Hitachi to Implement Emergency Management Measures and New Consolidated Management System

Business Wire, August 31, 2001

(3) Strengthening of Digital Media / Consumer Products Operations

--1. Home Network Appliance Systems

With the consumer products business entering a time of major transition, Hitachi will enhance profitability by shifting to new markets, such as network appliances and digital products, in which system and service capabilities are a requirement. As part of this, Hitachi will focus on strengthening its home network appliance systems business by making maximum use of its sophisticated technologies in the areas of information systems and networks and electronic devices and solutions, and by moving forward with the networking and digital implementation of home appliances.

Hitachi is also working with Matsushita Electric Industrial Co., Ltd. to establish de facto standards for home network appliance systems.

--2. Reorganization of Global Business

(Asia)

Hitachi has been transferring production overseas as part of its moves to strengthen its competitiveness in the areas of consumer products and digital media. Looking ahead, the Company will be reorganizing its production system in the Asia region to reduce manufacturing costs. The focus of this reorganization will be China, a market for which major growth is projected.

In room air-conditioners, in August this year Hitachi established a subsidiary in Anhui Province, China, to manufacture low-priced room air-conditioners for the China and Japan markets. The new company will enable Hitachi to increase its share of the China market, and will also make it possible to strengthen its cost-competitiveness in the Japan market. The company was established as a future global manufacturing base.

In TVs, Hitachi has started producing projection TVs in China. In other moves, TV production in Singapore has been transferred to China and Indonesia. Singapore has been repositioned as the base for developing TVs for markets in Asia. Hitachi Consumer Products (S) Pte. Ltd. will be wound up at the end of September.

(Europe)

Hitachi Home Electronics (Europe) Ltd. has initiated consultation with representatives of its employees, with a view to halt TV production and to close its plant at the end of this year. The company is to be restructured for marketing and sales of digital products, demand for which is expected to grow at a rapid pace as broadband access becomes more widespread.

III. New Consolidated Management System

(1) Segment-Based Consolidated Management

In order to maximize corporate value, from this October, consolidated management will be applied on a reorganized seven new segment basis. Specifically, there will be a strengthening of Group head-office function, which will formulate consolidated management strategies, provide advice on reorganization, and so forth. To achieve consolidated management that maximizes return on assets, management of business groups under the parent company and of subsidiaries will be analyzed and evaluated on a segment by segment basis, and the results will be used as a basis for boldly restructuring companies and business segments.