Hitachi to Implement Emergency Management Measures and New Consolidated Management System

Business Wire, August 31, 2001

With respect to the parts business, specifically hard disk drives, total supply-chain management will be used to reduce costs and new customers will be developed in order to grow the business.

To ensure the effectiveness of such storage business strategies, with respect to the SAN/NAS storage solutions business, which has good growth potential, within one year Hitachi is considering investing in venture enterprises and investing around 100 billion to 150 billion yen for M&A. In addition to this, Hitachi is considering aggressive measures such as multi-hundred-billion-yen M&A that will enable Hitachi to utilize its manufacturing strengths and achieve merits of scale on the production side.

--2. Information Solutions Business

In October 2000, Experio Solutions Corporation, a Hitachi subsidiary, acquired the e-Business Consulting Group of Grant Thornton LLP, an accounting and management-consulting firm. And in July this year, Experio Solutions acquired WaveBend Solutions, LLC. Hitachi expects these and other overseas information solutions businesses to generate sales of $1 billion in five years. Hitachi may implement further acquisitions and/or tie-ups before the end of the year.

--3. Telecommunications Business

To ensure its ability to respond to the rapidly-growing optical components market, in September 2000, Hitachi established a U.S. subsidiary, OpNext, Inc., to conduct Hitachi's fiber optic components business in the United States. This was done with the equity participation of Clarity Group, a U.S.-based equity partnership. Another task is to ensure Hitachi's competitiveness on world markets in other product areas. To strengthen its telecommunications business, by the end of this fiscal year Hitachi is considering measures such as new alliances.

(2) Strengthening of Power & Industrial Systems Business

--1. Power Systems

Hitachi is strengthening its services business, starting with operation and maintenance services, and is participating in the development of a next-generation nuclear reactor. To achieve higher efficiency and promote overseas operations, Hitachi is also studying the possibility of tie-ups with other companies in Japan and overseas. Management resources are being concentrated to develop new businesses that can rank alongside the power systems business as a pillar of operations. Examples of such new businesses include advanced medical-treatment support services utilizing radiation technology developed during the course of the Company's work with nuclear power.

--2. Building Systems

The total building services offered by the acquisition of SEISHIN SERVICE CO., LTD. will be strengthened, and M&A and tie-ups are being considered to expand the overseas business.

--3. Railway Systems

The tie-up with Kawasaki Heavy Industries, Ltd. will be used to expand overseas operations, and Hitachi will concentrate management resources to strengthen product competitiveness.

--4. New Businesses

New businesses for which future growth is projected include environmental energy solutions, which is a fusion between information technology and social infrastructure technology developed by Hitachi's power and industrial systems business, recycling plant services, and Private Finance Initiatives. To speed up the development and expansion of these businesses in Japan and overseas, Hitachi will use the comprehensive capabilities of the Hitachi Group together with outside alliances.