FOR IMMEDIATE RELEASE

Hitachi announces its Corporate Strategy

TOKYO, Japan, November 16, 2006 --- Hitachi, Ltd. (NYSE:HIT/TSE:6501) today
announced that it has formulated a corporate strategy to promote collaborative creationand profits. With a rigorous focus on a market-oriented approach and profit creation as
the basic policy, the aim is to establish a structure that stably generates high profits by
the use of key initiatives such as the implementation of fully FIV* (Future Inspiration
Value) based management, the creation of a business portfolio with higher profitability,
moving forward with group management, and innovation in collaboration with partners
and group companies.
*FIV: FIV is Hitachi's economic value-added evaluation index in which the cost ofcapital is deducted from after-tax operating profit. After-tax operating profit
must exceed the cost of capital to achieve positive FIV.
In line with this management policy, in order to improve earnings, businesses within the
Hitachi Group are to be rigorously managed based on FIV criteria, and subject torestructuring and reappraisal accordingly, with no area of operations being regarded as
exempt from such scrutiny. To build a business portfolio for stable, high profits, Hitachi
will strengthen its social innovation business, which consists of its social infrastructure,industrial infrastructure, life infrastructure and information infrastructure businesses, andwill endeavor to maximize the synergies with the infrastructure technology/products
business that underpins social innovation business operations. Corporate governance isbeing systematically strengthened, efficient group company management implemented
and equity relationships reviewed, in order to raise earnings throughout the corporategroup. With the emphasis on collaborations with partners and group companies, in the
Hitachi Group diverse partnerships are being used to strengthen collaborative innovation
business undertakings in various areas of operations. The focus is also on producing
innovations in which the priority is on profitability, such as by expanding businesses thatprovide innovative products and services that are market leaders, and strengthening
R&D capabilities that are directly linked to the generation of profits.

- more --2The aim is to use these initiatives to achieve an operating margin of 5% by fiscal 2009.
Hitachi is also focusing on strengthening its financial structure and maintaining a D/E
ratio (including minority interests) of 0.8 or below.
Details of the key initiatives are set out below.
1. Key management initiatives
1-1. High profitability through rigorously FIV-based management(1) Rigorously FIV-based business management･ Move to substantially independent company system
Each business group will be given increased autonomy and will manage its own
cash flows, further clarifying the profit responsibilities of each business group.
･ Stronger business monitoring and risk management
Particularly in the case of businesses that have been cautioned due to a negative FIV,
measures will include the appointment of an executive officer responsible formonitoring and risk management, and consideration of structural reforms from an
objective standpoint.
(2)

Restructuring and reappraisal, with no area sacrosanct
To strengthen competitiveness, any and all businesses of the Hitachi Group may besubject to restructuring and reappraisal, based on the rigorous application of the
FIV rule, in order to strengthen business operations and improve profitability.

1-2. Establishment of stable, high profit structure
A shift to business areas in which Hitachi can utilize its strengths will be accelerated,by timely management decisions based on the rigorous application of the FIV rule.
(1) Social innovation business
The Hitachi Group has extensive experience and expertise in the area of social
infrastructure systems, and a fund of leading-edge technology and knowledge
relating to information systems services. These strengths are to be utilized tostrengthen the social innovation business of the Hitachi Group. Specifically, the aim,with respect to the social innovation business, is to establish a stable, high profit
structure that can respond to the anticipated growth in overseas social infrastructure
markets, by providing strong products and systems, expanding related maintenanceservice operations, and giving priority to allocating resources to areas in which
Hitachi is strong, such as storage systems.
(2) Infrastructure technology/products businessWith respect to the infrastructure technology/products business, which possesses
such distinctive technologies as high functional materials, Hitachi Group strengths
will be utilized by maximizing synergies with the social innovation business.

- more --31-3. Evolution to group management for high profitability(1) Group governance system emphasizing collaborative creation
Hitachi Group governance is being enhanced by strengthening governance of theseven businesses of the parent company and some 40 principal companies.
Moreover, consolidated management will be enforced with respect to thesubsidiaries of the seven business groups and those of some 40 principal
subsidiaries.
(2) Efficient management of consolidated subsidiaries
The number of consolidated subsidiaries, which stood at 932 as of the end of March
2006, was reduced to 885 by the end of September. The number of subsidiaries willcontinue to be decreased to around 700, increasing the efficiency of the
management of consolidated subsidiaries.
(3) Flexible reappraisal of equity relationships to improve profitability
To improve profitability and bolster competitiveness, equity relationships will be
reviewed and, in order to strengthen the profitability of the overall group, if
necessary, consideration may be given to new-listing or de-listing, and changes ofinvestment ratio of group companies.
1-4. Innovation by collaborative creation(1) Diverse partnerships
To further strengthen the businesses of the Hitachi Group, emphasis is placed oncollaborative creation with partners. These diverse partnerships lead to innovations
in various business areas. An example of such collaboration is the one with General
Electric Company (GE) in the area of nuclear power. Group synergies are thus
being utilized in other sectors. In automotive equipment systems, for example, anarea to which the Hitachi Group is committed, in car information systems, Hitachi isstrengthening its partnership with Clarion Co., Ltd. (Clarion); and, with a view tomerging operations, Hitachi Metals made a tender offer for the remaining shares of
NEOMAX, a subsidiary that manufactures magnets for hybrid car applications.
(2) Profitability-focused innovations
Hitachi is focusing on innovations in which the emphasis is on profitability. In fiscal
2005, sales of innovative products that are first or second in terms of market shareaccounted for 30% of total sales. The plan is to increase this to 40% by fiscal 2009.
Also, in the case of research and development, Hitachi will increase the number of
researchers and 15% of corporate researchers are being reassigned to businessdivisions to bring R&D closer to the business side of operations, and an R&D
system is being put in place that will be directly linked to the generation of profits,
enabling the quicker release of strong products by reducing development times by
30%. Another aim is to double the value of patents and other intellectual property
held by the Company.

- more --42. Establishment of high profit structure, and growth strategies
2-1. High profit structure(1) Power Systems(Targets: an operating income in fiscal 2007 and a positive FIV in fiscal 2008)
The Supervisory Office for Power Systems, established this September, will be at thecenter of efforts to upgrade Hitachi's Monozukuri (manufacturing) capabilities, which
includes improving technological capabilities and reliability. Capital investment inadvanced verification systems is also being increased, to improve system reliability. In
the overseas thermal power plant business, Hitachi Power Systems America and
Hitachi Power Systems Europe are being used to manage projects rooted in eachregion, strengthening the Company's project capabilities, and risk management is being
promoted, in collaboration with group companies and partners.
(2) Flat-panel TVs(Targets: an operating income in fiscal 2007 and a positive FIV in fiscal 2008)
Hitachi intends to increase its share of the growing market for large-screen plasmaTVs, and to provide a more comprehensive product lineup that includes LCD TVs.
The Company is also strengthening its global operation system by setting up
production operations in North America, Europe and China as well as Japan, building
a worldwide total supply chain management system. Partnership collaborations arealso being increased. These include partnering with Matsushita Electric Industrial Co.,
Ltd. in a joint campaign for plasma TVs in Europe, and with IPS Alpha Technology inthe area of LCD TVs.
(3) Hard Disk Drives(Targets: an operating income in fiscal 2007 and a positive FIV in fiscal 2008)
Management is being strengthened by the use of a new management system and thedeployment of outside personnel. In terms of product strategies, the application of
perpendicular magnetic recording technology is being expanded to more products andnew products will account for 75% of total production shipments in 2007 from 50% in
2005. Mass-production efficiencies are being generated by ramping up production
capacity in China and Thailand and increased use of new head materials is raisingyields, resulting in higher cost competitiveness. To upgrade developmental capabilities,
design and development divisions were integrated, designs are being standardized and“TOKKEN,” special R&D projects, promoted. In addition, an internal emphasis on theJapanese Monozukuri ethic has strengthened Hitachi's manufacturing capabilities
overseas in this business, and product quality is receiving higher grades from major
customers, raising the Company's market share in 2006. Also, by expanding its
strategic partnerships, Hitachi is aiming to achieve a market share of 20% in 2007.

- more --52-2. Growth strategies for infrastructure businesses(1) Social infrastructure business(Target: an operating margin of 3% in fiscal 2009)･Power Systems
Creation of a global alliance with GE will generate growth of overseas orders of new
nuclear power stations in the global market such as the United States. Growth isexpected by the Company’s distinctive leading-edge maintenance and service
technology and high-reliability monitoring control systems. Development of
next-generation nuclear technology is also moving forward. For the thermal power
plant business in the United States and Europe, local corporations will play a central
role to strengthen the business infrastructure, and to improve earnings by using
differentiated technology provided by Hitachi’s high-efficiency power generation
systems, and environmental protection equipment.
･Railway Systems
Hitachi will build on U.K. orders for its lightweight aluminum cars, which lead themarket in Japan, to expand in mainland Europe. Other moves include railway vehicle
maintenance in the U.K., and an overseas push for the operations control system thatis the domestic market leader.
(2) Industrial infrastructure business(Target: an operating margin of 5% in fiscal 2009)･Automotive Equipment Systems
Hitachi is focusing on the development of hybrid car systems and outside recognition
technology for improving safety, and is also working with Clarion to bolster its car
information system business.
･Industrial Systems / Manufacturing Equipment for Semiconductor, LCD andothersHitachi is upgrading its ability to respond to the needs of overseas customers byachieving an early launch of equipment for next-generation semiconductor and LCD
manufacturing applications utilizing electronics and nano technologies formeasurement and analysis.
･Industrial Systems / Construction Machinery Systems
New plant construction will be used to strengthen global development and expand
services. There will also be a focus on upgrading the development of battery powered
excavators, energy-saving, environmental-burden reduction and other suchtechnologies.

- more --6(3) Life infrastructure business(Target: an operating margin of 5% in fiscal 2009)･Urban Systems
Hitachi is looking to grow its unit share of new elevator/escalator installations in Asia,and is expanding its solutions business based on elevator/escalator maintenance service
networks. (Security, energy, redevelopment projects, building management, etc.)･Home Information Communication Technology (ICT) Systems
Hitachi is planning to provide services that fuse broadcasting and communications,and systems and services relating to the next-generation networks that will be used forthe high-speed, reliable distribution of video and voice data.
(4) Information infrastructure business(Target: an operating margin of 7% in fiscal 2009)･IT Platforms
In storage, Hitachi is using its market superiority in enterprise systems, central towhich is virtualization technology, and the expansion of sales channels for mid-range
systems, to grow sales. In servers, the Company has a number of competitive offerings,
anchored by its “BladeSymphony” series.
･System Solutions
Hitachi will use its established consulting expertise combined with its system
integration capabilities to provide one-stop solution services. Hitachi is building its
consulting service into a global system, and by fiscal 2008 plans to have a total of
3,000 consultants in Japan and overseas to meet the needs of its rapidly globalizing
corporate clientele. The Company will also focus on marketing its finger veinauthentication systems and its “Hibiki µ-chip” RFID overseas.
(5) Materials Business(Target: an operating margin of 8% in fiscal 2009)
In high functional materials, Hitachi is marketing competitive, high-value-added
products and parts aimed at the automotive and electronics industries by increasing
top share products and promoting development of new materials. In the automotive
arena, the Company will be focusing on utilizing group synergies with its social
infrastructure business to achieve sustained growth, such as by the merger of
NEOMAX with Hitachi Metals to strengthen its magnetic materials business through atender offer, and the development of new materials for motors.
3. Globalization and capturing synergies
The Hitachi Group is promoting globalization through the comprehensive applicationof a market-oriented approach in the growing infrastructure markets of the world. The
group has diverse resources in the form of experience, knowledge and expertise froma wide range of business fields, which will be utilized to create value from synergies
between businesses and improve earnings based on operational synergies.

- more --7Accelerating globalization
3-1. Basic globalization strategy(1) Develop BRIC markets
Globalization of the social innovation business is being promoted for the growing
demand for social, industrial, life and information infrastructures seen in the BRICs. In
China, the Chief Executive for China has been central to the Hitachi Group's efforts toestablish itself there, where it is growing in business areas relating to social andindustrial infrastructures. To further establish and expand its business base, Hitachi isincreasing its recruitment of local personnel and endeavoring to maximize groupsynergies in its IT and financial operations. Also, in August 2006, a Chief Executive
for Asia was appointed, and the Company is increasing the profile of the HitachiGroup in India as part of a business expansion starting with the areas of construction
machinery, elevators and escalators, consumer products, air conditioners, andsoftware.
(2) Promoting localization through ties with major partners
In its globalization drive, Hitachi is using ties with prominent overseas partners, suchas its global alliance with GE in the area of nuclear power plant, which includes thetaking of orders on a joint basis, and is also establishing local subsidiaries.
(3) Increasing global proposal capabilities and brand power
Hitachi is using its overseas consultancies and the sales efforts of the Hitachi Group tostrengthen its ability to make proposals in global markets.
To increase Hitachi brand awareness in overseas, the Company is making an overseas
investment. The ratio of overseas investment will be increased from 30% in fiscal 2005
to 50% in fiscal 2008.
(4) Training of global personnel
The Hitachi global leadership program is being used to select and train personnel forsome 180 important management positions overseas.
(5) Upgrading functions of Chief Executives for North America, Europe, China
and Asia
The functions of Chief Executives for each region, selected from head office executive
officer grade personnel, are to be strengthened to develop optimal solution proposals
in concert with group sales efforts in each region.
3-2. Development of high-earnings global business
Hitachi is localizing development, production, marketing and service operations toaccelerate the globalization of its social innovation business and improve theearnings of overseas business operations. In fiscal 2005, overseas sales accounted
for 38% of total sales of the Hitachi Group, and Hitachi plans to raise the overseas
sales ratio to 45% by fiscal 2009. By strengthening sales in concert with groupefforts, Hitachi intends to grow its power, consulting, storage, automotive
equipment systems and other areas of its North America business operations. In
Europe, the emphasis will be on railway systems, storage, power and other suchgrowth sectors. In China, in growth areas such as elevators and escalators, railways- more --8and other social and industrial infrastructures, and high functional materials, tie-ups
with major partners and localization of operations will be used to strengthen growthbusinesses. In India, the focus will be on tackling growth markets, starting withconstruction machinery, consumer products, air conditioners, and software.
Capturing Synergies
3-3. Capturing synergies(1) Synergies between businesses
Synergies are being created between various business areas of the Hitachi Group. In
the case of automotive equipment systems, for example, Hitachi is strengthening the
hybrid car system business. As part of this, Hitachi Vehicle Energy was founded tomarket, develop and manufacture lithium-ion batteries, and in April 2006, theMotor Power Systems Division was established to centralize group resources
relating to everything from R&D to the design and manufacture of motors andinverters. Among other collaborative moves, in car information systems Hitachi isstrengthening its relationship with Clarion, and Hitachi Metals made a tender offer
for the remaining shares in its subsidiary, NEOMAX, a strong participant in the areaof magnets for hybrid cars, in order to merge the two companies to capture further
group synergies.
(2) Operational synergies
To utilize the merits of scale within the Hitachi Group, a group management
infrastructure has been put in place and optimal use is being made of funds,
personnel, purchasing power, IT infrastructures and other such resources toimprove the earnings of the Hitachi Group. For example, with respect toprocurement strategies, increased concentration and centralization of purchasing,utilization of IT and stronger ties with group companies enabled costs to be reduced
by some 300 billion yen during fiscal 2006, and by fiscal 2008 will make it possible
to cut costs by a further 30 billion yen. Hitachi also plans to cut indirect costs, suchas transportation expenses, by some 15 billion yen a year by utilizing shared services
and cross-company cutting of indirect costs. Also, the more efficient use of funds
made possible by pooling of group funds is being used to reduce the interest burden
by about 5 billion yen a year. Asset management that makes effective use of idle
assets should provide an annual improvement in cash flows amounting to about 5billion yen in 2010. Centralization of IT infrastructures is being used to achieve anannual cost reduction of 7 billion yen.

- more --94. Summary
4-1. Strengthening of management infrastructure(1) Monozukuri and technology capabilities
Taking the cases of turbine damage as a lesson, a the Supervisory Office for
MONOZUKURI will work to upgrade existing monozukuri activities and makefurther improvements to monozukuri capabilities on a company-wide basis in orderto improve reliability. In research and development, an R&D system is being built
by strengthening businesses that rank No. 1 or No. 2 in market share, and bystrengthening the R&D of business divisions, resulting in a system that willemphasize profitability. At the same time, to ensure innovation, the researchresources will continue to be channeled into major, long-term research efforts.
(2) Human-resource capabilities
Management and global business personnel are trained systematically. To make
Hitachi an energetic company where people find their work fulfilling, the numbersof young people and female managerial staff are being increased, employment ofexperienced personnel is being expanded, local overseas recruitment is being
strengthened, the specialized knowledge and expertise of employees of 60 years ofage and older are being utilized, brand improvement activities aimed at young
people are being promoted, and efforts are being made to discover those withbusiness leadership qualities.
(3) CSR Management
The Hitachi Group is committed to being in the forefront of corporate governance.
To ensure the achievement of that goal, the Hitachi Group has an internal control
system, risk management is handled by management committee and related
information is promptly shared. With respect to environmental management andmanufacturing, CSR management is working to ensure that Hitachi is emission
neutral by 2015.
4-2. Numerical management targets
The Hitachi Group is using the above measures, policies and initiatives to establish a
corporate structure that stably generates high profits, and a consolidated operating
margin of 5%, by fiscal 2009. Hitachi will endeavor to maintain a D/E ratio(including minority interests) of 0.8 or below by upgrading its financial structure.
Hitachi, Ltd., (NYSE: HIT / TSE: 6501), headquartered in Tokyo, Japan, is a leading
global electronics company with approximately 356,000 employees worldwide. Fiscal
2005 (ended March 31, 2006) consolidated sales totaled 9,464 billion yen ($80.9 billion).
The company offers a wide range of systems, products and services in market sectors
including information systems, electronic devices, power and industrial systems,
consumer products, materials and financial services. For more information on Hitachi,
please visit the company's website at http://www.hitachi.com.

- more -- 10 Cautionary Statement
Certain statements found in this document may constitute “forward-looking statements” as definedin the U.S. Private Securities Litigation Reform Act of 1995. Such “forward-looking statements”
reflect management’s current views with respect to certain future events and financial performanceand include any statement that does not directly relate to any historical or current fact. Words suchas “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “intend,” “plan,” “project” and similar
expressions which indicate future events and trends may identify “forward-looking statements.”
Such statements are based on currently available information and are subject to various risks anduncertainties that could cause actual results to differ materially from those projected or implied in
the “forward-looking statements” and from historical trends. Certain “forward-looking statements”
are based upon current assumptions of future events which may not prove to be accurate. Undue
reliance should not be placed on “forward-looking statements,” as such statements speak only as ofthe date of this document.
Factors that could cause actual results to differ materially from those projected or implied in any“forward-looking statement” and from historical trends include, but are not limited to:-fluctuations in product demand and industry capacity, particularly in the Information &Telecommunication Systems segment, Electronic Devices segment and Digital Media &Consumer Products segment;- uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate
new technology on a timely and cost-effective basis and to achieve market acceptance for suchproducts;- rapid technological change, particularly in the Information & Telecommunication Systems
segment, Electronic Devices segment and Digital Media & Consumer Products segment;- increasing commoditization of information technology products, and intensifying pricecompetition in the market for such products, particularly in the Information &Telecommunication Systems segment, Electronic Devices segment and Digital Media &Consumer Products segment;- fluctuations in rates of exchange for the yen and other currencies in which Hitachi makes
significant sales or in which Hitachi’s assets and liabilities are denominated, particularly
between the yen and the U.S. dollar;- uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative
impact of fluctuations in product demand and/or exchange rates;- general socio-economic and political conditions and the regulatory and trade environment of
Hitachi’s major markets, particularly, the United States, Japan and elsewhere in Asia, including,
without limitation, a return to stagnation or deterioration of the Japanese economy, or direct orindirect restriction by other nations on imports;- uncertainty as to Hitachi’s access to, or ability to protect, certain intellectual property rights,
particularly those related to electronics and data processing technologies;- uncertainty as to the results of litigation and legal proceedings of which the Company, its
subsidiaries or its equity method affiliates have become or may become parties;- possibility of incurring expenses resulting from any defects in products or services of Hitachi;- uncertainty as to the success of restructuring efforts to improve management efficiency and tostrengthen competitiveness;- uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi
may not control, with other corporations in the design and development of certain key products;- uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or
long-term financing; and- uncertainty as to general market price levels for equity securities in Japan, declines in which
may require Hitachi to write down equity securities it holds.
The factors listed above are not all-inclusive and are in addition to other factors contained in
Hitachi’s periodic filings with the U.S. Securities and Exchange Commission and in other materials
published by Hitachi.

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Information contained in this news release is current asof the date of the press announcement, but may be subject
to change without prior notice.
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