Hitachi to Transition Hard Drive Component Manufacturing from Guadalajara
Thur 22 March, 2007

Move Represents Primary Initiative in Business-Improvement Plan

GUADALAJARA, Mexico, March 22, 2007 – Hitachi Global Storage Technologies (Hitachi) is today announcing a series of manufacturing and development consolidations that includes the phasing out of its slider-manufacturing plant in Guadalajara, Mexico and relocation to Laguna, Philippines. These consolidations represent a key initiative of the company's plan to achieve and maintain business excellence and are expected to result in $300 million dollars (USD) in savings over the next five years. An integral component in the manufacturing of hard disk drives (HDDs), the slider carries the read/write head, which records and retrieves data.

"After more than a decade as part of the Guadalajara community, we are extremely saddened to have to move our operations, but the challenges of our business are making this necessary for our survival," said Hiroaki Nakanishi, CEO, Hitachi Global Storage Technologies. "We would like to extend our deepest gratitude to the people, government and our business partners in Guadalajara for the support we've received over the years and for their cooperation as we go through this very difficult transition period."

Approximately 4,500 employees and contractors will be affected by the closure of Hitachi's Guadalajara plant, which is expected to be completed by the middle of 2008. Hitachi is working with local government bodies and its labor contractors to ensure that all legal requirements for separating employees and contract workers are met. Hitachi is also working directly with its Guadalajara employees and contractor workers through their employers to support their transition. As a result, Hitachi expects to reduce its nearly 40,000-person global workforce by 11 percent.

Centers of Competency

Manufacturing and development consolidation is one of the top initiatives Hitachi is undertaking to achieve long-term business health and to underscore the company's commitment to the hard drive business.

Through the planned consolidations, Hitachi will create "centers of competency" for the development and production of sliders, head-gimbal assemblies (HGA) and media* – three of the most critical components in the manufacturing of HDDs. The following consolidations comprise Hitachi's new manufacturing/development strategy, which is expected to be completed by the end of 2008:

Manufacturing consolidation

• Laguna, Philippines – increases existing slider manufacturing to become Hitachi’s center of competency for the production of sliders. Consequently, Hitachi will phase out its slider manufacturing facility in Guadalajara, Mexico by the middle of 2008.
• Shenzhen, China – increases existing media manufacturing to become Hitachi’s media center of competency. As a result, Hitachi will phase out its media manufacturing operation in Odawara, Japan by the fourth quarter of 2007. Hitachi’s Shenzhen operations will also become the center of competency for HGA manufacturing.
• Prachinburi, Thailand – receives new mission for manufacturing 2.5-inch automotive hard disk drives and increases existing HGA production.
• San Jose, California – retains media manufacturing, complementing media production in Shenzhen.

Development consolidation

• Odawara, Japan – becomes the center of competency for slider development.
• San Jose, California – becomes center of competency for media development.

Boosting Mega-manufacturing

Locating these centers of competency near Hitachi’s final HDD-assembly plants in Thailand and China will streamline operations and advance Hitachi’s mega-manufacturing concept. This concept is based on the premise that greater levels of efficiencies can be gained by placing the whole manufacturing supply chain in a central hub.

Close proximity between the component- and final-HDD manufacturing facilities shortens cycle times and minimizes shipping costs – both of which can have a great impact on Hitachi’s ability to deliver products with time-to-market and time-to-volume leadership. Hitachi’s mega-manufacturing strategy also advances the efficiency of customers, whose manufacturing facilities are also predominantly based in Asia.

Cost Reduction

Hitachi will realize nearly $300 million in savings as a result of its planned manufacturing and development changes. This will come about through reductions in workforce, capital expenditure and other operational expenses.

* On a hard drive, the head-gimbal assembly is the arm that carries the slider, which in turn holds the read/write head; the media is the disk or platter upon which data is written.

About Hitachi Global Storage Technologies

Hitachi Global Storage Technologies is a storage technology leader, founded in 2003 through the combination of Hitachi's and IBM's hard disk drive businesses. Hitachi GST enables users to fully engage in the digital lifestyle by providing high-value hard drives in formats suitable for the office, on the road and in the home.

With its legacy in hard drive invention, Hitachi GST led the industry in celebrating the hard drive's golden anniversary in 2006. After five decades of innovation, the hard drive has had a profound effect on the computing and consumer electronics industries. That heritage lives on at Hitachi GST through products that define the standard for hard drive miniaturization, capacity, performance and reliability.

Hitachi GST offers a comprehensive range of hard drive products for desktop computers, high-performance servers, notebooks and consumer devices. For more information, please visit the company's web site at www.hitachigst.com.

About Hitachi, Ltd.

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.