corporation

21

2. Growth Strategy: Regional Strategy (China)
Enhance Resources for Sales, Development, Production and Services in
China as the Priority Overseas Market◆ Establish our position in IoT market using Chinese
government’s guideline “Made in China 2025” as a springboard
1. Participate in government-sponsored seminars as
a lecturer
2. Establish relationships with relevant government sectors<e-F＠ctory seminar>◆ Expand e-F＠ctory usage in government projects
ITEI* Intelligent Production Model Line constructed(November 2017)*ITEI：Instrumentation Technology and Economy Institute◆ Strengthen local network to understand trend towards
automation and IoT
1. Substantial increase in number of staff for sales,
production, design and service
2. Increase number of e-F＠ctory staff at sales companies
3. Reinforce sales bases for focus segments(e.g., government’s investment promotion regions)
4. Increase number of models manufactured in the
consumption areas and expand locally procured materials<ITEI Model Line><China International
Industry Fair>

Approx. 2,600 (up 400 from FY17)
Approx. 50 (2x from FY17)
FY18: 4 locations (Hefei and others)
FY18: Robots
22© Mitsubishi Electric Corporation

2. Growth Strategy: Regional Strategy(South Korea, Taiwan/ASEAN)

ASEAN

South Korea/Taiwan

Korea/Taiwan - Maintain/Expand top-class share by winning projects in
key segments
ASEAN - Strengthen business networks in anticipation of local company
growth and additional investment by Japanese companies◆ Expand e-F＠ctory partnerships
1. South Korea/Taiwan
e-F@ctory Alliance formed (March 2018)

Partner Target No.
South Korea: 70 companies
Taiwan: 70 companies

2. Taiwan① MOU concluded with Taiwan Ministry of Economic Affairs forpromotion of IoT (June 2017)② e-F＠ctory demonstration model exhibited at IoT experimental
exhibition held in Taichung City◆ Key segments
Smartphones, LCDs/OLEDs, Semiconductors, Lithium-ion batteries,
machine tools<e-F＠ctory Alliance formed>◆ Strengthen business networks
Reinforce business networks utilizing comprehensive sales company, andexpand and improve local sales network◆ Key segments
Automobiles/Automotive components (including local Japanese affiliatecompanies), food processing and instrumentation<MOU concluded with Taiwan
Ministry of Economic Affairs>
23© Mitsubishi Electric Corporation

2. Growth Strategy: Regional Strategies(India, Europe and Americas)
India - Strengthen Business Networks in Anticipation of Economic
Growth and Sophistication of Manufacturing
Europe and Americas – Improve Position by Gaining Market Share in Key
Segments/Regions

Europe and Americas

India◆ Strengthen business networks
1. Expand sales network to north and central regions(e.g., Rajasthan)
2. Examination of setting up of new production base (see p.25)◆ Key segments
Automobiles, food processing, pharmaceuticals, machine tools,
and instrumentation◆ Contribute to advancements in manufacturing through<Mitsubishi Electric booth visited byPrime Minster Narendra Modi>“Made in India” movement
Active participation in government-sponsored events(e.g., attract foreign investment)◆ IoT and AI technology R&D
Collect Industrie4.0-related information
１.European FA Development Center: participate in
and develop relevant technologies
Industrie4.0-related working group
２.North American FA Development Centers:
Research technological trends in AI, AR, etc.
Utilize new San Jose Center◆ Enhance development activities to meet local needs in Europe and US
Europe: Foods, automobiles and instrumentation; Americas: Automobiles, air-conditioning and sanitation◆ Key regions
Europe: Southern Europe, central and eastern Europe and Turkey; Americas: US Midwest and Mexico© Mitsubishi Electric Corporation

24

2. Growth Strategy: Production Strategy
Strengthen Production Network and Establish Stable
Supply Network to Achieve Mid-term Business Target◆ Increase production capacity
1. Increase AC
servos production

March 2018
480,000 units/month

2. Increase
Programmable
Controllers production(170% compared to FY16)

3. Increase robots
production

June 2018
190,000 units/month(160% compared to FY16)

June 2018
Production started in China (Changshu)◆ Procurement of parts and materials, and securing the workforce (labor)
1.Strengthen relationships with key suppliers in cooperation with procurement divisions across the company
and diversify suppliers of parts and materials
2. Aggressively promote recruitment and improve employee satisfaction (e.g., upgrade welfare facilities)◆ Reinforce production network to achieve mid-term business targets
Japan

Overseas

Nagoya Works: Strengthen production network
1. Consider purchasing site for factory in Chubu region (FY18)
2. Construction of new factory building/office block (FY19-)◆ Establish Stable Supply Network
Improve and extend inventories of key
parts and products

Strengthen production network in consumption areas
1. Expand production bases in Changshu and Dalianareas in China
2. Consider establishing new production base (India)

Reinforce BCP measures/Learn tomanage sharp fluctuations in demand25© Mitsubishi Electric Corporation

2. Growth Strategy: Injection of Resources and Increase
Workforce
Continuous Injection of Resources to Enhance Business Competitiveness◆ Capital Investment◆R&D(JPY Billion)(JPY Billion)

40

40

32.5

35
30

30

25

25

20

20

15

15

10

10

5

5

0
FY12

FY13

FY14

FY15

FY16

◆Change in No. of Employees
16,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

FY17
Forecast

14,300

33.0

35

0
FY12

FY13

FY14

FY15

FY16

FY17
Forecast

FY14

FY15

FY16

FY17
Forecast

Capitalinvestment

Increase production capacity and accelerate
updating of factories

R&D

e-F@ctory, edge computing-related products,
Networks, next series

Employees
FY12

FY13

Sales, production, design, quality assurance, andservice staff
26© Mitsubishi Electric Corporation

2. Growth Strategy: M&As
① Complement Product Groups, Technological Fields, Etc.
② Ensure Sales/Service Networks, and ③ Obtain New Clientele◆Major M&As carried out in past five years (including joint capital investments)
Strengthening of Technological Prowess
Country

Case

Aim

Expansion of Sales Networks
Country

Case

Aim
Expand sales channels
and enhance productdevelopment function

Japan

Making AnyWire
Corporation a
subsidiary

Strengthen sensor
network

India

Acquisition of
MESSUNGUS

Acquisition of a
stake in ICONICS

Expand SCADA
product lineup

TurkeyAcquisition of GTS

Expand Turkish business

Germany

Acquisition of
KH-Automation

Enhance solution
proposal capability

ThailandAcquisition of
F.A.TECH

Enhance sales function

Japan

Acquisition of assetsof Dura Systems
Corporation

Enhance productdevelopment
capability in edge
computingJapan/
Asia

Making SETSUYOASTEC Corporationa subsidiary

Enhance sales networkand expand business in
ASEAN/Taiwanesemarkets

Japan

Takeover of part ofbusiness of NIPPONDENNO Co., Ltd.

Enhance productdevelopment
capability in edge
computingRussiaTakeover of ETS

Enhance businessnetwork

Strengthened technical prowess: 11 cases in total

Expanded sales channels: 8 cases in total
27© Mitsubishi Electric Corporation

3. Mid-term Business Target

FY25 Business Target
Consolidated Sales:¥900 billion＋（JPY Billion）

80%

Overseas
900

900

Japan

75%

740

Overseas
ratio

70%

65%

600

60%

56%
54%

55%

52%
300

49%
50%

45%

0

40%

FY16

FY17
Forecast

FY20

FY25
© Mitsubishi Electric Corporation

28

Cautionary Statements
The expectation of operating results herein and any associated statement to be made orally with respect to the Company’s current
plans, estimates, strategies and beliefs, and any other statements that are not historical facts are forward-looking statements.
Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimated,” “targeted,” along with any variations of thesewords and similar expressions are intended to identify forward-looking statements that include but are not limited to projections ofrevenues, earnings, performance and production. While the statements herein are based on certain assumptions and premises that
the Company trusts and considers to be reasonable under the circumstances to the date of announcement, you are requested tokindly take note that actual operating results are subject to change due to any of the factors as contemplated hereunder and/or any
additional factor unforeseeable as of the date of this announcement.
Such factors materially affecting the expectations expressed herein shall include but are not limited to the following. As such,
additional factors may arise at any given time.
1. Any change in worldwide economic and social conditions, as well as laws, regulations, taxation and other legislation
2. Changes in foreign currency exchange rates, especially yen/dollar rates
3. Changes in stock markets, especially in Japan
4. Changes in balance of supply and demand of products that may affect prices and volume, as well as material procurement
conditions
5. Changes in the ability to fund raising, especially in Japan
6. Uncertainties relating to patents, licenses and other intellectual property, including disputes involving patent infringement
7. New environmental regulations or the arising of environmental issues
8. Defects in products or services
9. Litigation and legal proceedings brought and contemplated against the Company or its subsidiaries and affiliates that may
adversely affect operations or finances
10. Technological change, the development of products using new technology, manufacturing and time-to-market
11. Business restructuring
12. Incidents related to information security
13. Occurrence of large-scale disasters including earthquakes, typhoons, tsunami, fires and others
14. Social or political upheaval caused by terrorism, war, pandemic by new strains of influenza and other diseases, or other factors
29© Mitsubishi Electric Corporation