Exiting commodity DRAM for system LSI and power devices — the “age of selection” (1998)

Choosing to step off the cost race

At the heart of this decision was a break from the idea that sheer scale is itself a value. A place among the world’s top ten in DRAM was a banner not easily given up. Even so, Mitsubishi Electric judged that clinging to commodity parts whose contest is decided by cost alone would only drain its stamina in an endless price war with Korean and Taiwanese makers, and it chose instead the fields where it could build an edge rather than scale. Stepping down from the all-things-to-everyone “department-store” model, this was a painful retreat — and yet it can be read as the forerunner of the selection-and-concentration that would come in later years.

What is striking is how the businesses it cast off and those it kept later diverged. Renesas Technology was eventually merged with NEC Electronics to become Renesas Electronics and passed out of Mitsubishi Electric’s hands. The power semiconductors it held onto, by contrast, caught the tailwinds of electrification and decarbonization and have grown into a core business now drawing investment of about $1.7B (¥260bn). Which businesses to keep and which to let go — the phrase “age of selection,” coined in 1998, seems to cast its shadow over the company’s investment choices a quarter of a century on.