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                      | HITACHI HOME | UP | SEARCH | HITACHI

                      News Release

                      September 3, 1998

                      MEASURES TO IMPROVE RESULTS

                      I.Aggressive measures utilizing Hitachi's consolidated strengths

                      1.Provision of social infrastructures for the 21st century based on information systems and electronics technologies

                      1)A principal focus of Hitachi's business will be the provision of new social infrastructures for the 21st century,based on information systems and electronics technology as well as the expertise and trust it has acquired through its implementation of social infrastructural systems.

                      2)Consolidated software and service operations presently amount to some 1.5 trillion yen a year. Within five years this will be increased to around 2.5 trillion yen by expanding and strengthening personnel resources by redeploying personnel, mergers and acquisitions, the utilization of outside human resources and other such means.

                      2.Reorganization of Hitachi Group companies and aggressive promotion of outside alliances

                      To speed up the realization of the Hitachi's business vision, the parent company will be restructured. Together with this, consolidation of operations will also be implemented with respect to subsidiaries. At the same time, the building of alliances with other companies will be aggressively promoted, including through investments and acquisitions, as necessary.

                      II.Restructuring to turn results around
                      - The implementation of restructuring plans already under way will be accelerated

                      1.Expansion of sales and orders by moving more personnel into front-line operations such as sales and service

                      2.Reducing fixed costs of the parent company

                      1)By the end of fiscal 1999, fixed costs will be trimmed by about 10 percent compared to the present level, entailing a reduction of 140 billion yen per a year.

                      2)Main Measures
                      -Personnel costs will be trimmed by 60 billion yen by various measures including reducing the number of employees,cutting back on overtime and reviewing related costs. During fiscal 1998, the number of employees will decrease by 4,000 to around 66,000, as a result of natural attrition, including through retirement-age severance, redeployments made in the course of restructuring, utilization of human resources from outside as well as inside the Hitachi Group, and other such steps and factors. The new systems governing qualifications and pay implemented this spring will be utilized, together with target management systems, in the rigorous application of a system based on results and abilities.
                      -150 billion yen was originally allocated for investment in plant and equipment. While 70 billion yen of this hasalready been used, in principle further investments will be frozen pending a full screening of items.
                      -Research and development projects will be further prioritized and streamlined to reduce the original sum of 380 billion yen allocated for research and development expenditure to 350 billion yen.

                      3.Consolidation and disposition of idle assets

                      4.Restructuring of operating divisions
                      1)Comprehensive restructuring of semiconductor operations
                      -TwinStar Semiconductor Incorporated, a joint venture established with Texas Instruments Incorporated, was dissolved in March 1998.
                      -Personnel redeployment and organizational changes required to focus semiconductor operations on system LSIs instead of memories were completed in July 1998.
                      -The consolidation of two design subsidiaries was completed in April 1998.
                      -Back-end assembly operations of Hitachi Semiconductor (Europe) GmbH was transferred to an assembling plant in Malaysia.
                      -Production line operations at Hitachi Semiconductor (America) Inc. will be frozen and the sales and design divisions consolidated to strengthen the company's ability to design products that answer market needs.
                      -As part of the streamlining of operations, five domestic subsidiaries will be reorganized and consolidated to form three companies.
                      -This fall 1998, volume production of 64-megabit DRAMs based on 0.18-micron process technology will be started. During the first half of the fiscal 1999, production will be centralized with Hitachi Nippon Steel Semiconductor Singapore Pte. Ltd. forming the main production base.
                      -The ramping-up of system LSI operations will be accelerated to double sales to 200 billion yen by 2000. This will be achieved by setting up a System LSI Development Center to make effective use of the company's extensive fund of systems expertise, the concentrated deployment of human resources and making optimum use of the SuperH and H8 microprocessors and other such areas in which the company has a technological edge.
                      -The aim of these measures is to move into the black in fiscal 1999.

                      2)Consumer products divisions of the parent company to be made into separate entity
                      -Hitachi is already implementing streamlining and trimming the fixed costs of the manufacturing and sales operations. The fixed costs of the parent company's manufacturing divisions during the first half of fiscal 1998 were 15 percent less than in the corresponding period of the preceding fiscal year. By the end of the first half of fiscal 1998 the sales divisions will have 3,000 employees, 500 fewer than the corresponding period of the preceding fiscal year.
                      -In order to achieve further reductions in fixed costs, the manufacturing divisions will be reorganized as separate entities within a year.
                      -In response to infrastructural changes in the consumer products industry, the focus will be on developing as a life solutions based operation able to provide products meeting individual customer requirements. In addition to the enhancement of operations having a stable foundation, resources will be concentrated in the areas of digital technology and ecology to promote the changeover to high value added sectors. Concerning the development of new products, the three S's of Segment, System and Standard will be emphasized to create new demand and present customers with life style for the new age.
                      -These measures will move consolidated operating income of Consumer Products segment into the black during the second half of fiscal 1998, and will also ensure stable earnings next fiscal year and beyond.

                      3)Rigorous rationalization of power systems operation
                      -Business functions will be concentrated in Hitachi City in order to effect restructuring commensurate with the scale of sales involved.
                      -Streamlining will include the consolidation of eight subsidiaries affiliated with the Hitachi Works into four units by the end of the year.
                      -Cooperative arrangements with General Electric Company and Toshiba Corporation will be expanded.
                      -As a result of these measures, sales will start to recover in the second half of fiscal 1999, led by sales by the nuclear power division. Taken together with the effects of the restructuring, earnings will improve.

                      4)Consolidating of industrial systems and equipment operation
                      -Manufacturing, sales and service operations of the motor division and the air-conditioning system division of the parent company, together with those of subsidiaries, will be consolidated.

                      5)The information systems divisions of the parent company to focus on software and services
                      During the current fiscal year some 1,000 personnel will be transferred to the information systems divisions to strengthen their capabilities to meet the service requirements arising from Japan's "Financial Big Bang," network services such as TWX-21, outsourcing services and so forth.

                      5.Implementation of management reforms in the parent company to ensure a speedy response to market changes (To be implemented from April 1999)

                      -Each business division will be substantially an independent company, with considerable decision-making powers and responsibilities.
                      -The current Executive Committee, vice-president committee and other such organs will be abolished. Important decisions that affect the whole company will be made substantially by a "corporate management council."
                      -The head office functions will be minimized to roughly halve the present level.
                      -In October a "Hitachi Group committee" will be set up to discuss management strategies important to the whole Hitachi Group. The result will be more efficient consolidated management of the Hitachi Group.


                      WRITTEN BY Secretary's Office
                      All Rights Reserved, Copyright (C) 1998, Hitachi, Ltd.

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