Information &Telecommunication Systems
Business Strategy

June 9, 2010

Junzo Nakajima
Senior Vice President and Executive Officer
President & CEO,Information & Telecommunication Systems Company
Hitachi, Ltd.

Information & Telecommunication Systems
Business Strategy

Contents
1. Business Overview and Outlook
2. Targets and Business Policy Toward 2015
3. Growth Strategy
4. Conclusion

1-1. Business Overview
Management vision Contribute to social innovation throughcollaborative creation with customers
Business size
FY2009 revenues: ¥1,705.5 billion

Revenue breakdown
SoftwareHardware33%

Services

9%Government
Finance

30%

20%

58%

Industry
Distribution

20%

Socialinfrastructure

30%

Japan

Overseas78%

22%

North America:50%
Europe:30%
China/Asia, etc.:20%(Note) The percentages for Japan and overseas revenues are approximate figures.
© Hitachi, Ltd. 2010. All rights reserved.

21-2. FY2009 Results and FY2010 Forecasts
Aim to generate operating income of ¥100.0 billion on revenues of ¥1,730.0 billion
in fiscal 2010 after results bottomed out in fiscal 2009.
(Billion yen)

Revenues

Operating Income

Hardware/software
Services

Operating Income Ratio

1,945.3
1,705.5 1,730.0

7.1%

5.5%

5.8%

138.4
94.5

100.0

Services revenue ratio
58%

58％

FY2008(Actual)

FY2009 FY2010(Actual) (Forecast)

59％

FY2008 FY2009 FY2010(Actual) (Actual) (Forecast)

Overseas revenue ratio
21%

22%

22%
© Hitachi, Ltd. 2010. All rights reserved.

3

Information & Telecommunication Systems
Business Strategy

Contents
1. Business Overview and Outlook
2. Targets and Business Policy Toward 2015
3. Growth Strategy
4. Conclusion

2-1. IT Market Trends and Competitive Environment

EconomyEmerging markets continue to grow, industrialized
nations are expected to recover
Uncertain outlook due to credit worries in Europe

IT market

Saturated Japanese IT market
Recovering worldwide, driven by emerging markets

IT systems

Shift from “ownership” to “use”
Expanding use of IT in business and for social
innovation
Growing environmental needs

IT vendors

Vertical integration by global major vendors
Strengthening social infrastructure solutions businesses
Enhancing global business responsiveness (M&As, using
offshore resources)© Hitachi, Ltd. 2010. All rights reserved.

5

2-2. Future Targets
Transform into a global company capable of providing reliability
and security in high-profile fields around the world as a solutions
partner based on strong products and services

2015

2009

Expandcloud
computing

Establish global
consulting network,
including China andIndia

Expand platform
services

Systems
integration

Consulting

Storage

Development
focused on Japan,
the U.S. andEuropeDevelopment worldwide
based onstrong storage
products

Project management
capabilities
MONOZUKURI(Manufacturing capabilities)

System solutions

Actively expand
into emerging
markets

Global nichemarkets
Development ofemerging markets

Platforms© Hitachi, Ltd. 2010. All rights reserved.

6

2-2. Future Targets
Transform into a global company capable of providing reliability
and security in high-profile fields around the world as a solutions
partner based on strong products and services

2015

Establish global
ExpandExpand platform
consulting network,
cloud
services
including
China andBusinessStrengthening
Initiatives
computing
India

Actively expand
into emerging
markets

Strengthen and expand global business

Add value to businesses and create services
2009

Systems
integration
Project management
capabilities
MONOZUKURI(Manufacturing capabilities)

Consulting

Storage

Development
focused on Japan,
the U.S. andEuropeDevelopment worldwide
based onstrong storage
products

System solutions

Global nichemarkets
Development ofemerging markets

Platforms© Hitachi, Ltd. 2010. All rights reserved.

7

2-3. Business Policy
Strengthen and expand
global business

Add value to businesses
and create services

Growth based on three pillars

Expand highly reliable cloudcomputing services
Create platform services
Add value in systems integrationand services businesses
Establish global consulting
network■ Platform solutions business■ Consulting business■ Integrated IT services business

Expand business in emerging
markets

Reinforce management base
FY2015 Targets
Revenues: ¥2,300.0 billion

Operating income ratio: 8%

Overseas revenue ratio: 35%

Services revenue ratio: 65%© Hitachi, Ltd. 2010. All rights reserved.

8

Information & Telecommunication Systems
Business Strategy

Contents
1. Business Overview and Outlook
2. Targets and Business Policy Toward 2015
3. Growth Strategy
4. Conclusion

3-1.Growth Strategy

Strengthen andexpand global business
Add value to businesses andcreate services

Reinforce management base© Hitachi, Ltd. 2010. All rights reserved.

10

Strengthen andexpand global business
Add value to businesses andcreate services

Reinforce management base© Hitachi, Ltd. 2010. All rights reserved.

113-2. Global Business Development 2005

2005

2010

2015

Global development centered on storage business
Focused on establishing a consulting business base in the U.S. and Europe,developed ATM business in China

Storage

Consulting/services

ATM and other global niche markets© Hitachi, Ltd. 2010. All rights reserved.

12

3-3. Global Business Development 2010

2005

2010

2015

Expand platform solutions business based on storage products
Strengthen consulting in China, etc., step up efforts in emerging nations

Expand andenhance consultingin Europe

Strengthen consulting in China

Expand business
Expand sales of StarBoard
in China and other Asian countries
interactive whiteboards(Storage, ATM)
(U.S., Europe, China, Middle East)
Expand sales of finger veinauthentication systems

Storage

Consulting/services

ATM and other global niche markets© Hitachi, Ltd. 2010. All rights reserved.

13

3-4. Global Business Development 2015

2005

2010

2015

Establish new business pillar alongside storage and consulting
Expand business in emerging markets
Establish integrated IT services(as a third pillar)

Create synergies with platform
and consulting

Storage

Consulting/services

Actively move into
emerging markets
Strengthen resources

ATM and other global niche markets© Hitachi, Ltd. 2010. All rights reserved.

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3-5. FY2015 Targets and Key Policies

FY2015 targets

Overseas revenues: ¥800.0 billion
Overseas revenue ratio: 35%
Key policies

Expand business globally based on three pillars■ Establish a third business pillar alongside storage and consulting■ Conduct M&As

Expand business in emerging markets■ Develop business based on strong products such as storage and ATMs

Develop a social infrastructure building businessby harnessing the Hitachi Group’s collective strengths© Hitachi, Ltd. 2010. All rights reserved.

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3-6. First Business Pillar
Platform solutions business centeredon world-leading share*1 in storage products
Expand platform business centered on strong storage products■ Established leading position in markets
・ Captured top global share*1(approx. 30%) for 5 consecutive years
in enterprise storage market
・ Commanded top share*2 for 14 straight years in the Japanese external storage market■ Expand business by capturing market share in growth fields
・ Achieve double-digit growth in overseas revenues from midrange
products(in FY2009)
・ Increased the software & services overseas revenue ratio (FY2007: 35% → FY2009: 45%)
・ Expanded business in emerging markets (2H FY2009 Asia-Pacific approx. 20% growth)・ Strengthen position in file and contents management field (Developed medical,
government-related and other markets)*1: Enterprise storage market, monetary basis (Hitachi calculation)*2: May 2010 “Analysis of 2009 Japan Disk Storage Systems Market and 2010-2014 Forecasts” (J10510104), IDC Japan

Storage solutions business revenues

FY2009: ¥304.0 billion → FY2015: ¥400.0 billion© Hitachi, Ltd. 2010. All rights reserved.

16

3-7. Second Business Pillar
Strengthen response to customer needs
by establishing a global consulting network
Strengthen global responsiveness by expanding
and improving bases■ Reinforce structure in China and India■ Expand the number of consulting bases(Now have 23 bases mainly in the U.S. and Europe)

Pursue further growth■ Develop worldwide by sharing success stories and best practicefrom the U.S. and Europe
・ Won many orders for global accounting systems, etc. from major U.S. manufacturers,
major global law firms, etc.
・ Leverage expertise in highly rated BI*1, ERP and other fields in North America■ Expand business by conducting M&As and forming alliances with partners

Expand coverage of system lifecycle■ Expand AMO*2 business and other management services in the U.S.,
Europe and China.
*１：Business Intelligence *2: Application Management Outsourcing
Consulting business revenues

FY2009: ¥45.0 billion → FY2015: ¥130.0 billion© Hitachi, Ltd. 2010. All rights reserved.

173-8. Third Business Pillar
Integrated IT services business based on know-how gained in data center business(Next-generation, value-added data center services supporting everythingfrom platforms to application usage platforms)

Bolster business and customers bases through M&As
Nurture business toward global development in 2015;
establish leading position in integrated IT services businessthrough synergies with strong platform technologies/products,
and consulting capabilities
Build up track record and know-how in eco-friendly data centersin preparation for full-scale business entry■ Europe: Signed partnership agreements (April 2010)
・ Development of high density data center: TELEHOUSE EUROPE (UK)・ Highly efficient data center deployment: Eco2dc initiative (Netherlands)■ China: Establish dedicated organization to promote
the eco-friendly data center business
Integrated IT services business revenues

FY2015: ¥260.0 billion© Hitachi, Ltd. 2010. All rights reserved.

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3-9. Expand Business in Emerging Markets
Expand business size leveraging strong products with a proven track record
such as storage products and ATM, as well as distinctive technologies
Product strategy Expand business by launching products that cater to regional needs■ Storage: Continuously launch products for emerging markets and bolster sales channels■ ATMs: Expand in India, Brazil and other regions leveraging top share in China*■ StarBoard interactive whiteboards: Pitch at IT infrastructure needsin the education sector
・ Already supplied 120,000 units in over 70 countries, including the Middle East, Russia andother emerging markets■ Create markets utilizing distinctive technologies such as finger vein,
RFID and sensor network.

*Hitachi calculation

Regional strategy Strengthen position in China, India and Brazil as priority markets■ China: Strengthen ability to provide solutions
for regional customers, in addition to strong products■ India, Brazil: Create business opportunities through personnel assignments
and strengthen framework■ Draw on the Hitachi Group’s collective strengths totarget markets other than priority markets in social infrastructure building

China/Asia revenues

FY2009: ¥75.0 billion → FY2015: ¥200.0 billion© Hitachi, Ltd. 2010. All rights reserved.

19

Strengthen andexpand global business
Add value to businesses andcreate services

Reinforce management base© Hitachi, Ltd. 2010. All rights reserved.

20

3-10. Add Value to Businesses and Create Services
Best solutions partner in contributing to customer innovation
2015

2010s
2000s

Integrated IT services
Expand highly reliablecloud computing services

Create platform services

Add value to systems
integration andservice businesses

Establish global
consulting network

Expand service range(Upstream consulting, strategic outsourcing)
1990s
1980s

Charge for SE services (Develop a solutions lineup)Services associated with hardware(SE services, maintenance)© Hitachi, Ltd. 2010. All rights reserved.

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3-11. FY2015 Targets and Key Policies

FY2015 targets

Services revenues: ¥1,500.0 billion
Services revenue ratio: 65%
Key policies

Expand highly reliable cloud computing services■ Expand private cloud, hybrid cloud computing services

Expand platform services■ Expand services business centered on strong hardware

Add value to the systems integration and services businesses■ Contribute to social innovation and business through the provision of best practice■ Deepen collaborative creation with customers■ Increase environmental value

Establish a global consulting network■ Strengthen ability to cater to global corporations© Hitachi, Ltd. 2010. All rights reserved.

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3-12. Creating Highly Reliable Cloud Computing Services
Aim to create highly reliable cloud computing services
for social infrastructure systems
and mission critical operations of core enterprise systems
Full-scale application in core corporate systems and social
infrastructure systems
Establish trustworthiness as mission critical systems(Advanced reliability technology, security assurance, etc.)

Introduce and expand application in coreenterprise systems

Around2015

Create advanced hybrid cloud computing services, including
linkage with existing systems and various cloud computing
services

Expand introduction to enterprise
information systems
Utilize public cloud, private cloudcomputing services

Present

Related revenues● Authentication (Security)● Interaction platform (Software)● Performance assurance (Servers, networks)● Data protection (Storage)● Integration and operation techniques
FY2012: ¥200.0 billion → FY2015: ¥500.0 billion© Hitachi, Ltd. 2010. All rights reserved.

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Track Record in Highly Reliable Cloud Computing
3-13. Strong
Services
Develop cloud computing business leveraging track recordin providing cutting-edge services“TWX-21,” Japan’s largest inter-company e-marketplace■ Corporate members: Approx. ¥12 trillion/year in transactions
by 40,000 companies (as of May 2010)■ First to provide SaaS, providing as cloud platform based onservice track record of 13 years■ Added SaaS services for sharing environmental information for European REACH
and other chemical substance management operations (July 2009)“FINEMAX,” joint online banking ASP service based on trackrecord in integrating and operating highly reliable systems■ For individuals: 2.5 million accounts at 29 financial institutions■ For companies: Approx. ¥10.0 trillion in annual monetary transactionsat 19 financial institutions

Created cloud computing business applications within Hitachi■ Adopted cloud computing for Hitachi consolidated taxation solution
Began offering SaaS-type consolidated taxation solution C-Taxconductor service(April 2010)© Hitachi, Ltd. 2010. All rights reserved.

24Supporting Highly Reliable Cloud Computing
3-14. Backbone
Services

Fusing Hitachi-developed core technologies and integration knowhow

Virtualization technology■ Hitachi server virtualization technology: server processing performance assurance■ Thin-provisioning for providing virtual storage capacity:
Increase usage efficiency of large-capacity storage

Highly reliable network technologies■ MPLS-TP: Ensure communication among networks

Systems operation and management technologies■ Integrated systems operation and management JP1: Increase efficiency ofcloud computing operation and management

Private cloud integration and operation techniques based on
integration track record■ Expand private cloud integration template, and integration and operation techniques(Drafted 2009)Higher-level interaction technology for cloud computing
services (Hybrid cloud)■ Development of the Harmonious Cloud Framework, enables intersystem cooperation
between Private and Public cloud platforms(Service launch scheduled on December 2010)© Hitachi, Ltd. 2010. All rights reserved.

25

3-15. Create and Expand Platform Business Services
Expand storage differentiation solutions■ Double-digit growth in service revenues overseas (FY2009)
・ Thin-provisioning for providing virtual storage utilizing Hitachi’s proprietary virtualization
technologies to maximize storage usage efficiency, including existing assets highly rated(Customer adoption rate approx. 50%)

■ Provide new differentiated solutions
・ Managed services: Strengthen operation and management through onsite/remote site・ Contents cloud: Develop storage utilization solutions for contents data

Develop integrated platform aimed at reducing platform operationand maintenance costs*
Server-Related TCO■Refine server, storage and other virtualization（B$）
technologies to reduce spiraling operating
and management costs and improve level of200
service・ Automate increasingly labor intensive work
・ Save power

1000Power and air-conditioning
expenses

Operation andmanagement costs
Initial introduction
costs
1997 1999 2001 2003 2005 2007 2009 2011 2013

*Source: IDC, Three Data Centers-One Vision?, Doc # DR2010_T2_MB, March 2010
© Hitachi, Ltd. 2010. All rights reserved.

26

Server and Telecommunications Networks
3-16. Develop
Businesses Overseas

Server business
Develop globally to triple overseas server revenues (FY2010)■ Provide integrated platforms combining storage and servers■ Develop with solutions and services centered on cloud computing services- Use servers to differentiate solutions such as file storage and contents cloud computing services

Expand business to emerging markets, including China, Russia andSouth America

Telecommunications networks business
Expand global business in next-generation networks centered on HCTA*1■ Next-generation mobile (LTE) business*2
・ Acquired LTE-related software assets (Dec. 2009), developing global sales partners■ Optical access business・ Stepping up proposals to other companies leveraging track record introducing
at North American CATV operator BHN*3■ Home ICT business・ Break into the home ICT market by cooperating with overseas communications carriers*1 HCTA: Hitachi Communication Technologies America, Inc.
*2 LTE : Long Term Evolution*3 BHN : Bright House Networks (North American CATV operator)© Hitachi, Ltd. 2010. All rights reserved.

27

Value to Systems Integration and Services
3-17. Add
Businesses
Contribute to social innovation and business through collaborative creation with customers

New business approaches and lifestyles leveraging IT 20XX
Major financial institution-related core systems 2009
NEXTBASE joint outsourcing service 2005
targeting regional financial institutions
FINEMAX joint online banking ASP service 1999
1997 TWX-21 inter-company e-marketplace1988 Third-generation online banking system
1977 Second-generation online banking system
1970 Bullet train operation and management system

1969 Banking online system
1959 Seat reservation system
1959 Electronic computer1937 Founding of Totsuka plant(Production of telephones, switching equipment)
1910 Formation of Hitachi© Hitachi, Ltd. 2010. All rights reserved.

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3-18. Methods for Adding Value in the System Integration Business
Ultra-upstream design techniques for systems development to satisfy
and impress customers
Create systems that “understand, share and solve” customers’ real problems

Ex Approach “Experience Oriented Approach”
Management

HitachiITdivision・Form agreement through collaborative creation
at each development stage

Business
frontline

Collaborative
creation spiral

Thorough workplace observationby specialists

Understand workplaceissues and desires

Share the ideal business process flowin joint workshops with customers

Decide on
problem-solving strategies

Create visual image of system
by constructing hypotheses andusing prototyping technology

Visualize processes
required until completion

Create systems that respond to customers’ needs at all organizational
levels and share project successes at customers and Hitachi© Hitachi, Ltd. 2010. All rights reserved.

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3-19. Create and Expand Fusion BusinessContribute to social innovation by fusing social infrastructure and informationand telecommunications systems
Power systems■ Knowhow in power andTransportationtransportation systems
Social■ Control-related technologies
infrastructure

Information■ Business system knowhow■ System development andproject management capabilities■ Highly reliable IT platforms

New business approaches
and lifestyles using IT
Middleware for fusion field
IT platform

Develop and expand globally the eco-friendly data center business■ Provide one-stop services from consulting to equipment sales
・ Energy-saving and “small footprint” modular data centers■ Develop in China after Europe

Break into new markets leveraging Hitachi’s collective capabilities■ Cooperate in development and construction of
Sino-Singapore Tianjin Eco-City Project, an eco-friendly city
・ Provide environmental solutions utilizing smart grids and other advanced technologies■ Participate in India’s Delhi Mumbai Industrial Corridor project© Hitachi, Ltd. 2010. All rights reserved.

30

3-20. Increase Environmental Value
Expand contribution to customers’ environmental management
and realization of a sustainable society

Hitachi’s Environmental Vision 2025
Help reduce annual CO2 emissions by 100 million
tonnes by 2025 through Hitachi Group products
The Information & Telecommunications Company aims to curb emissions
by 4 million tonnes per annum (FY2025)

Green of IT
IT Power-saving Plan

Eco-friendly
Datacenter ProjectDecrease CO2 emissions of IT equipmentby 330,000 t(Total reduction from FY2008 to FY2012)

Reduce electricity consumption
up to 50% at data centers by 2012
(compared to fiscal 2007)

Green by IT
Share of revenues of Eco-Products
50% (FY2010)

GeoAction 100 Plan to contribute to the environment via IT
Prevention of Global warming ・Provide customers with CO2 emissions information

for hardware and solutions products (From July 2010)
Conservation of Resources

・ Strengthen product collection scheme (July 2010)

Preservation of Ecosystem

・Design for IT eco experimental village, etc.
© Hitachi, Ltd. 2010. All rights reserved.

31

3-21. Hitachi Products Using Energy-Saving Technology
Developed power supplies
that achieve an industry-leading*1
conversion efficiency of 92%
Server integration using proprietaryvirtualization technology

Servers
BS2000Operation andmanagement software
JP1

Version 9

Storage
Hitachi Adaptable
Modular Storage 2000 series

Networks

Supports more efficient operations andflexible operations in the cloud computing age
HDD drive rotational control according
to usage frequency and power supply control
in scalable disk arrays

Controls power supply
according toonline conditions

AX6600S

Green IT Award 2009
Committee special award

Green IT Award 2009
Director-General of Commerce andInformation Policy Bureau Award,
Ministry of Economy, Trade and Industry

Interop Tokyo 2009
Best of Show Award
Green IT Grand Prix

Hitachi is taking a comprehensive approach that extends to air-conditioning and power supplies,in addition to eco-friendly data centers and IT equipment.

Eco-friendly Datacenter Project
CoolCenter50
Green IT Award 2008
Committee special award

Module-type data centersUp to 67%
Maximize cooling efficiency
through optimal configuration ofcooling units and IT equipment
inside modules

reduction inairconditioning powerusage*2*1 Hitachi estimate as of May 31,2010*2 Compared to conventional air-conditioning systems Hitachi estimate based on data in report from JEITA (Japan Electronics and Information Technology Industries Association), June 2009

© Hitachi, Ltd. 2010. All rights reserved.

32

Strengthen andexpand global business
Add value to businesses andcreate services

Reinforce management base© Hitachi, Ltd. 2010. All rights reserved.

33

3-22. Reinforce Management Base
Pursue business synergies and further increase corporate value on a consolidated basis

Develop new customers and expand business scale by optimizing tasks
among Hitachi Group companies■ Provide one-stop solutions of value throughout the entire IT lifecycle■ Group company restructuring: Establish Hitachi Solutions (Oct. 2010)(Merge Hitachi Software Engineering Co., Ltd. and Hitachi Systems & Services, Ltd.)Strengthen operations■ Optimally allocate resources, aggregate and share common functions,eliminate duplicate investment■ Strengthen procurement ability through shared procurement strategy andmeasures, rigorously reduce materials expenses■ Investment plan: ¥90.0 billion in FY2010 (Up 49% YoY)

Pursue improved quality and productivity by strengthening MONOZUKURI(Manufacturing capabilities) and increase customer satisfaction further■ The Society of Project Management, awarded first “PM Application Prize” (November 2009)■ Top in 9 of 15 categories in 12th Customer Satisfaction Survey,
Nikkei Computer February 3, 2010 edition(Top-placing categories) Thin client, Blade servers, network/system operation and management software, storage,
UNIX servers, application servers, groupware/EIP/blog/SNS, IP telephony systems, PC servers© Hitachi, Ltd. 2010. All rights reserved.

34

Information & Telecommunication Systems
Business Strategy

Contents
1. Business Overview and Outlook
2. Targets and Business Policy Toward 2015
3. Growth Strategy
4. Conclusion

4-1. Conclusion
FY2010 forecasts: Revenues of ¥1,730.0 billion, operating income of ¥100.0 billion

Revenues
Hardware/software
Services

1,730.0

Operating Income, Operating Income Ratio(Billion yen)
2,300.0(Billion yen)

8%
7%

5.8％
185.0

1,850.0
130.0
100.0

Services revenue ratio
59％

60％

65％

FY2010(Forecast)

FY2012(Target)

FY2015(Target)

FY2010(Forecast)

FY2012(Target)

FY2015(Target)Overseas revenue ratio
22%

23%

35%
© Hitachi, Ltd. 2010. All rights reserved.

36

4-2. Conclusion

FY2015 Target
Revenues: ¥2,300.0 billion, operating
income: 8%
Overseas revenue ratio: 35%
Services revenue ratio: 65%
Transform into a global company capable ofproviding reliability and security in high-profile fields aroundthe world as a solutions partner based on strong products
and services© Hitachi, Ltd. 2010. All rights reserved.

37

Cautionary Statement
Certain statements found in this document may constitute “forward-looking statements” as defined in 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 performance and include any statement that does not directly relate to any historical or
current fact. Words such as “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 and uncertainties 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 of the 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:- economic conditions, including consumer spending and plant and equipment investments in Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, as well as levels of demand in the majorindustrial sectors which Hitachi serves, including, without limitation, the information, electronics, automotive, construction and financial sectors;- exchange rate fluctuations for the yen and other currencies in which Hitachi makes significant sales or in which Hitachi’s assets and liabilities are denominated, particularly against the U.S. dollar and the euro;- uncertainty as to Hitachi’s ability to access, or access on favorable terms, liquidity or long-term financing;- uncertainty as to general market price levels for equity securities in Japan, declines in which may require Hitachi to write down equity securities that it holds;- the potential for significant losses on Hitachi’s investments in equity method affiliates;- increased commoditization of information technology products and digital media-related products and intensifying price competition for such products, particularly in the Components & Devices and the Digital Media &Consumer Products segments;- 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 such products;- rapid technological innovation;- the possibility of cost fluctuations during the lifetime of or cancellation of long-term contracts, for which Hitachi uses the percentage-of-completion method to recognize revenue from sales;- fluctuations in the price of raw materials including, without limitation, petroleum and other materials, such as copper, steel, aluminum and synthetic resins;- fluctuations in product demand and industry capacity;- uncertainty as to Hitachi’s ability to implement measures to reduce the potential negative impact of fluctuations in product demand, exchange rates and/or price of raw materials;- uncertainty as to Hitachi’s ability to achieve the anticipated benefits of its strategy to strengthen its Social Innovation Business;- uncertainty as to the success of restructuring efforts to improve management efficiency by divesting or otherwise exiting underperforming businesses and to strengthen competitiveness and other cost reduction
measures;- general socio-economic and political conditions and the regulatory and trade environment of Hitachi’s major markets, particularly Japan, Asia, the United States and Europe, including, without limitation, direct orIndirect restrictions by other nations on imports, or differences in commercial and business customs including, without limitation, contract terms and conditions and labor relations;- 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 access to, or ability to protect, certain intellectual property rights, particularly those related to electronics and data processing technologies;- uncertainty as to the outcome of litigation, regulatory investigations and other legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties;- the possibility of incurring expenses resulting from any defects in products or services of Hitachi;- the possibility of disruption of Hitachi’s operations in Japan by earthquakes or other natural disasters;- uncertainty as to Hitachi’s ability to maintain the integrity of its information systems, as well as Hitachi’s ability to protect its confidential information and that of its customers;- uncertainty as to the accuracy of key assumptions Hitachi uses to valuate its significant employee benefit related costs; and- uncertainty as to Hitachi’s ability to attract and retain skilled personnel.

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 othermaterials published by Hitachi.

© Hitachi, Ltd. 2010. All rights reserved.

38