Medium-Term Management Strategy Aiming at “\1 Trillion in Sales”

In April 2002, to mark the actual start of operations in the new fiscal year, Hitachi High-Technologies held welcoming ceremonies for new employees at the Head Office, Naka Division, and Kasado Division.

President Higuchi told the new employees, “We have put in place a system that will enable us to provide powerful solutions through the winning combination of “people” and “technology.” In order to demonstrate our strengths it is important that we quickly realize the benefits of business integration. I hope you, the new employees who will be responsible for carrying us forward in the next era, will endeavor to undertake the following four points: “embracing big ambitions,” “undertaking challenges with all your might,” “aiming to become a first-class professional,” and “making the most of your individuality.”

In June Hitachi High-Technologies announced its financial results for 2001. There was strong interest, and nearly 100 analysts attended the announcement. Business performance (non-consolidated results) was affected by the worldwide business slowdown due to the IT slump originating in the United States, resulting in sluggish demand for semiconductor manufacturing equipment and optical communication components. However, even though sales, operating profit, and current net profit declined compared with the financial results of Nissei Sangyo Co., Ltd., for fiscal 2000, the analysts held favorable expectations for business integration and issued reports with buy recommendations for Hitachi High-Technologies.

In addition, a three-year “consolidated medium-term management plan” to end in fiscal 2004 and containing targets of “sales of 1 trillion” and “operating profit of \30 billion” was announced.

The consolidated medium-term management plan set forth as key policies delivering total solutions with high added value by making the most of Hitachi High-Tech’s unprecedented corporate structure fusing trading company and manufacturing functions, thoroughly implementing a sales division profit management system, strengthening the nanotechnology business comprising devices such as analyzers for the biological field, and development of new products and businesses. It identified as common strategic goals promotion of business investment (R&D and capital investment as well as investment in alliances), improving product competiveness, and strengthening of consolidated sales. Finally, it set targets based on the business strategy for individual segments and business strategy for group companies.

With these fundamental strategic aims as the basis, reorganization and integration of the semiconductor manufacturing equipment and measuring equipment business operations in North America, Europe, and Asia got underway. In Japan the SAP R/3 Implementation Project was launched to reform the main information system in order to boost efficiency at the Head Office and branch offices.

While these initiatives were underway, in September President Higuchi resigned due to health reasons and Chairman Kuwata concurrently assumed the post of President. In October Hitachi High-Technologies announced an agreement to purchase the shares of the chip mounter manufacturer and service companies Sanyo High Technology Co., Ltd. and Sanyo High-Tech Service Co., Ltd. from Sanyo Electric Co., Ltd. Hitachi High-Technologies acquired all shares of both companies on April 1, 2003, changed their names to Hitachi High-Tech Instruments and Hitachi High-Tech Instruments Service, respectively, and established an integrated “manufacturing, sales, and services” system for the chip mounter business. In October 2003 Hitachi High-Technologies agreed to acquire all shares of Hitachi Electronics Engineering Co., Ltd. from Hitachi, Ltd., and on March 1, 2004, it was made a subsidiary.

Business performance as reflected in the consolidated financial statement for fiscal 2001 was sluggish due to the IT slump, with sales of \738.3 billion, operating profit of \9.9 billion, and current net profit of \5.5 billion. In the consolidated financial statement for fiscal 2002, however, sales of life science products such as DNA sequencers were strong, and sales totaled \778.2 billion, operating profit \11.8 billion, and current net profit \5.9 billion, in spite of the continuing worldwide slump. The consolidated financial statement for fiscal 2003 reflected an upturn in the semiconductor market climate, notwithstanding global instability from the Iraq war and SARS epidemic, with sales of \831.1 billion (up 6.8% year on year), operating profit of \13.8 billion (up 17.0% year on year), and current net profit of \7.2 billion (up 20.8% year on year).

“Briefing on consolidated medium-term managementplan”
“Briefing on consolidated medium-term managementplan” for securities analysts
Joint press conference
Joint press conference announcing transfer of the chip mounter business