Nex t MADE IN JAPAN. Copyright 2003 Hitachi Global Storage Technologies

Transcription

1 Nex t MADE IN JAPAN. 1

2 HDD Business Strategy Toward The No.1 HDD Supplier In The World Jun Naruse Chief Executive Officer Hitachi Global Storage Technologies June 12, 2003

3 Contents Market Trends Technology Trends Business Strategy Implementing Structural Reforms Business Plan

4 Contents Market Trends Technology Trends Business Strategy Implementing Structural Reforms Business Plan

5 1-1 Ubiquitous HDD World Mobile Computing K-12 Educational Devices Internet communication WinCE R & HPC e- Business e-entertainment Information Access Anywhere Entertainment Anywhere Communication Anywhere Embedded Card PC Information Technology Emerging Technology Embedded Applications Personal Computing Digital Imaging Digital Mobility Automotive Applications Car Navigation ITS Digital Audio Digital Video Digital Entertainment Digital Books Consumer Electronics * ITS: Intelligent Transport Systems 5

6 1-2 Growth in emerging and non-traditional applications M units/y Market: 2,400 billion in ,000 billion in 2006 Notebook PC PDA, Portable Audio Video Camera, Car Navigation Car Audio, ivdr* HDD Recorder Notebook PC Consumer Electronics Notebook PC 3.5 Desktop PC Desktop PC, PC Server 0 Server Source: Hitachi, Ltd. estimates 2.5 PC/Server I T ivdr: Information Versatile Disk for Removable usage 6

7 1-3 HDD Form Factor and Applications Interface Size Rotational Speed Applications Server SCSI FC SAS ,000 RPM 15,000 RPM IT Desktop ATA SATA ,400 RPM 7,200 RPM 10,000 RPM IT Consumer Electronics Mobile ATA SATA ,200 RPM 5,400 RPM 7,200 RPM IT Automotive Consumer Electronics Microdrive ATA 1.0 3,600 RPM Consumer Electronics 7

8 Contents Market Trends Technology Trends Business Strategy Implementing Structural Reforms Business Plan

9 2-1 Technology Trends Areal Density Megabits/in st Thin Film Head 1st GMR Head 6 years ahead 1st MR Head Perpendicular Recording 1st AFC Media 25% CGR 60% CGR 100% CGR Hitachi/IBM Disk Drive Products Industry Lab Demos 35 Million Increase Future Areal Density Progress IBM RAMAC (First Hard Disk Drive) Production Year 9

10 Contents Market Trends Technology Trends Business Strategy Implementing Structural Reforms Business Plan

11 3-1 Basic Strategy Business Growth Strategy Capitalize on Depth of R&D Resource & Product Line Breadth Recover Share in Server Business through New Products Grow Desktop Business with Low Cost Designs Continue Leadership in Small Form Factor (1.0, 1.8, 2.5 ) Drive Growth In Emerging Markets Business Challenges Business Process Change Initiatives * Revenue Growth Cost Reduction Asset Efficiency The No.1 HDD supplier in the world *Name of the structural reforms project of Hitachi GST 11

12 3-2 Business Unit Concept & Global R&D Existing Technology Mobile BU development &design Desktop BU development &design Server BU development &design Emerging BU development &design Head & Media BU development &design Technology Development Ad Tech R&D Future Technology Fundamental Research San Jose Research Center Hitachi Corp. Research Storage Technology Research Center, Central Research Lab., Mechanical Engineering Research Lab., Systems Development Lab., etc. 12

13 3-3 Expand Share in Server Business Leverage strong R&D teams to increase product breadth Capitalize on proven technical support capabilities Deliver highly reliable products Maintain strong relationships in all key server accounts Win #1 or #2 qualification position in all key accounts 13

14 3-4 Competitive Positioning in Small Form Factor Form Factor Unit CGR Hitachi GST Company A Company B Company Company Company Company C D E F 1 95% # % # % # Server 3.5 Desktop -3% # 3 8% # 4 Source:IDC,Hitachi 14

15 3-5 1 Factors driving 2.5 growth Shift to from desktop to notebook <$1000 Wireless 2 Increase in non-notebook applications Servers Desknote (No battery) 2.5 Copyright 2003 Hitachi Global Storage Technologies 15

16 3-6 Recent Hitachi Announcements RPM Travelstar C4K40 New RPM Travelstar 4K RPM Travelstar A4K20 4 GB ivdr RPM Ultrastar 15K73 May 28, 2003 Travelstar 4K80 Most rugged 2.5 (250G / 2ms op. shock) May 14, 2003 Travelstar 7K60 World s first 7200 RPM mobile drive Travelstar 5K80 Highest capacity 5400 RPM Mobile drive January 6, 2003 Travelstar C4K40 Hitachi s entry to 1.8 ATA Travelstar A4K20 Automotive drive -20C to +85C operating Ultrastar 15K73 15,000 RPM SCSI & FC Preview of next generation Microdrive 4 GB ivdr Industry consortium participation & promotion RPM Travelstar 7K RPM Travelstar 5K80 16

17 3-7 Business Growth in Emerging Market HDD are increasingly being used in new applications MP3 players, personal video recorders (PVRs), digital cameras, set top boxes, game machines 89% CGR (source: Institute of Information Technology, Ltd.) Hitachi is a leading innovator in drives for consumer products 1 Microdrives (1GB) 2.5Automotive drives (20GB) 1.8 drives (20/40GB) To come: 4GB Microdrives & ivdr drives Hitachi is best positioned to lead this growth - Widest range of products - High volume manufacturing - Focus on customer satisfaction - Leaders in HDD miniaturization 17

18 Contents Market Trends Technology Trends Business Strategy Implementing Structural Reforms Business Plan

19 4-1 Structural Reforms Business Process Change Initiatives Basic strategy Capitalize on Depth of R&D Resource & Product Line Breadth Continue Leadership in Small Form Factor (1.0, 1.8, 2.5 ) Drive Growth In Emerging Markets Recover Share in Server Business through New Products Grow Desktop Business with Low Cost Designs Revenue Growth Business Challenges Business Process Change Initiatives Cost Reduction 2 The No.1 HDD supplier in the world Asset Efficiency 19

20 4-2 Revenue Growth Capitalize on Hitachi s Reputation of Easy to Do Business With -Combine Strength of Two Companies Strong Customer Bases Deliver First to Market Approach to Product R&D Schedules -Recover Share in Server Business through High-Performance New Products -Focus on High-Growth Small Form Factor Segment -Grow Desktop Business through Low Cost Designs Platforms Enhance Hitachi Brand Awareness in Distribution Channel 20

21 4-3 Cost Reduction Minimize Infrastructure through Site/Equipment Consolidation - Shift Workload from High-Cost to Low-Cost Countries Drive Increased Procurement Leverage - Focus on multiple sources for key components - Lowest cost parts procurement policy - Drive increased parts commonality to produce volume leverage Reduce Lost-Cost through Supply Chain Management - End of Life Transition Management - Pull-Based Demand Planning - Simplify Supply Chain to Minimize Logistics Cost - Limit Vendor Liabilities through Replenishment Terms Design Test Strategy to Minimize Warranty Cost Establish Yield Management Task Force to Limit Lost-Cost 21

22 4-4 Asset Efficiency Consolidation of HDD Manufacturing Locations Reduction of High Cost Site Footprints Restructure/Retire Under-utilized Assets End-to-end Improvement of Supply Chain Management - Improved Inventory Turnover through SCM Techniques - Drive Linear Sales Skew to Reduce Accounts Receivable - Improve Sales Forecast Accuracy to Smooth End of Life Transition 22

23 Contents Market Trends Technology Trends Business Strategy Implementing Structural Reforms Business Plan

24 5-1 Plan For Revenue Growth Attainment of revenue goals driven by: 1) Industry growth in targeted markets 2) Server share growth 3) Dominant share in the Non-IT market (1 billion $) $5.5 $5.0 Average annual growth rate of 10% Server Grow Share $4.5 $4.0 $ Mobile Maintain Share near 60% Desktop Maintain Share at 10% Non-IT Applications Grow with industry (78% CGR) $3.0 FY2003 FY2004 FY2005 FY2006 Hitachi GST has a December 31 year-end: for example,the fiscal 2003 consolidated forecast for Hitachi,Ltd., the year ending March 31,2004 includes Hitachi GST s business result for its fiscal year ending December 31,

25 5-2 Plan For Profit Growth Profit Achieve at least 6% operating margin Minimize losses Turn to profitability Volume Growth Recover Server Share to 33% Grow market Non-I/T / Mobile / Desktop Contribute to profit margins Supply Chain & Productivity Gains Combined Procurement Strength Structural Reforms (Begin manufacturing site consolidation) HDD site consolidation Pilot Line consolidation Contribution Margin Research delivers lowest cost designs Low cost sourcing alternatives Structural Reforms (Realize site consolidation ) Consolidation of pilot lines and lab effort FY2003 FY2004 FY2005 FY

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27 Cautionary Statement This document contains forward-looking statements which reflect management s current views with respect to certain future events and financial performance. Words such as anticipate, believe, expect, estimate, intend, plan, project and similar expressions which indicate future events and trends identify forward-looking statements. Actual results may differ materially from those projected or implied in the forward-looking statements and from historical trends. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. Factors that could cause actual results to differ materially from those projected or implied in any forward-looking statements include, but are not limited to, rapid technological change, particularly in the Information & Telecommunication Systems segment and Electronic Devices segment; uncertainty as to Hitachi s ability to continue to develop products and to market products that incorporate new technology on a timely and cost-effective basis and achieve market acceptance; fluctuations in product demand and industry capacity, particularly in the Information & Telecommunication Systems segment, Electronic Devices segment and Digital Media & Consumer Products segment; increasing commoditization of information technology products, and intensifying price competition in the market for such products; 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 access to liquidity or long-term financing, particularly in the context of restrictions on availability of credit prevailing in Japan; 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 economic conditions and the regulatory and trade environment of Hitachi s major markets, particularly, the United States, Japan and elsewhere in Asia, including, without limitation, continued stagnation or deterioration of the Japanese or other East Asian economies, or direct or indirect restriction by other nations of imports; uncertainty as to Hitachi s access to, or protection for, certain intellectual property rights, particularly those related to electronics and data processing technologies; Hitachi s dependence on alliances with other corporations in designing or developing certain products; and the market prices of equity securities in Japan, declines in which may result in write-downs of equity securities Hitachi holds. These factors listed above are not exclusive and are in addition to other factors that are stated or indicated elsewhere in this document, or in other materials published by the Company.

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