Mitsubishi Electric to transfer distribution transformer business to hitachi industrial equipment systems

Hitachi Industrial Equipment Systems (Head Office: Chiyoda-ku,
Tokyo; President and CEO: Yasuhiro Takeuchi; hereinafter “Hitachi Industrial Equipment
Systems”) and Mitsubishi Electric (Head Office: Chiyoda-ku, Tokyo; President &
CEO: Kei Uruma; hereinafter “Mitsubishi Electric”) announced that they have agreed to
transfer the distribution transformer business of Mitsubishi Electric’s Nagoya Works, which
develops and manufactures factory automation (FA) equipment, to Hitachi Industrial Equipment
Systems and integrate their businesses (hereinafter “Business Transfer”). After obtaining
approval from the relevant authorities, assets and other items related to the distribution
transformer business (development, design, manufacturing, sales, and maintenance) at
Mitsubishi Electric’s Nagoya Works will be transferred to Hitachi Industrial Equipment Systems
in stages beginning in October 2024, with completion scheduled for April 1, 2026. The Business
Transfer does not include the transformers manufactured at Mitsubishi Electric’s Transmission &
Distribution Systems Center, Ako Factory.

Through this Business Transfer, Hitachi Industrial Equipment Systems will expand its product
lineup of highly energy-efficient and eco-friendly transformers and accelerate the growth of grid
edge solutions*1 centered on power distribution systems, mainly in the domestic market.
Furthermore, the company aims to contribute to the sustainable evolution of Japan’s power
transmission and distribution network by utilizing Hitachi wider capabilities in IT, OT,
and Products. Mitsubishi Electric will focus on expanding its FA systems business based on its
portfolio strategy of concentrating investments in priority growth businesses.

Distribution transformers serve the function of lowering the voltage of high-voltage electricity
generated by power plants, so that the power can be used to meet the needs of the users. They
are installed at relay points of the power grid, such as substations, public facilities, business
facilities, and commercial facilities.

With the global diversification of power generation sources due to the spread of renewable
energy and the increasing demand for electric power due to the expansion of data centers and
semiconductor manufacturing with the spread of generative AI and Digital Transformation (DX),
the demand for power distribution transformers is expected to grow globally over the long term.

In Japan, the Top Runner Program under the Energy Conservation Law sets targets for
improving energy consumption efficiency, and distribution transformers used in factories and
buildings are expected to achieve improvement by 11.4% in the fiscal year ending March 31,
2027 compared to the actual value for the same period ending 2020. The improvement of
environmental performance is becoming indispensable, and in 2026, the market is expected to
expand by more than 10% from the 2022 level.

Hitachi is expanding its transformer business globally as one of the key products for
achieving carbon neutrality. As a manufacturer of distribution transformers in Japan,
Hitachi Industrial Equipment Systems provides products that achieve superior energy efficiency
by using “amorphous metal” with low power loss in the iron core, and products that achieve high
environmental performance and safety by using vegetable oil (ester oil).

Furthermore, as part of the Hitachi, the global leader in transformers, Hitachi Energy, is
offering liquid-filled and dry-type transformers, as well as services for complete life-cycle support
to utilities, industrial and transport sectors by ensuring high reliability and optimized performance
while lowering life-cycle costs and environmental impact.

Mitsubishi Electric’s distribution transformer business based at its Nagoya Works has evolved
and inherited technologies cultivated through years of experience. More recently it has been
promoting a rich lineup of Top Runner oil-filled transformers such as the R series, in pursuit of
energy-saving performance. Looking forward, to strengthen the business further and ensure a
stable supply of products, the company duly decided on the Business Transfer to Hitachi
Industrial Equipment Systems.

Hitachi Industrial Equipment Systems and Mitsubishi Electric shared a common vision that
integrating the technologies and assets of the two companies to improve energy efficiency and
increase business value through the development and provision of more environmentallyfriendly products is the best way to achieve the advanced power transmission and distribution
network required in Japan. Furthermore, the integration will contribute to the Japanese
government’s aim to achieve “carbon neutrality by 2050.” Accordingly, the top management of
the two companies came to the agreement at this time.

Yasuhiro Takeuchi, President and CEO, Hitachi Industrial Equipment Systems
“The desire to contribute to Japan’s carbon neutrality in 2050 is behind this integration. Hitachi
Industrial Equipment Systems globally provides industrial equipment that supports social
infrastructure and manufacturing, and transformers are indispensable products for building a
greener and more intelligent domestic power transmission and distribution network in Japan.
We are confident that through a steady integration process, we can contribute to realizing the
sustenance of society within ‘Planetary Boundary’ which is the target of the Hitachi.”

Toshie Takeuchi, Executive Officer (President, Factory Automation Systems), Mitsubishi
“Starting in 1952, the Nagoya Works distribution transformer business has over 70 years of
production experience. We are pleased that Hitachi Industrial Equipment Systems will inherit
our technology that has been cultivated over many years, as it can contribute to the
development of the distribution transformer industry. We will gradually proceed with the
business integration while continuing our supply to the market. In the future, we will focus on
expanding the factory automation systems business and our Circular Digital-Engineering