Infrastructure Business AreaMay 2023
Mitsubishi Electric Corporation

Index1. Executive Summary

P3

2. Business Structure

P5

3. Market Environment and Directions of Growth Strategy

P73-1. Concentrated Investment into Decarbonization Components

P93-2. Energy & Facility Solutions BusinessP103-3. Focused Allocation of Resources to Defense & Space Business

P11

４． The Big Picture for Strengthening Business Foundation

P124-1. Rebuild Business and Production Foundation that Generates Cash

P144-2. Merge Engineering Capabilities andP15

Digital Technology to Support Solution Business
4-3.Enhance Capability to Address Business Risk

P16

5. Portfolio Strategy

P17

6. The Ideal Form

P19

1

Executive Summary

Executive Summar y
Solve social

Balance carbon neutrality and stable power supply toContribute to stable operation and development of safe & secure

challenges

contribute to a sustainable societysocial infrastructures with digital technologies

Management

Revenue of ¥1,200 billion or more, operating profit margin of 7.0% or more for FY 2026

target（Results for FY 2023： Revenue ¥973.1 billion, operating profit margin 2.8%）

GrowthConcentrated Investment into

Integrated Solutions: Develop

Focused Allocation of Resources tostrategiesDecarbonization Components

Energy & Facility Solutions business

Defense & Space Business

Worldwide customer base& supply record
Strengths
Strong engineering capabilities

World’s top-level components and cutting-edge

accumulated in large-scale projects

technologies in Defense & Space BusinessS Y S T E M

Enhancebusinessfoundation&P L A N T

U N I Q U E

E N G I N E E R I N G

Rebuild business andproduction foundation thatgenerates cash

Merge engineering
capabilities and digitaltechnology to support
solution business

T E C H N O L O G Y

Enhance capability toaddress business risk

2Business Structure

Business Structure
Business/product groups that support wide-ranging social infrastructures in and out of Japan
Public system

Delivery record• 5,300 water treatment
facilities

Transportation system• Electrical equipment
for 93,600 railcars

Power system• Power generator: 2,800units• HV Switchgear: 24,000units• Power transformer: 9,000units

Space system

Defense system• Radar, electronic warfare
system, information andcommunication commandsystem, etc.
• Ranked 3 rd in the contract
order amount from ATLA*（FY 2022）• Track record ofmanufacturing morethan 70 satellites• Equipment mounted on
more than 650 satellites
across the globe

ATLA*: Acquisition, Technology & Logistics Agency

3Market Environment andDirections of Growth Strategy

Market Environment and Directions of Growth Strategy
Balancing carbon neutrality with economy, and national/energy security are growth opportunities.
(Focus on improving profitability of core business)
Business field(water environment. railcars,electricity generation andtransmission)

Decarbonization
Business

Solution Business forenergy /infrastructures

Defense/SpaceDefenseSpace• Demand for National Resilience andupgrading aged infrastructures• Energy security• Demand for grid stabilization and distributed energy
resource control from expanding renewable energy• Greenhouse gas control (SF6-free),DC transmission demand• Solve the issue of labor shortage to keep
infrastructure operation• Achieve carbon neutrality with economic rationality

Growth strategies

Focus on cash-generating
businesses & components(Restructure less profitable/non-core businesses)

Concentrated Investment into
Decarbonization Components
Integrated Solutions: DevelopEnergy & Facility Solutions
business

GlobalPublic-use/Transportation/Electricity

Core Business

Market environment (market trend)• Defense budget increase based on
government policy "Defense Build-up Plan"• Growing security demand in the space domain• Japan participates in international space
exploration (Lunar Exploration Program)

Focused Allocation of Resources toDefense & Space Business(Establish development/production structures)Growth Strategy 1: Concentrated Investment into Decarbonization Components
Development of components corresponding to renewable energy expansion and strategic alliance
1. Power Transmission Business•

Promote joint development with Siemens in the field ofSF6-free switchgears (VCB)•Acquisition of Scibreak of Sweden for DC Circuit
Breakers (DCCB)

2. Power Generation Business•72.5kV VCB
Acquisition of Scibreak

Promote SMR Business through cooperation with
Holtec in U.S.

3. Digital Energy Business•Acquisition of Smarter Grid Solutions in U.K. for
distributed energy resource control

Growth Strategy 2: Energy & Facility Solutions Business
Circular Digital-Engineering business initiatives

1. Business Development Based on Strengths of IBA*MELCO’s strong customer base & supply record
Synergy

Strong engineering

capabilities of IBA

Superior components &cutting-edge technologies
in IBA

2. Energy & Facility Solutions• Energy solutions that achieve carbon neutrality witheconomic rationality• Facility solutions that achieve safety and security• Digital twin that creates new customer value
IBA*: Infrastructure BA

Growth Strategy 3: Focused Allocation of Resources to Defense & Space Business
Improvement of development/production structures by bold resource shifting and strategic alliance

1. Address and contribute to the government policy• Establish development/production structures contributing togovernment’s "Defense Build-up Plan“ and “Basic Plan forSpace Policy"(1) Increase approx. 1,000 persons (including resource shifting)(2) Plan capital investment in Kamakura Works andElectronics and Communication Systems Center​(approx. ¥70 billion)

2. Strategic alliance• Joint development of mission avionics system for nextgeneration fighter electronics(cooperation among 4 companies from Japan, U.K. and Italy)• Cooperation with Astroscale in Japan for joint
development/manufacturing of satellite bus for security use

4The Big Picture for Strengthening
Business Foundation

The Big Picture for Strengthening Business Foundation

Rebuild business and1. Rebuild business/production foundation to respond to changes in the market

production foundation

2. Focus resources on cash-generating businesses

that generates cashMerge engineering
capabilities and digitaltechnology to support
solution business（Restructure less profitable/non-core businesses)

1. Establish a company-wide engineering organization

2. Structure manufacturing-driven analysis technologies and digital twinbased on field knowledge

Enhance capability to

1. Address risk of declining profitability of large projects

address business risk

2. Reinforce responsiveness to changes in the market environment

Strengthen Business Foundation 1: Rebuild business and production foundation that generates cash

1. Rebuild business/production foundation to
respond to changes in the market• Establish power generator JV company with Mitsubishi
Heavy Industries, Ltd.
• Optimize production systems for transportation businessand transmission business(revise yard plan, streamline staff functions, etc.)• Reduce cross-shareholdings

2. Focus resources on cash-generating businesses(Restructure less profitable/non-core businesses)• Promote ambidextrous management in the water
environment business (service business expansion)• Expand domestic digital energy business(smart meter system, etc.)• Accelerate restructuring of businesses with issues

Strengthen Business Foundation 2: Merge engineering capabilities and digital technology to support Solution Business

1. Establish a company-wide engineering organization• Establish E&F Solution Dept. to provide Energy andFacility solutions to all our customers• Cooperation with DX Innovation Center

2. Structure manufacturing-driven analysis
technologies and digital twin based on fieldknowledge• Reinforce analysis technology based on manufacturing(abnormality signals detection, deterioration diagnosis,condition estimation, etc.)• Algorithmize field knowledge obtained fromconstruction, maintenance, and operation• Establish high-precision digital twin
(utilize modeling and simulation technologies)

Strengthen Business Foundation 3: Enhance Capability to Address Business Risk

1. Address risk of declining profitability of large projects• Improve current project profitability(measures have already been deployed)• Frontloading (delivery, quality and cost) upon signing contract

2. Reinforce responsiveness to changes in the marketenvironment• Responding to innovation risk (disruptors)(utilize open innovation, CVC*, etc.)• Strengthen core component solution business(asset-light orientation)
CVC*: Corporate Venture Capital5Portfolio Strategy

Por tfolio Strategy

6The Ideal FormThe Ideal Form

Socialchallenges

Businessstrategies

Electricity

Public Utility

Defense & Space（Carbon neutrality & energy security）（Safe, secure, and resilient society）（National Security）

EnergyCarbon neutrality

Safety/Security

Facility

Allocate resources intensively to growing businesses

Develop decarbonization components/products
Enhance Defense & Space business

Create Integrated Solutions that generatecross-business synergies

Promote E＆F Solution Business

E＆F Solution Business
Energy Carbon neutrality, energy conservation and electrification

Facility Abnormal signs detection, operation and maintenance of entire facility◆ New value offering to customer

Global customer/installation base
BA’sStrength◆ Consulting service

O＆M* service ◆Synergy

Engineering capability
Superior components
Cutting-edge technologies◆ Digital twin (DX) ◆Data provision & analysis ◆O＆M*：Operation＆Maintenance