hitachi's flat-panel tv business strategy · hitachi’s flat-panel tv business strategy...

Copyright © Hitachi,Ltd.2005 All rights reservedCopyright © Hitachi,Ltd.2005 All rights reserved

Hitachi’s Flat-panel TV Business Strategy

2005/12/20

Makoto Ebata

Vice-President and Executive Officer, Hitachi, Ltd.

President & CEO, Ubiquitous Platform Systems Group

Aiming to be the leader in HD TV Worldwide


2. Importance of Digital Consumer Business for Hitachi

3. FPD TV Markets Trends and Hitachi’s Business Targets

4. Scenario for Success

5. Conclusion

1. Introduction

Contents


Contents

2. Importance of Digital Consumer Business for Hitachi

3. FPD TV Markets Trends and Hitachi’s Business Targets


5. Conclusion

1. Introduction

Copyright © Hitachi,Ltd.2005 All rights reserved

Concentrate investment and specialize in growing HD market

Enhance global production and salesConcentrate company wide development capabilities in panels（PDP,LCD） and components （HDDs, LSIs and others）　

Introduction

Business targets

1

Hitachi’s Goals in the FPD TV Business

※HD : High Definition

FY2006/2H: Return to profitability

FY2008: Capture leading global share in PDP HD*TVs (30%)

: Win 7% share of global market for LCD TVslarger than 26-inch

Reinforce and cultivate FPD TV business by combining Hitachi’s strengths from research through to sales


2. Importance of digital consumer business for Hitachi

3. FPD TVs’ markets trends and Hitachi’s business targets


5. Conclusion

1. Introduction

Contents


Rolling out 3 major networks

BroadcastingIP （ * 2）

Broadband

Hitachi has full lineup of products for 3 major networks

Imagingdevices

Recordingdevices

Information

devices

PDP TV Rear – Projection TVLCD

Projector

HDD/DVDRecorders

DVD Cameras

BB （ *1） PC

Home Networking

Hitachi’s Digital Home Electronics Product Group2-1

*1　BB：Broadband*2　IP：Internet Protocol

Cellular phone

Car navigation system


≪Policies and Targets by Product ≫

PlasmaTVs

LCDTVs

Focus on Hi - vision MarketTarget global HD market share of 30% (2008)

Focus on 26-inch and larger screen models

Hitachi’s Goals in the Digital Home Electronics Market （１）

Centered on PlasmaTVs, capture the top position in the digital home electronics market

Target share(%)Target share(%)2005 2006 PolicyPolicyProduct

2007 2008

４３３９４１３５

５５６７

１８２０１４１１

２４

６７

2-2

Ｗ/Ｗ

Ｗ/Ｗ

Japan

Japan

FY

*LCD shows 26-inch and larger models.


≪Policies and Targets by Product ≫

Hitachi’s Goals in the Digital Home Electronics Market (２)

Target share(%)Target share(%)2005 2006 PolicyPolicyProduct 2007 2008

2-2

Ｗ/Ｗ

Ｗ/Ｗ

Japan

Japan

FY

HDD/DVDRecorders

DVD Cameras

４９

１８２０

２５９１０

１０１３１７

２０

５８１０１２

Pursue Top 3 Market Position

Create DVD camera market attuned to changes in media formatsSecure leading share in Japan

Japan: Specialize in premium　 products

(Built-in terrestrial digital tuner 　 + high-capacity HDDs)

*DVD Cameras show video camera market.


Expand Digital Home Electronics Business Centered on FPD TVs

FY2005 FY2010

１,５００.０

８５０.０

Expand Hitachi’s Digital Home Electronics Business2-3

(Sales of Digital Home Electronics)Billions yen/year

Net

Sales Leverage Company made Strengths to Cultivate Digital Home Electronics into Growth Business





5. Conclution

1. Introduction

Contents


　　　　　２００５　　　　　　　　　　　　２０１０　　　　　２００５　　　　　　　　　　　　２０１０

Uptake phaseUptake phaseIntroduction phaseBroadcasting Digital hi-vision broadcasting worldwide

Japan

China

Europe

USA

Digital broadcasting

ContentBroadband broadcasting

Sales of hi-vision software in Blu-ray disc and HD-DVD formats

Global Market Trends:Broadcasting

Global Broadcasting Industry Shifting to Digital Hi-vision Format

▼ Late 2008

▼2011　End of analog broadcasts

▼2015 　　　　　　　

3-1

Launch and shift to digital

Complete shift to digital

▼2006～2012


Global Market　Trends: Flat-Panel　TVs

Expansion in FPD TVs demand

<Plasma TVs> <LCD TVs>(Demand: millions of units)

FY2004 FY2005 FY2006 FY2007 FY2008

(Demand: millions of units)

5.7

8.7

11.0

13.0

3.6

10.6

20.0

30.0

40.0

shows comparison with base year of FY2004=100

2.8

464

393

311

204100

0.6

833

556

294

100

0.05

　1,111　

・・・

・・・

3-1

FY2002 FY2004 FY2005 FY2006 FY2007 FY2008FY2002

Large screens(37-inch and over) Mid-size screens

(26-inch to 37-inch)

Large screens

Large screens

Mid-size screens

Mid-size screens


Plasma TV Demand TrendPlasma TV Demand Trend

Global Market Trends : Plasma TVs

Upsurge in ratio of HD Products after FY2005

100

208

365

530707

70％

47％

54％

62％

46％

FY2002

HD Type

shows HD Plasma TV demand compared with base year of FY2004=100

【Ratio of HD products】

FY2004 FY2006 FY2007 FY2008FY2005

3-1


Investment in Digital Media Products

【Subsidiaries】　・FHP : Fujitsu Hitachi Plasma Display　・HLDS : Hitachi LG Data Storage　・Hitachi GST : Hitachi Global Storage Technologies

ImagingDevices

▲2003▲2000Hitachi GST(HDDs)

HLDS(DVD Drives)

RecordingDevices

and Others

▲2003Renesas (LSIs)

▲2005Establish IPS alpha(LCDs)

［Capital Investment］110.0 billion yen

Consolidation FHP▲2005

［Capital Investment］155.0 billion yen

First in Industry to Focus on FPD TVs

CRT TVsTVs sets

２００３～１９９９２００５～２００１

FPD （Plasma TVs, LCD TVs）

Switch from Analog to Digital High visionSwitch from Analog to Digital High vision

▲1999

Production Start： FY2006 2Q

Production Capacity: 2.5 million units/ year

Production Capacity：100,000 units / month(Aug, 2005)⇒300,000 units / month(from FY2007 to FY2008)

【Equity-method Affiliates】　・Renesas : Renesas Technology Corp.　・IPS alpha : IPS Alpha Technology, Ltd.

3-2

Fiscal year 　　　2000　　　　　　　　　　　　　　　 2005　　　　2000　　　　　　　　　　　　　　　 2005　

Establish FHP(PDPs)


<Plasma TVs> <LCD TVs>

(Sales : millions of units)

Share of HD market

Share of overall Plasma TV market

0.30.68

1.2

2.0

2.6

2004 2005 2006 2007 2008

11% 12%14%

18%20%

18%

23%27%

30% 30%

(Sales : millions of units)

Share :26-inch and larger TVs

0.05 0.2

0.75

2.0

2.8

１%２%

４%

６%７%

FPD Business Sales Targets

Hitachi’s Initiatives for the FPD TVs Business(1)3-3

(Fiscal Year)2004 2005 2006 2007 2008

(Fiscal Year)


Issues for Hitachi’s FPD TVs business

ProductsProducts

Cost

Market Trends in FY2005 Issues for Hi tachi

Globalization

Sales, Branding

HD ratio levelingoff despite market growth

Expansion in mid-size LCD TVs

Rapid fall in sales price about 30% per year

Lack of appeal ofHD lineup

Delay in establishment ofpanel supply system

PlasmaTVs

Misunderstanding

of market trends

Delay in cost cutting withintegrated in panels and sets

Market rapidlyexpanding worldwide

Delay in strengtheningW/W SCM systemLack in strengtheningW/W sales promotion andbranding activities

LCDTVs

Overall：From FY2001 to FY2004, sales expanded, profitable　　　　　　　

3-3

FY2005 : Delay in market growth, loss　 Recover in FY2006

Hitachi’s Initiatives for the FPD TVs Business(2)

Delay in increasingpanel production


Business Strategy

Cost

Production Capability

Sales and Marketing

Hitachi’s strategy and key measuresProductsStrategy

Business Target

Business Target

Back to Profitability in FY2006 2Q　【 share of market Shipments 】　Plasma TVs ：1.2 million (14%), LCD TVs：750,000-lerel(4%) FY2008　Plasma TVs : Achieve top share in W/W HD market(30%)

Become most cost-competitive maker of HD plasma TVsAchieve level of cost comparable with VGAs in Plasma TVs

Strengthen and speed up developmentSynchronized business planning panel and TV set(introduce new models twice a year)HD PDP：World-leading production capability

　　(FHP #3plant)Expand global production capabilitiesReinforce global sales structureImprove advertising and sales promotion focus on HD marketSustained and concentrated investment in marketing

Benefits of

vertical integrationFocus on H

D m

arkets

LCD TVs : Gain 7% share of W/W 26-inch and larger market

3-3

Large Screen : Focus on Plasma TVsMid-size Screen : Focus on LCD TVs

Hitachi’s Initiatives for the FPD TVs Business(3)

Enhance Products, Strengthen Development Capability





5. Conclusion

1. Introduction

Contents


Focus on HD + Unique Products (e.g.internal HDD and other features)

Products introducing plan with global events(introduce new models twice a year)

Scenario for Success : Enhance Products and Strengthen Development Capability(1)4-1

Consolidated development capabilities(Enhance and leverage company-wide strengths)

Review Product PlansReview Product Plans

Strengthen Development CapabilityStrengthen Development Capability


37-42–55- inch HD new line-upMainstream

Expand FULL-HD type

Points

FY2005FY2005 FY2006FY2006 FY2007FY2007

1.Glass thickness 1.8mm　　2.Direct filter application3.Development of non-lead PDPs4.Benefit of alliance with Matsushita Electric Industrial Co.Ltd.(Standardization of a parts and material)

Key Factors behind Enhance Competitiveness

Plasma TV Products’ Roadmap

Introduce new lineup with advantages of ALIS(*)Expand lineup to FULL-HD type, launch mainstream lineup for 37-42-55-inch TVs

*ALIS: Alternate Lighting of Surfaces Method


42-inch FULL-HD Type60-inch classFULL-HD Type


Launch Products to Coincide with Global Events, Back to Back Spring & Fall Product LaunchesLaunch Products to Coincide with Global Events, Back to Back Spring & Fall Product Launches

Roadm

ap Product

FY2006FY2006

Events

FY2005FY2005

Internal terrestrial digital tuner

▼Dec, 2005 ▼Feb, 2006 ▼June, 2006Christmas,year-end andnew year events

TorinoOlympics

FIFA World cup

New models for 2006Models for 2005

New ALIS panel

Spring

New IPS panel

New models for 2006

▼Dec, 2006Christmas,year-end andnew year events

fall

Further evolution Further evolution WoooWooohigh definition TVshigh definition TVs

（Aug. 2006～）（Apr, 2006～）

Simultaneous global launchSimultaneous global launch

Plasma TVs : 37- 42- 50- 55- inch LCD TVs : 26- 32- 37- inch

Product Roadmap to Coincide with Global Events



HD

Developm

ent

Yokohama　approx. 1,600 personnel

Yokohama TVs

Ebina PCs

Tokai HDD/DVD recorders

FHP Driver circuit design

Yokohama Marketing

Tokyo Sales

Concentration of HD Development Section, Sales and Marketing Sections.

Sales and Marketing

Apr, 2005　　　Apr, 2006Apr, 2005　　　Apr, 2006AreaAreaJan.2006

Benefit Reflect customer needs in product roadmapFaster decision-making

Benefit Horizontal technology developmentCost reduction via vertical integration


Tokyo　approx. 500 personnel


　　　Items　　　　　　　 Actions　　　　 Expand Capabilities　　　Items　　　　　　　 Actions　　　　 Expand CapabilitiesDivisionDivision

Expand HD Product Development ： FY2004 ⇒ FY2007 1.5 times

2007年度

Concentrate Groupwide Development Capabilities

R&D for HD products

Developmentof FULL-HDdriver circuit

Platforms forHD products

ConcentrateR&D sectionsFY2005-FY2006

Establishin FY2005

Specialize in HD Establish

R&D centersfor each globalbase in FY2006

Approx. 1,400

Approx. 2,000

FY2004

FY2007

Digital Media Div.

Fujitsu Hitachi Plasma Display

Ubiquitous PlatformSystem R&D Lab.

Embedded Systems Structure Research Institute (R&D group)

Next generationHD image rendering technology



Mobilize Hitachi’s corporate laboratories’ capabilities to tackle more FPD-superior related technology (approx. 500 of 3,700(*) personnel)

Central Research Central Research LaboratoryLaboratory

Hitachi Research Hitachi Research LaboratoryLaboratory

Production Engineering Production Engineering Research LaboratoryResearch Laboratory

Advanced Research Advanced Research LaboratoryLaboratory

Mechanical Engineering Mechanical Engineering Research LaboratoryResearch Laboratory

System Development System Development LaboratoryLaboratory

Overseas research Overseas research laboratorieslaboratories

PDPs, LCDs

FPD TVs

Important Benefits and Research items

*　 forecast for all Hitachi’s corporate laboratories’ capabilities for FY2005

Best picture qualityHigh yields Advanced technologies

High-performance Panel Technologies

High Production Reliabilityand Improved yields

Next-generationUser interface

Structural & CryogenicTechnologies

System Development

Basic Technologiesfor Next-generation TVs



　DVD drives

　Driver ICs, LSIsRenesasRenesas Technology Corp.Technology Corp.

Hitachi Chemical and othersHitachi Chemical and others

Hitachi LG Data StorageHitachi LG Data Storage

Strategic Partnership with Hitachi Group Component businesses, Forward-looking Joint Development

Hitachi Media ElectronicsHitachi Media Electronics

Hitachi Global Hitachi Global Storage TechnologiesStorage Technologies

　Display-related materials

　Hard disk drives

　Tuners

FPD TVs

Leading maker of built-in HDD TVs

Leading PDP maker in HD

Advanced installation of W-terrestrial digital tuners

IPS Alpha Technology, Ltd.IPS Alpha Technology, Ltd. 　LCDs

Fujitsu Hitachi Plasma displayFujitsu Hitachi Plasma display 　PDPs



ポイント

Become most cost-competitive maker of HD TVsAchieve level of cost comparable with VGAs for plasma TVs

Promote Strategic Cost Reduction for Plasma TVsPromote Strategic Cost Reduction for Plasma TVs

Scenario for Success : Strengthen Cost Competitiveness (1)4-2


Strengthen Cost-competitiveness of Plasma TVs

Major Initiatives Behind Realizing Cost Strategy

　　■ Common global HD platform　　　　1.Promote high-level integration of digital LSIs　　　　2.Rationalization of digital IC component　　　　3.Enhance development efficiency through

componentization of software　　　　　(Aim to increase efficiency by a factor of five by FY2008)

Strengthen Cost-competitiveness of PDPs　　■ Improve cooperation between FHP and Hitachi 　　　1. Enhance development capabilities

(boost luminescence efficiency, direct filter application, etc.) 　　　2. Bring FHP’s #3Plant on stream (increase productivity and yields)　　■ Promote project to reduce cost of large components through

modularization



Plasma TVs : Cost Reduction Plan

FY2008 : Reduce costs to withstand 5,000 yen per inch

price level

FY2008 : Reduce costs to withstand 5,000 yen per inch

price level

Total cost and sales price of domestic 42-inch plasma TV,including built-in digital tuner

Ongoing cost reduction ahead of falls in sales price

Ongoing cost reduction ahead of falls in sales price

Sales price　20-30% down

Others

ManufacturingCosts

Panel

Material Costs

Total Cost

1st Half 2nd HalfFY2005

10080

69 60


1st Half 2nd HalfFY2006


（Scale of 1-100 ）Boost Cost-competitiveness of Plasma TVs

Scenario for Success:4-2

Shipment periodNo. of

componentsMaterial

costs

Key target areas for cost

reduction compared to

previous year

2004

Summer

100

100

2005

Summer8070

　All-in-one speaker components/AVC/ monitor unit (-28%)

Rationalization of circuit systems for digital tuner (complete digitization)(-45%)

More streamlined construction compared to previous models (-41%)

2006

Spring7050

　Greater integration of digital ICs (-50%)

Rationalization of unit components (power supply, speaker components)(-42%)　Rationalization of structural components (frame, filter components) (-42%)

Strengthen Cost Competitiveness (4)

FY


Specific Cost Reduction

Initiatives

Cost Reduction Plan for Plasma TVs

Catch up with VGA costs in spring of

2006

100100

8080

6060

4040

2020

（（Scale of 1Scale of 1--100100 ））

2004 2004 modelsmodels 2005 2005 modelsmodels 2006 2006 modelsmodels

【Cost of 42-inch PDP modules】

1. Panels: Improve usage rate, use more panels from glass substrate for 42-inch modules, reduce thickness (1.8 mm)2. Circuits: Promote greater integration, rationalize construction of frame and finished product 3.Other: Use direct filter application, promote central purchasing of core components (utilize Hitachi’s strengths in procurement)

Scenario for Success:4-2Strengthen Cost Competitiveness (5)

Variable costs

Fixed costs

Other companies VGA costs

(Hitachi estimates)


Panels:Increase Production Capacity with Construction of #3 Plant at FHP and New Plant at IPS Alpha.

Plasma TVs:Strengthen Overseas Supply Capabilities by Setting up Global Manufacturing Sites that Utilize Vertical Integration

Improve Efficiency by Enhancing SCMAchieve Low-cost Operations through Reforms toLogistics

Expand Manufacturing FrameworkExpand Manufacturing Framework

Shift to High-efficiency Operating StructureShift to High-efficiency Operating Structure

Scenario for Success:4-3Boost Output & Build Business Infrastructure(1)


A highA high--efficiency facilityefficiency facility An eco-friendly facilityImprovement in energy usage: 1.1 timesWater recovery ratio: 1.5 timesVolume of waste generated: 1/2

Capital investment efficiency: 1.5 timesPanel-use efficiency: 2 Lead time reduction: 1/2　　　　　　Space efficiency: 1.5 times

(All comparisons with 2nd plant)

200,000 units/month systemOct. 06, #2 and #3 plants

#3 Plant

#2 Plant

#3 Plant:320m X 120m = Approx. 88,000m2

#2 Plant:280m X 100m = Approx. 56,000m2

Plasma Panels: Begin operations at FHP’s #3 Plant,world’s largest HD panel production facility

Illustration of completed #3 Plant

300,000 units/month systemBy 2008, #2 and #3 plants

100,000 units/month system

　　Aug. 05, #2 plant

Scenario for Success:4-3Boost Output & Build Business Infrastructure (2)


Reforms to Production Framework: Strengthen and Expand Global Manufacturing Network

Panel Production (Japan)→Supplied to Assembly Sites

Boost Global Production and Supply Capacity:70,000 units/month(FY2005)　　　　(Fivefold increase)

JapanEurope

China

North America

Unit: 1000 units/month (monthly average)

20052004

０

10

LCD TVs

４

６

６

Panels(HHEA)

(HFDM)

EMS

(Gifu)2006 2007 FY

FY2007～Examine in-house production

Plasma TVs

* HFDM:Hitachi Fujian Digital Media Co., LtdHHEA:Hitachi Home Electronics (America), Inc.


330,000 units/month(FY2007)　　　　


Reforms to Production Framework: Integrate Module production processes and finished product assembly at single sites

Integrated production Integrated production by regionby region

Concentrate production Concentrate production (Miyazaki)(Miyazaki)

Preparations completed in Japan/China; similar steps to be taken in North America and Europe

Aims of Integrated Production

Electrodes/light-emitting component

Finished Products

Driver circuit components

Attaching and sealing

(Module processes)(Back-end processes)(Front-end processes)


Reduce Production Planning Work and Mid-process Inventories

Load Efficiency Increased and Logistics Costs Reduced by Only Transporting Panels to Local MarketsCosts Reduced by Avoiding Import Tariffs and Increasing Sourcingof Local Components


Improve Advertising and Sales promotion, Focusing on HD Market

Sustained and Concentrated Investment in MarketingSustained and Concentrated Investment in Marketing

Initiatives to Strengthen Regional MarketingCampaigns to Boost Brand power

Enhance Global Sales Capabilities and Hitachi’s brandEnhance Global Sales Capabilities and Hitachi’s brand

Scenario for Success:4-4Enhance Global Sales Capabilities (1)


Global Sales and Market Share Targets for Plasma TVs (HD Market)

EuropeFY2008FY2005

(2.8million units)

※　( ):global market units

30%25%

China

(0.16million units)

49%51%

(0.6million units)

Asia

(0.4 million units)

26%17%

(1.2 million units)

(0.7million units)

1st

1st

2nd

North America

(3.5 million units)

(1 million units)

7th

15% 24%

Japan

(0.5 million units)

40%30%

(0.79 million units)

2nd

:Hitachi’s share

Hitachi


FY2008FY2005


Sales Channel Strategy by Region

North America

China

Europe

Japan

Europe

Regions T

argeted for Sales C

hannel Expansion Russia

Asia

Actions Actions Core StrategyCore StrategyRegionRegion

Regions T

argeted forIncreased Sales

*AE:Account Executive

Introduce Products via Region’s Biggest Volume Retailers

Increase No. of Sales Locations 　　　　(From 21 to 60 cities)

Rebuild Sales Channels

Strengthen brand and sales promotion capabilities

Develop Supermarket Channels

Establish Sales Framework

Strengthen Regional Marketing Framework(Develop 7 sites in North America, Create AE positions)Roll out Hitachi is HD sales campaign 　　　

Expand Network of Regional Stores

Capture more than 50% of Sales at 5 Biggest Volume Retailers Expand Regional Store Sales Channels

Establish Local Sales Company (April 2006)

Strengthen Trading Relationships with Biggest Volume Retailers 　　　　　　　　　　

Introduce Products via Leading Volume Retailers

Expand Network of Stores


(UK, France, Australia, Hong Kong)


Global Marketing Campaign to Strengthen BrandPeriodPeriod Greater Focus on more Unique InitiativesGreater Focus on more Unique Initiatives

First half of 2005

Sustained and Concentrated Investment in Marketing, 2005~2007

From second half of 2005

Concentrated Investment FocusConcentrated Investment Focus

2005

(％)

2006 2007

(2004: base year = 100)

2004Ratio by geography(%)

FY2004:100

FY2006:300

３５

１４３０

１７

４２０

３５２４

１１１０ Japan

North America

Europe

AsiaChina

Japan

North America

Europe

Asia

China

(completed)

Unified Global Marketing Campaign (36 Countries Worldwide)-Tie-up with Hollywood movie “War of the Worlds” -

Implements Next Major Global Marketing Campaign

Implement Brand Campaign for Different Markets (Jan, 2006 Europe)

100200

300350


FY


Main Target Areas

JapanEurope

China

Global Advertising and Sales Campaigns Focusing on HD Products

“Japan Black” Campaign

CCTV Tie-up Campaign

Integrated Advertising and In-store Sales Campaign

HD Partnership Signed

Face of Campaign: Ms. Hitomi KurokiHi-Vision TV with HDD recorder

Create more Visible Brand with

Customized In-store Sales Areas

Create more Visible Brand with

Customized In-store Sales Areas

*CCTV:China Central Television


Main thrust: Japanese brands = High Quality

Actively Roll out Hitachi is HD Campaign in China

プラズマで●ＲＥＣ“Recording with plasma TV”





5. Conclusion

1. Introduction

Contents


Concentrate Investment and Specialize in Growing HD Market

Enhance Global Production and SalesConcentrate Companywide Development Capabilities in Panels （PDP,LCD） and Components （HDDs, LSIs and others）　

Business targets

Hitachi’s Goals in the FPD TVs Business

※HD：High Definition

FY2006/2H: Return to profitability

FY2008: Capture leading global share in PDP HD* TVs (30%)

: Win 7% share of global market for LCD TVslarger than 26-inch

Reinforce and Cultivate FPD TVs business by Combining Hitachi’s Strengths from Research through to Sales

Conclusion5


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: - 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 such products; - 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 price competition in the markets 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 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 or indirect 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 success of restructuring efforts to improve management efficiency and to strengthen 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.


ちい

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