Progress on the “i.e. HITACHI Plan II”
Medium-Term Management Plan
February 4, 2004

Hitachi, Ltd.

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Activities to Realign Business Portfolio and Improve Profitability
The Goal and Initiatives in “i.e.HITACHI Plan II”
Major Acquisitions, Reorganizations and Alliances to Date
Reform of Internal Systems
Global BusinessMeasures to Improve Profitability Toward Positive FIV
Measures to Improve Profitability in Display Business
Establishment of Consumer Business Strategy Division
Making Headway Toward Positive FIV
Progress on “i.e.HITACHI Plan II”
Measures to Realize Continuous Growth
Creation of New Businesses (“Inspire A Businesses”)
Main Measures for Medium- and Long-term Growth
Shifting from the Digital Era to the Ubiquitous Era
Conclusions“Next Made in Japan”:
Reaffirming Hitachi’s Reputation as a Technological Leader
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The Goal and Initiatives in “ｉ.e.HITACHI PlanⅡ”
Goal : Achieve positive FIV* in FY 2005
FY2005 net sales and earnings (expected as of Jan. 2003)
Net sales : 8 trillion yen level
Operating margin : At least 5%
ROE：At least 8%
is Hitachi’s economic value-added evaluation index in* FIV
which the cost of capital is deducted from after-tax
operating profit. After-tax operating profit must exceed thecost of capital to achieve positive FIV.

Key Initiatives :Realize a highly profitable earnings structure through businessportfolio realignment
Accelerate globalization
Create new businesses (“Inspire A Businesses”)
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Major Acquisitions, Reorganizations and Alliances to Date
Transferred semiconductor operations to Renesas Technology Corp.
Acquired IBM Corporation’s HDD operations
Sold shares of Nitto Denko Corporation (equity-method affiliate) and SLIONTEC Corporation
Sumitomo Special Metals Co., Ltd. becomes subsidiary of Hitachi Metals, Ltd.
Babcock-Hitachi K.K. acquired Germany’s Babcock Borsig Power Systems GmbH
Hitachi High-Technologies Corporation to make Hitachi Electronics Engineering Co.,
Ltd. a subsidiary
Merger of Hitachi Information Systems, Ltd. and Hitachi net Business, Ltd.
Joint venture to be established with Casio Computer Co., Ltd. for joint development ofmobile phone handsets
Agreed with Omron Corporation to integrate ATM and other information equipment
businesses
Listing of Hitachi Systems & Services, Ltd.
Expected impact on FY2005 consolidated net sales:
Increase : Approx. 650 billion yen
Decrease : Approx. 540 billion yen
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Reform of Internal Systems

Strengthen corporate governance・Ensure the Committee System firmly in place（at Hitachi Ltd. and 19 Group companies）
・Established Group Management Committee

Reform compensation system for non-manager staff
・Further progress toward performance-based compensation system（ex. Hitachi, Ltd. Hitachi Capital Corporation）

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Global Business
Expansion of key materials and components used in PCs and digital appliances
HDDs, optical storage devices, recordable media, high-functional materials, etc.
Driving growth in Digital Consumer products- Plasma TVs, LCD projectors, etc.
Rapid business expansion in China by Hitachi Construction Co., Ltd.
and other companies
Steady expansion in Storage Solutions and Telecommunications businesses
Expanding power systems business in U.S. market
ex. Order from MidAmerican Energy Company for Supercritical coal-fired power
plant
Overseas sales accounted for 36% of consolidated net sales
for the first nine months of fiscal 2003
(34% in the same period of fiscal 2002)
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Measures to Improve Profitability Toward Positive FIV
Semiconductor business-Established joint venture companies (equity-method affiliates)
to improve competitiveness based on integration
Display business-Improved profitability by changing the product mix-Decided to make investment to increase production capacity forsmall and medium-size LCDs
Digital media-Withdrew from CRT TV production, concentrating on flat
panel TVs
Telecommunication System business-Improved profitability through “Selection & Concentration”and globalization of business
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Measures to Improve Profitability in Display BusinessDramatically improved the product mix: focusing on small andmedium-size LCDs, particularly for mobile phones with color
screens, and LCDs for large TVs
In order to meet the growing demand, decided to makeinvestment to increase production capacity of low-temperaturepolysilicon TFT LCDs for mobile phones, digitals cameras, etc.
Considering procuring LCDs for large TVs from a foundry topromote IPS(In Plane Switching) technology
Developing new type of display device that realizes highresolution and low power consumption
Turned into the black in August 2003
Secure stable earnings in fiscal 2004 onwards
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Establishment of Consumer Business Strategy Division

Establishment of Consumer Business Strategy Division(Led by Etsuhiko Shoyama, President and CEO)

Offering secure, safe and user-friendly products and services to meet
individual needs

Basic Stance on Rebuilding the Consumer Business
Focus on high-value-added product fields underpinned by advanced technologies
Improve management efficiency through more effective use of Groupmanagement resources
Centered on the Ubiquitous Platform Systems Group and Hitachi Home &Life Solutions, as well as Hitachi Industrial Equipment Systems and Hitachi
Air Conditioning Systems due to technological synergies, increasecooperation with the Information and Telecommunications Group
responsible for information lifelines, and other areas of Hitachi
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Making Headway Toward Positive FIV

２００１

Structural reforms and improving competitivenessInformation& Telecommunication Systems
Hard Disk Drives
Urban Planning and Development
Automotive Systems
Materials, Digital MediaMedical, Financial Services
Industrial Systems＋Urban Planning and Development
Automotive Systems
Medical, Financial Services
Energy and Infrastructure…

…

FIV=０２００５

Displays, Home Appliances

Materials, Industrial Systems、Home Appliances, Digital Media

Energy and Infrastructure

Information& Telecommunication Systems

Integration−HDD (IBM)
Displays, Semiconductors

Semiconductor joint ventures have improved
efficiency in development and production.

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Progress on “i.e.HITACHI PlanⅡ”

Achieve positive FIV in FY2005
Current FY2005 net sales and earnings (Current projections)
Net Sales : 9 trillion yen level
Operating Income : More than 400 billion yen
Initiatives to reach the goal
Further progress with structural reforms
Push ahead with Corporate Innovation Initiative II（CII II）（C Project II, D Project, E Project II, etc）

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Creation of New Businesses “Inspire A Businesses”
Selected Around 30 “Inspire A Businesses”[Examples of “Inspire A Businesses”]
Expansionary Phase
Inter-division Business Individual Business

Medical diagnostic systems
Semiconductors/LCD production
equipment, etc.

Storage solutions
Hard disk drives
Outsourcing
e-government“Wooo-World” (Plasma TV, etc.)
Total railway systems, etc.

Incubation Phase
Ubiquitous HDDs
On-board car information systems
Advanced medical treatment and services
RFID solutions
Fuel cells, Lithium-ion batteries
Urban planning and development solutions
Wireless information systems, etc.
Electric powertrains
New energy business
Next-generation displays device
Physical security, etc.

“Next MADE IN JAPAN”
Reaffirm Japan’s Reputation as Technological Leader
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Main Measures for Medium- and Long-term Growth
IT Solutions- Security services, “Harmonious Computing”- Drive forward new businesses related to e-Japan II Strategy to realize
vibrant, reassuring, exciting and convenient society
Automotive products- Promote increased cooperation between automotive-related businesses
in the Hitachi Group- Strengthen the electric powertrain business
Batteries and fuel cells- Target fuel cells for mobile applications, rechargeable lithium-ion
batteries for the automotive field, etc
Biotechnology and medical systems- Strengthen diagnostic devices and analytic equipment businesses
such as DNA sequencers
Ubiquitous application products- Ubiquitous HDDs / networks, etc.
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Shifting from the Digital Era to the Ubiquitous Era“The Winner in the Ubiquitous Era”
A company capable of offering a comprehensive lineup of products and services:from key technologies, devices and components to products and infrastructure

Key Technologies, Key Devices and Key Components
Security technology, HDDs, flat panel displays, etc.
Products
Large screen TVs (plasma TVs, projection TVs, LCDprojectors, etc.),
Digital products with HDDs, mobile applications
for broadband networks (mobile phones, PCs, etc.)
Social InfrastructureHigh-speed broadband networks(routers, switches, EV-DO, IT solutions, etc.)
All Rights Reserved, Copyright（C） 2004, Hitachi, Ltd.

“Next Made in Japan”: Reaffirming Hitachi’s Reputation as a Technological Leader

Continuing Reforms Aimed at Transforming Hitachi
into a “Best Solutions Partner”“i.e.HITACHI Plan II”“New Era Lifeline
Support Solutions”“Global Products Incorporating
Advanced Technology”

All Rights Reserved, Copyright（C） 2004, Hitachi, Ltd.

Nex’t MADE IN JAPAN.

All Rights Reserved, Copyright（C） 2004, Hitachi, Ltd.

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 suchas “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “project” and similar expressions which indicate future events andtrends are used to assist readers in identifying these “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 projectedor implied in the “forward-looking statements” and from historical trends. Certain “forward-looking statements” are based on current
assumptions of future events which may not prove to be accurate. Undue reliance should not be placed on “forward-lookingstatements,” 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” andfrom historical trends include, but are not limited to:-rapid technological change, particularly in the Information & Telecommunication Systems segment and Electronic Devices segment;-uncertainty as to Hitachi’s ability to continue to develop and market products that incorporate new technology on a timely and costeffective basis and to achieve market acceptance for such products;-fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment,
Electronic Devices segment and Digital Media & Consumer Products segment;-increasing commoditization of information technology products, and intensifying price competition in the market for such products;-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 access, or access on favorable terms, liquidity or long-term financing, particularly in the contextof limited credit availability currently prevailing in Japan;-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 economic conditions and the regulatory and trade environment of Hitachi’s major markets, particularly, the United States,
Japan and elsewhere in Asia, including, without limitation, continued stagnation or deterioration of the Japanese economy, or direct orindirect restriction by other nations on imports;-uncertainty as to Hitachi’s access to, and ability to protect, certain intellectual property rights, particularly those related to electronics
and data processing technologies;-uncertainty as to the success of alliances upon which Hitachi depends, some of which Hitachi may not control, with other corporationsin the design and development of certain key products; 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.