Hitachi Shenzhen Operations to be Center of Competency for HDD Technologies
Tues 27 March, 2007

Part of Hitachi’s Broader, Strategic Manufacturing Consolidation Plan; Represents Key Initiative for 2007 Business Improvement

SHENZHEN, China, March 27, 2007 – As part of a strategic plan for consolidating manufacturing and development worldwide, Hitachi Global Storage Technologies (Hitachi) today announced that two of its three Shenzhen-based facilities will become the company’s primary producers of media and head-gimbal assemblies* (HGA) – key components in the production of hard disk drives (HDD). As a result, Hitachi’s Shenzhen operations will become the center of technology competency for these two components.

Hitachi’s Shenzhen plants already produce media, HGA and final HDDs today. Shenzhen will now add to its mission the manufacturing of media for enterprise hard drives and HGAs for 2.5-inch automotive HDDs. The increased mission for media and HGA production intensifies Shenzhen’s position as a Hitachi mega-manufacturing site for HDD production.

The mega-manufacturing concept is based on the premise that greater levels of efficiencies can be gained by placing the whole manufacturing supply chain – from component manufacturing, to suppliers, to final assembly, to shipping – in close proximity. This potentially 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.

“Hitachi’s strategic consolidation plan is good for our company, our customers and our Shenzhen employees; it also further demonstrates our commitment to Shenzhen and its people,” said Dirk Thomas, president, Greater China, Hitachi Global Storage Technologies. “As the primary manufacturer of media and HGAs for Hitachi, Shenzhen will develop a level of technology specialization that will result in highly valued skill-sets for the local workforce and our customers.”

The manufacturing changes in Shenzhen, along with others detailed below, represent a key initiative of Hitachi’s objective to achieve and maintain business excellence. These consolidations are 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. The changes are expected to result in a potential savings of nearly $300 million (USD) over the next five years by streamlining operations and maximizing efficiencies.

Centers of Competency

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. Hitachi’s state-of-the-art manufacturing facilities, primarily based in Asia, are being customized to create an even higher level of specialization and reliability for these hard drive components. In addition, centralized development will accelerate the implementation of future hard drive technologies, such as patterned media and thermally-assisted recording.

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.

Efficiencies, Productivity & 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. Hitachi expects to reduce its roughly 40,000-person global workforce – both regular employees and contractors – by some 11 percent as a result of the closure of its Guadalajara plant. Non-cost related benefits of Hitachi’s consolidation plan will be evident in the more efficient and productive manufacturing process – from component manufacturing to final hard-drive assembly. These efficiencies are expected to result in a shortened manufacturing process, higher product yields, less scrap and greater customer satisfaction. * 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.