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R&D strategy for new growth in Hitachi 10 th April 2008 Dr. Eiji TAKEDA Vice President & Executive Officer, General Manager, Research & Development Group, Hitachi, Ltd. © 2008 Hitachi, Ltd. All rights reserved.
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Page 1: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

R&D strategyfor new growth in Hitachi

10th April 2008

Dr. Eiji TAKEDAVice President & Executive Officer, General Manager, Research & Development Group,Hitachi, Ltd.

© 2008 Hitachi, Ltd. All rights reserved.

Page 2: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

1© 2008 Hitachi, Ltd. All rights reserved.

  

Global R&D Strategy

Creating an industry which can overcome global issues and produce global competitiveness

Generate innovation for the creation of new industriesFusion of Hitachi Group’s strengths and employing external collaborations1.Commitment to maintain and strengthen the MONOZUKURI industryFortifying innovative MONOZUKURI and increasing the productivity of service industries

2.Speed-up global deploymentExpanding a seamless global R&D network3.Foster global and innovative human resourcesRecruitment, fostering and appointment of global and highly-skilled experts4.

Global R&D strategy supporting further new growth in Hitachi

Page 3: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

Contents1. “R&D Management Vision” for Hitachi growth

2. For the expansion of current business areas

3. Fortifying the growth strategy

4. Creation of innovative technology

Page 4: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

Contents1. “R&D Management Vision” for Hitachi growth

2. For the expansion of current business areas

3. Fortifying the growth strategy

4. Creation of innovative technology

Page 5: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

4© 2008 Hitachi, Ltd. All rights reserved.

1-1.

Rigorous focus on market-oriented approach and profit creation

Basic Management Policy “Collaborative creation and profit”

Management Goal

Establish a stable, high profit structure

Key Initiatives

1. Increased profitability through rigorously FIV-based management

2. Building a stable, high profit structure

3. Evolution to group management for high profitability

4. Innovation through collaborative creation

Hitachi’s management policy

Page 6: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

5© 2008 Hitachi, Ltd. All rights reserved.

1-2.

Manage R&D to produce "World No.1", "Only one" technologyManage R&D to produce "World No.1", "Only one" technology(1) Technology viewpoint + Laboratory balance sheet (B/S.P/L) viewpoint(2) Comply with short-term business division needs and prepare long-

term research

Management placing emphasis on R&D as the source of profit and corporate value

Evolution to “Hitachi = Technology”

Managementof

Research

Return onR&D

Research-based

Management

II

DDPP

SS

Profit Development: Technology development / Patentacquisition

Sales

R&D investment

Return on investments

RR

Innovation Cycle

“R&D Management Vision” for Hitachi growth

Determine how much R&D investment has contributed to Hitachi Group’s

(1) Sales, profit increase(2) Creation of new

business(3) Innovative new

technology,

and manage based on the innovation cycle

Page 7: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

6© 2008 Hitachi, Ltd. All rights reserved.

1-3.

Management systems, Production systems & processesMechatronics applications systems

Info. & Telecommunications, Embedded systems, Solution LSI, Storage, Life sciences

Human & Information systems, Health systems, Environment & Energy, Nano-materials & Devices

Information systems, Security, Ubiquitous, Storage, Service solutions

Public systems, Devices, Components, Materials

Current business

expansion

Generation of new business

Creation of innovation technology

1 2 3

6 Corporate Laboratories

Central Research Laboratory <950>

Central Research Laboratory <950>

Mechanical Engineering Research Laboratory <380>

Mechanical Engineering Research Laboratory <380>

Production Engineering Research Laboratory <340>

Production Engineering Research Laboratory <340>

Systems Development Laboratory <500>Systems Development Laboratory <500>Hitachi Research Laboratory<680>

Hitachi Research Laboratory<680>

Advanced Research Laboratory <100>Advanced Research Laboratory <100>

Kokubunji-shi, Tokyo Yokohama-shi, KanagawaHitachinaka-shi, Ibaraki

Hatoyama-machi, SaitamaKawasaki-shi, Kanagawa

Hitachi-shi, Ibaraki

Research mission for new growth

<No. of employees as at 2008/4/1>

Page 8: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

7© 2008 Hitachi, Ltd. All rights reserved.

1-4.

Gro

uped

into

5 a

reas

Circuit design & packagingNanoelectronics

Energy electronicsWireless

New energyMachinery / Plant

SimulationMotor

Human sciencesService engineering

Management systemsDesign platforms

Info. processing platformsIntelligent info. processing

SensorNetSecurity

Embedded software

 

Physics/Chemistry

Information

Humanities

Mechanical

Electrical

 BusinessTechnology

Technology × Business matrix to objectify fortification guidelines

BatteriesMaterials

Machining processMeasurementBio-platforms

Technology axis

Social Infrastructure TechnologyInformationLifeIndustrial

Engine of growth: “Fortifying research matrix”

Business axis: Hitachi policy

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8© 2008 Hitachi, Ltd. All rights reserved.

1-4.

Gro

uped

into

5 a

reas

Circuit design & packagingNanoelectronics

Energy electronicsWireless

New energyMachinery / Plant

SimulationMotor

Human sciencesService engineering

Management systemsDesign platforms

Info. processing platformsIntelligent info. processing

SensorNetSecurity

Embedded software

 

Physics/Chemistry

Information

Humanities

Mechanical

Electrical

 BusinessTechnology

Technology × Business matrix to objectify fortification guidelines

BatteriesMaterials

Machining processMeasurementBio-platforms

Technology axis

Social InformationIndustrial

Engine of growth: “Fortifying research matrix”

A Focus on platform research       

⇒ Part 2: Current business

CB

B Fortify environmental, energy-saving research

C Fortify next-generation information research 

D Deployment of new electronics

⇒ Part 3: New business

⇒ Part 3: New business

⇒ Exhibited

Infrastructure TechnologyLife

Page 10: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

9© 2008 Hitachi, Ltd. All rights reserved.

Business strategy roadmap

R&D Group

1-5.

「Management for collaborative creation & profit」

Environmental Vision 2025

Sponsored research(50%)

Adv. sponsoredresearch (30%)

Frontier research(10%)

Platform research (10%)

 Est. innovative business(Shifts in paradigm)

 Create new businesses(speed-up synergy)

 Current business expansion(Generate No. 1 businesses)

Business Group

Managementstrategy

Long-term technology development plan

2010Business target 20252008 2015

Research Schemes

Page 11: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

Contents1. “R&D Management Vision” for Hitachi growth

2. For the expansion of current business areas

3. Fortifying the growth strategy

4. Creation of innovative technology

Page 12: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

11© 2008 Hitachi, Ltd. All rights reserved.

2. Contribute to No. 1 businesses

2-1.

Actual figure: 16.8%

1. “Collaborative Creation and Profits” progress presentation (28th May 2007)

① Place 15% of corporate researchers in the business division

② Cut Development time by 30%

■ Corporate organization: Supervisory Office for MONOZUKURI

■ R&D organization:Follow-up scheme on development timeTechnology platforms across the Group

MONOZUKURI innovation based on advanced technology

R&D strength & Contributing to profit generation

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12© 2008 Hitachi, Ltd. All rights reserved.

2-2.

Supervisory Office for MONOZUKURI

1st Subcommittee: Reform of development, design & manufacturing process

2nd Subcommittee: Reinforce risk management, project management skills

3rd Subcommittee: Enhance reliability

4th Subcommittee: Reinforce knowledge-based management

5th Subcommittee: Enhance MONOZUKURI technology

6th Subcommittee:

● Analysis-led design● Phase-gate system● W/w-TSCM innovation● Data-linked MONOZKURI

● PM support system, PM education

● Reinforcing quality assurance activities

● Consolidate common DB of success, accident, and incident examples

● Intensify committee activity, enhance factory floor skills

● Hand-down the legacy of Hitachi Founding sprit

Policy: Injecting innovation into MONOZUKURI through cutting-edge technology development

Automatically generated analysis model to reduce design labor

Applied from Sept. 2007 in the next shinkansen and express train for the overseas market(Railway car strength evaluation time: 21 days → 10 days)

Analysis-led Design

Data-linked MONOZUKURIHigh-speed detection of trouble/defects in

process & equipment linked with statistical data

Processequip.

Monitoring all equipment data

Monitor

Early maintenance/inspection

Trouble?Yes

Automatically generated analysis model

Statistics based inspection standard

30% cut in R&D time through “MONOZUKURI innovation”

Personnel, organization, Hitachi Founding Spirit

Page 14: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

13© 2008 Hitachi, Ltd. All rights reserved.

Tech

nolo

gy P

latf

orm

Det

ails Electronics

Environment & EnergyNew materialsMedical & BiotechnologyNanotechnology

OutsourcingEA*/SoA**/Initial stage consultingApplication of advantage technology & devicesNew Service Methodologies

Service Science

Electron beam-based measurementNon-destructive measurementProduct design supportOptimal motor development

Solution LSIEfficient systems developmentPlatformingProject managementOptimal inverter development

Embedded SystemsDigital EngineeringMaterials

*EA: Enterprise Architecture**SoA: Service Oriented Architecture

Technology platforms supportingMONOZUKURI reform

2-3.

Mechanical & Electrical Electronics Information

Group wide enhancement & fusion of common key technology and personnel developmentM

ater

ials

Res

earc

h La

bora

tory

Mec

hani

cal

Inno

vatio

n Ce

nter

Mec

hani

cal

Inno

vatio

n Ce

nter

Adva

nced

Si

mul

atio

n Ce

nter

Mot

or I

nnov

atio

n Ce

nter

Adv.

Mea

sure

men

t &

Ana

lysi

s Ce

nter

Inve

rter

In

nova

tion

Cent

er

Embe

dded

Sys

tem

Pl

atfo

rm R

esea

rch

Labo

rato

ry

Coop

erat

ive

Crea

tion

with

Cus

tom

ers

(Lab.

Ope

n D

ays)

uVAL

UE

Inno

vatio

n Ce

nter

’05.03 ’02 ~’05.10’05.04’04.04 ’04.04 ’05.10 ’06.04’04.04

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14© 2008 Hitachi, Ltd. All rights reserved.

2-4.

CRL (Central Research Laboratory), ARL (Advanced Research Laboratory), HRL (Hitachi Research Laboratory), SDL (Systems Development Laboratory), MERL (Mechanical Engineering Research Laboratory), PERL (Production Engineering Research Laboratory), CEL (Consumer Electronics Laboratory, Consumer Business Group)

SocietyAluminum train carriage (A-train) (Domestic No. 1)Rail traffic control system (Domestic No. 1)

MERL, HRLSDL, HRL

Industry

Critical-dimension SEM (W/w No. 1)DNA sequencer (W/w No. 1)Bio/Immunological assay equipment (W/w No. 1)Drill hole opener (W/w: No. 1)Hot-wire air flow sensor (W/w No. 1)

CRL, PERL, MERLCRL, ARLCRL, PERLMERL, HRLHRL, MERL

Everyday lifeOptical disk drive (W/w: No. 1*1)

MRI equipment (low-medium magnetic field; open) (Domestic, Europe No. 1)

CRL, MERL, CEL, PERL

CRL, HRL

Information

Enterprise storage equipment (W/w: No. 1*2)

Operation management software JP1 (Domestic No. 1*3 for 10 consecutive years)

ATMs (Domestic No. 1, China No. 1*1)Finger vein authentication system (Domestic No. 1)

SDL, CRL

SDL, CRLMERL, CRL, SDLCRL, SDL

PlatformTechnology

2.5-inch HDD (W/w No. 1) Magnetic Materials (NEOMAX) W/w No. 1)Photosensitive film (W/w No. 1)Anisotropic Conductive Film for displays (W/w No. 1)

CRL, PERL, MERLHitachi Metals, Ltd.(Magnetic Materials Research Lab.)Hitachi Chemical Co., Ltd. (New Applied Materials R&D Center)

[W/w: Worldwide *1: Quantity, *2: Capacity, *3: Monetary; share based on 2006 sales]

Contributing to No. 1 business

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15© 2008 Hitachi, Ltd. All rights reserved.

2-5.

(CTRL: Channel Tunnel Rail Link)Large-scale collision analysis

Enhancing riding comfort & safety

Large-scale fluid analysis Internal/external noise prediction technology

Enhancing comfort

Carriage behavior analysis, testing technology

2007.09~2008.03U.K. test runs

Environment-conscious hybrid technology

1st major European order: U.K. CTRL

London

New express line

Local lines

Ashford

Strait of Dover

   2nd Oct. 2007: Opening ceremony of the carriage maintenance depots

(Attended by the U.K. Minister of Transport & the Japanese Ambassador to the U.K.)

MONOZUKURI Innovation technology

Prototype high-speed hybrid train “HAYABUSA”

2009.12 ~ Start of commercial operations

2007.06 ~ Delivery of 4 prototype trains2007.10 ~ Start of test runs

World’s first commercial operation(East Japan Railway Company, Koumi line, 2007.07)

Conglomerate MONOZUKURI strength: CTRL (for Europe)

海峡トンネル

開所式には英国運輸大臣、在英日本大使が出席

ハイブリッド化

環境・省エネルギ環境・省エネルギ

試験 HAYABUSA

リチウムイオン電池(15kWh)

ハイブリッドシステム

モータ

海峡トンネル

開所式には英国運輸大臣、在英日本大使が出席

ハイブリッド化

環境・省エネルギ環境・省エネルギ

試験 HAYABUSAInverterGenera-tor

Converter

Lithium ion battery (15 kWh)

95 kWx2

230kW

Hybrid system

Engine(300kW) Motor

Wheel

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16© 2008 Hitachi, Ltd. All rights reserved.

2-6.

Old Hitachi model

Nearline(Low cost) Other vendor

USP V Storage administratorVirtual storage equipment

(Awarded 50th Best New 10 Products Awards – Nippon Brand Prize

(Jan. 2008, The Nikkan Kogyo Shimbun Ltd.)

1st Oct. 2007 World’s top record(SPC-1 benchmark results)

3 consecutive years W/w top share11 consecutive years top domestic share

USP V (launched May 2005)

Large-scale corporate data compilation

Virtual equipment technology: Utilize the data storage capacity of multiple equipment

+ +

Cultivate undeveloped businesses ⇒

Plan conceptEstablished concept of virtualization technology

Develop No. 1 technology

Expand U.S. market

Product developmentDetermine specifications

Storage solution business

Hitachi AmericaSAN Solutions Lab.

(U.S.)

Hitachi DataSystems(U.S.)

Disk Array Systems Div.SAN Systems Solution Div.

Software Div.

Technical information

Customerneeds

Product/Customer

information

Capacity virtualization technology: Virtualizes compilation of a greater volume of data than actual capacity

150TB

100TB 80TB 20TB

Systems Development Laboratory

Global synergy: Enterprise storage equipment

348.0 billion JPY[FY 2006]

390.0 billion JPY[FY 2009 target]

Draw-upSpec.

Est. 1999

Customer acquirement service

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17© 2008 Hitachi, Ltd. All rights reserved.

22--7.7.

Finger vein authentication business

20.0 billion JPY<FY 2006>

Near infra-red light

Finger vein pattern

ATM authentication

2005

Central Research Laboratory

② Image processing

① Pick-up image with near-infrared light

③ Pattern matching

Automobile

Finger vein authentication technology (2000)

・ Identity theft・ Skimming・ Personal

information leaks

・ Digital shop-lifting    

::

50.0 billion JPY<FY 2009 target>⇒

Social needs

Technology fusion

Optical measurement

Medical technology

Image recognition

Ultrasound diagnostics

Products & applications 「「Finger vein authentication Finger vein authentication ATM」ATM」Sumitomo Mitsui Banking Corporation, Mizuho

Bank, Ltd., Risona Bank, Limited,am/pm(@BANK), Japan Post Bank Co., Ltd., etc.

In the future

Oct. 2007 Tokyo Motor Show2004

Admission control

Social needs and fusion of technology:Finger vein authentication system

Employed by 80% of commercial banksAwarded

2005 (48th) Best Ten New Products Award – Nippon

Brand Prizeby The Nikkan Kogyo

Shimbun, Ltd.(Jan. 2006)

Awarded 2006 (38th) IchimuraPrizes in Industry -

Meritorious Achievement Prize

by The New Technology Development Foundation

(April 2006)

Page 19: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

Contents1. “R&D Management Vision” for Hitachi growth

2. For the expansion of current business areas

3. Fortifying the growth strategy

4. Creation of innovative technology

Page 20: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

19© 2008 Hitachi, Ltd. All rights reserved.

1. Speed-up globalization

3-1.

・ Broadcasting and communication convergence: Lead “Broadgather” technology

・ Environment, energy conservation: development of core technology・ Metropolitan renaissance: Building solutions

(1) Fortify overseas R&D centers

(2) R&D-led deployment of global business

2. Following a business strategy for high-growth

(1) Environmental Vision 2025

(2) Accelerate creation from Group synergy

Growth strategy fortification plan

Page 21: R&D strategy for new growth in HitachiD strategy for new growth in Hitachi 10th April 2008 ... project management skills ... Critical-dimension SEM (W/w No. 1) DNA sequencer ...

20© 2008 Hitachi, Ltd. All rights reserved.

• Automotive components• Broadband wireless transmission

systems,• SAN solutions

• Fundamental device physics• Organic electronics• Mobile communications• Security• Automotive systems

Staff: 80Staff: 80

Staff: 40Staff: 40

3-2.

Lab. Head: George Saikalis

Staff: 5Staff: 5

Staff: 35Staff: 35

Fundamental physics research at the University of Cambridge (Mission 3)

• Hitachi Cambridge Lab.

R&D support for local automobile manufacturers (Mission 1)

• Automotive Research & Development Lab.

Info. & Telecomm., Software, Env. tech. devt. (Mission 2)Industry-academia cooperation with Tsinghua Univ., Fudan Univ., etc. (Mission 3)

Hitachi Asia Ltd. (Singapore)Hitachi (China) R&D Corporation

Hitachi Europe Ltd. Hitachi America, Ltd.

1. Contribute to local business operations2. Conduct research rooted in the local needs and talents3. Cooperate with local talent & academic centers of excellence

Mission of overseasR&D centers

VP: CHEN Yang-Qiu

Fortify overseas R&D centers

Close cooperation in development with the Big 3 automobile manufacturers (Mission 1)

• Automotive Products Research Lab.

R&D for the next-generation U.S. storage business• Storage Area Network Laboratory (Mission 1)

• IP network• Digital TV• Advanced software• Materials, etc.

• Storage mechanics

R&D in line with national strategy to fortify storage technology (Mission 2)

Act as a regional R&D hub in ASEAN countries and south Asia (Mission 2)

1. Speed-up globalization

Lab. Head: David Williams

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21© 2008 Hitachi, Ltd. All rights reserved.

Mic. 4

Mic. 2

Mic. 3

(Conduct test locally: alone or jointly)

Mechatronics modeling

(Delivered to customer)

Start

Goal New route

Statistical traffic info. processing

(Collect local data)

Noise measurement/improvement

Electro-magnetic noise measurement/improvement

Up-to-date information on customer needs, etc.

Hitachi Group

CD-SEM

Joint research with IBM to lead Group business (Feb. 2008)

R&D customized for US automobile manufacturers

IBM HitachiJoint research (Feb. 2008 start)

Automotive Products Research Lab.Est. 1989 Staff 19 (local staff 10)

Local manufacturers: GM, Ford, Chrysler)

Stanford UniversityElementary reaction model

LES analysis

Virtual boiler analysis

W/w joint research for environmental defacto’s

High-temperature materials

Hitachi Research Laboratory

Low NOxcombustion

Power & Industrial Systems R&D Lab.

CoalOxygen

Air

N2

Advanced purification

CO2

H2OExhaust

O2 combustion boiler

Aachen UniversityOxygen CO2 combustion

Ash radiative model

University of Bochum

Babcock-Hitachi K.K.Kure Research Laboratory

5MW combustion trial

R&D-led deployment of global business3-3.1. Speed-up globalization

Close to customers / prompt response

Semiconductor manufacturing equipment business

Semiconductor inspection equipment business

•IBM Thomas J. Watson Research Center

•State University of New York (Albany NanoTechComplex)

New manufacturing equipNew analytical equip.

Fundamental research on 32nm semiconductors &

beyondClarification of atomic level semiconductor physics

Global competition in coal thermal power: pilot experiment in CO2 retrieval (2009)

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22© 2008 Hitachi, Ltd. All rights reserved.

3-4.

1 Reinforce global warming countermeasures

2 Strengthen environment business

3 Promote collaborative creation projects on a global scale

4 Strengthen structure for promoting environmental management

Form alliances with corporate partners worldwide, governmental institutions, universities

Hitachi Group Chief Environmental Strategy Officer (CEnO) appointed 1st December 2007; Environmental Strategy Office established 1st January 2008

2. Business strategy for high growth

Contribute to 100 million ton reduction in CO2 emission through Hitachi group products by 2025

Aspire to transform all Hitachi products to Eco-products by 2025

Environmental Vision 2025

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23© 2008 Hitachi, Ltd. All rights reserved.

• Reduction in power consumption during operation (compared with previous year)

FY 2005: 720 million kWh FY 2006: 810 million kWh

(equivalent to 234,000 households)

(No. of models)

4,000

6,000

5,000

3,2944,506

5,491

Businessdivision

H-25 gas turbine Plasma TV

2.5” HDD Amorphous transformer

Information & Telecommunication

systems

Electronic devices Power & Industrial systems

Digital media & Consumer products

Highly functional materials

Anisotropic conductive film for displays Enterprise storage

equipmentClinical testing equip.

No. of models

Product examples

1,473 206 9521,5291,331

Refrigerator Eco-cables(vinyl-chloride-less)

TFT module

(7,000)7,000

3-5.

2025

All products

FY 2006 achievements

02004 2005 2006 2010

Increase Eco-products

(FY)

2. Business strategy for high growth

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24© 2008 Hitachi, Ltd. All rights reserved.

3-6.

■ Market size:3,23.2 billion JPY (2005) ⇒ 420.0 billion JPY (2010)

都市

家庭

オフィス

産業ブロードキャスト

バックエンド ネットワーク

ブロードギャザー

フロントエンド

都市

家庭

オフィス

産業ブロードキャスト

バックエンド ネットワーク

ブロードギャザー

フロントエンド

Announced February 2008

Broadgather: Large-scale monitoring using network cameras

【Technology developed】• Efficient transmission• Image enlargement of emergency situations• Seamless search of similar images from the

screen

Accelerate creation from Group synergy: Broadcasting and communication convergence

• Service・ASP market:

• Hardware/Software market:  

179.4 billion JPY → 2,600 billion JPY

143.8 billion JPY → 160.0 billion JPY

BroadcastIndustry

Office

Cities

Homes

FrontendNetworkBackend

Broadgather

Broadband IP network

NGNPublic & Police

MonitoringCenter

HomesSchools

Roads

Shops

Cameras & Sensors

2. Business strategy for high growth

Social Industrial Life  Information Technology

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25© 2008 Hitachi, Ltd. All rights reserved.

3-7.

CO2 reduction IT energy conservation

Announced Jan. 2008 Announced Feb. 2008

LSI消費電力2/3に低減⇒装置電力5%削減

Low-power IT equipment

High-temp lead free solder Lead-free glass

Low-power multi-core LSI

Temp. raised from 150℃ ⇒ 200℃<Applicable to power semiconductors>

Achieved with vanadium system   Reserves: 38 million tonsConventional: Bismuth systems   Reserves: 680,000 tons

サーバ/ルータ/ストレージ バックプレーンボード

送信LSI受信LSI

サーバ/ルータ/ストレージ バックプレーンボード

送信LSI受信LSI

Core#2 Core#3

Core#1

Core#4 Core#5

Core#6 Core#7

SNC

0SN

C1

DBG0

DBG1

DBSC

DDRPADCPGM

CSM

LBSC

GD

BG SHWY

URAMDLRAM

Core#0ILRAM

D-cache

I-cache

VSWC

• Increasing efficiency of coal thermal power plants

• Retrieve CO2emission from fossil fuels

Power consumption reduced to 2/3 ⇒ 5% overall power reduction in equipment

Transferring to electricity-base

• Battery, inverter, motor technology

ISSCC: International Solid-State Circuits Conference

Accelerate creation from Group synergy:

Core technology for environment & energy

ボイラー 排煙

石炭

蒸気

排煙処理

蒸気タービン 発電機

電気

ボイラー 排煙

石炭

蒸気

排煙処理

蒸気タービン 発電機

電気

Boiler

CoalVapor

Exhaust processing

Vaporturbine

Electricgenerator

Electricity

Reducing environmental burdenR&D

Materials

Consumer

Industry

PowerIT

High-outputmagnetic motor

High efficiency engine

Hybrid electric vehicle (HEV) Low-loss & high power

density inverter

Copper

Semiconductor device

50μm

Announced Feb. 2008 @ ISSCC* Announced Feb. 2008 @ ISSCC*

8 coredevice

High output & high energy densityLi ion battery

Automatic reduction of 86% power (NEDO project: Joint research with Waseda Univ. & RenesasTechnologies Corp.)

Server/Router/Storage Backplane board

Transmitter LSIReceiver LSI

2. Business strategy for high growth

Social Industrial Life  Information Technology

Exhaustgas

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Contents1. “R&D Management Vision” for Hitachi growth

2. For the expansion of current business areas

3. Fortifying the growth strategy

4. Creation of innovative technology

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27© 2008 Hitachi, Ltd. All rights reserved.

Automobiles, Large-scale jets, Super sonic transport,Precision machinery ⇒ robot

Electricity ⇒ Nuclear, Solar, Fuel cell battery

4-1.

Human

Information

Energy

Transportation engineering

Nylon, Alloy materials, Nano-materials

Materials

Transistor ⇒ VLSI, Computer ⇒ Internet

DNA, Immunology, Cranial neuroscience, Generative and regenerative medicine

20th centuryA century of industry pioneered by science

FundamentalQuantum mechanics, Theory of relativity

21st centuryA century of prosperity

×

Source: Innovation 25 strategy council material, etc.

• Human-symbiotic robot• Brain machine interface

Ambient information society

Clean energy industry

Society with life-long health

• 3rd Information Revolution• New electronics

Human-friendly industry/consumer products

• Spread of regenerative medicine• Health maintenance industry

Human-centric business industry• Visualization of business productivity• Virtualization of business systems

• Environment・energy innovative technology

• Clean vehicles

Century of industry & Century of prosperous human society

Fusi

on o

f fie

lds

and

Inno

vatio

n (s

ocie

ty /

peo

ple

/ S&

T)

Peo

ple

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4-2.

Digital media & Consumer products 1,506.1 Billion JPY

Power & Industrial systems3, 022.3 Billion JPY

Information & Telecommunication systems 2,472,2 Billion JPY

Current Hitachi business (Revenues at end of March 2007)

An interface which operates as desired

System to minimize accidentsStress-free driving・operation

Securing securityStress-free managementSystem with minimum scope for human-error

Thoughtful

Peop

le

Paradigm shift

Harmonic

Sensible

•Brain activity measurement

•Keyboard-less interface

Brain science

Brain Machine Interface

Nanoelectronics•Intelligent Device 

• High-speed• Lagre capacity• Non-volatile

Spintronics device(MEXT Project: Joint research with Tohoku Univ.)

Robotics

Announced Nov. 2007

•Autonomous movement•Voice conversation /intelligence

•Obstacle avoidance •Ultimate movement mechanism & control (2-wheel ⇒ 4-wheel transformation)

R&D for a century of prosperity:MONOZUKURI

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4-3.

Productivity

無線基地局

組織像生成サーバ

組織像の閲覧

A car not requiring a key⇒ steering wheel embedded finger vein authentication (Oct. 2007)

A car not requiring a key⇒ steering wheel embedded finger vein authentication (Oct. 2007)

Health maintenance

Safety

Measurement of brain activity during ordinary daily activities⇒ Wearable optical topography (May 2007)

Measurement of brain activity during ordinary daily activities⇒ Wearable optical topography (May 2007)

Medical advice via the Internet for metabolic syndrome⇒ Harasuma Diet (May 2007)

Medical advice via the Internet for metabolic syndrome⇒ Harasuma Diet (May 2007)

Internet

Visualization of daily rhythm over a long period time(temp., movement, pulse)⇒ Life-Microscope (Sept. 2007)

Visualization of daily rhythm over a long period time(temp., movement, pulse)⇒ Life-Microscope (Sept. 2007)

IEEE 802.15.4

Wireless base station

PC

USBVisualization of business activity⇒ Business-Microscope (June 2007)Visualization of business activity⇒ Business-Microscope (June 2007)

R&D for a century of prosperity:Services (Lifestyle, Business, Health)

Topographical interaction map of an organization

Interaction map generating server

Wireless base station

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30© 2008 Hitachi, Ltd. All rights reserved.

Platform structure for human resources

Human resource diversity

(3) Use of young researchers

Researcher exchange with overseas R&D

facility

R&D division

2006-2007 flow in corporate researchers: 16.8%

• an employee who has contributed to the progress of science and technology on a world-level• an employee who has contributed to the international acknowledgement of Hitachi's high standard of technology

CEO, Hitachi High-Technologies Corp. CEO, Hitachi Maxell, Ltd.Former CEO, Hitachi ULSI Systems Co., Ltd. etc.

Doctoral degree support (since 2005): apply the experience of coalescing work to the generation of innovation

Experienced person from university, researchorganization

Business group, Group company

Effective use of personnel

Education

Secure personnel

Foster global personnel

(2) Use of doctoral degree holders (approx. 700 as at March 2008)

(1) Hitachi Fellow system (since 1999): position equivalent to a Board Director (currently 6 Fellows)

Left: Mr. NakamuraEMIEW 2 Project leader(joined Hitachi 2004)Right: Mr. AminoMechanical systemleader (joined Hitachi 2005)

ケーブルレス化Realization of the world’s lowest noise levels using a mm-wave high frequency circuit with CMOS

ISSCC PresentationMr. Wachi(joined Hitachi 2006)

InnovativePersonnel

A person with shrewd insight into society and markets, able to conceive new business conceptsA person who can bring together different technologies and people from various backgrounds, and integrate them for a single purposeA person who can be a development leader in order to realize that business

4-4.

Human resource for innovation

Wireless

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32© 2008 Hitachi, Ltd. All rights reserved.

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:

• increasing commoditization of information technology products, and intensifying price competition in the markets for such products, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment;

• 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;

• 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 restrictions 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 results of litigation and legal proceedings of which the Company, its subsidiaries or its equity method affiliates have become or may become parties;

• the possibility of incurring expenses resulting from any defects in products or services of Hitachi; • 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 elsewhere in this document and in other materials published by Hitachi.