Hitachi to Implement Emergency Management Measures and New Consolidated Management System

Business Wire, August 31, 2001

sale of the monitor CRT business. The withdrawal will eliminate

losses generated by this CRT operation, and reduce the number of

employees by some 2,600. Hitachi is also considering a

reorganization of its television CRT business.

- (2) Flat Panel Displays (FPDS)

Looking ahead, Hitachi intends to concentrate resources on FPDs,

with particular emphasis on TFT LCDs, including low-temperature

poly-silicon TFT LCDs. Hitachi has been expanding its FPD

business, targeting mainly notebook PCs. However, the Company also

intends to aggressively expand sales of FPDs ranging from small-

and medium-sized LCDs for mobile phones and other such

applications, to large-screen models for monitors, by introducing

new, competitive products that incorporate the Company's

leading-edge technology. As part of ongoing moves to reduce unit

costs, in July TFT LCD production got underway at a new

high-efficiency production line that uses the world's largest

glass substrates, measuring 730 mm by 920 mm, and in August

assembly of LCD modules was started in China. These measures are

expected to improve efficiency and profitability.

II. Strengthening of Operations Through Re-Appraisal of Business

Portfolio

In order to achieve effective consolidated management, the business portfolio will be re-appraised in terms of the seven new segments to clarify business strategies for a consolidated Hitachi.

Based on the re-appraisal, within fiscal 2002, with respect to businesses that should be strengthened as core businesses, management resources will be concentrated and M&A and other such measures will be used aggressively to expand those business operations. Along with this, businesses from which Hitachi should withdraw will also be clarified.

Moreover, to build an optimum operations system able to speedily respond to market changes, Hitachi will move forcefully forward to reorganize business operations between the parent company and subsidiaries, by spinning off companies, merging subsidiaries and other such measures.

(1) Strengthening of Information and Telecommunication Systems

Business

--1. Storage Business

In the storage business, the disk-array based SAN/NAS storage solutions business will be strengthened to achieve sales targets of 310 billion yen in fiscal 2001 and 400 billion yen in fiscal 2002.

Hitachi will develop solutions that offer a high level of customer satisfaction, by combining leading application software of partners with Hitachi's powerful disk arrays and basic software, and, in conjunction with Hitachi Data Systems Corporation and its worldwide network, will focus on expanding the business from a global perspective, including in Japan, where Hitachi has the leading share of the market.

With particular respect to disk array systems, which are a core product, Hitachi will move forward with the development and production of hardware that will continue to be highly competitive. On the sales side, in addition to using Hitachi's own channels and OEM supply arrangements with partners such as Hewlett-Packard Company, sales will be strengthened using a diverse range of channels, including Sun Microsystems, Inc., with which Hitachi has signed a new sales agreement.