TOKYO -- Hitachi, Ltd. (NYSE: HIT / TSE: 6501) and Mitsubishi Electric Corporation (TSE: 6503 - News) have reached a basic agreement to establish a new semiconductor company, Renesas Technology Corp., that will focus on system LSI operations. The new company will be established on April 1, 2003 and will aim to be a reliable semiconductor manufacturer, working as an intelligent chip solution provider supporting system partners on a global basis as part of their drive to create a prosperous society in this "ubiquitous" era. This agreement is a result of discussions to integrate system LSI businesses, which was agreed to on March 18, 2002. Hitachi and Mitsubishi Electric will take advantage of the special provisions for corporate reorganization under the Japanese Commercial Code to jointly establish a new company and will move both companies' semiconductor operations to the new company, including microcomputer, logic, analog and discrete devices and memory (flash memory, SRAM etc.) with the exception of DRAMs. The new company will be established following Hitachi's and Mitsubishi Electric's completion of the legal procedures for corporate split. The plans are to appoint Dr. Koichi Nagasawa (currently Executive Vice President, Member of the Board Group President, Semiconductor, Mitsubishi Electric) as Chairman & CEO, and Satoru Ito (currently Senior Corporate Officer, President & Chief Executive Officer of Semiconductor & Integrated Circuits, Hitachi) as President & COO. Upon establishment of the new company, the sales/service divisions and companies in Japan will be integrated. This will create a single, end to end operation of development, design and manufacturing to sales and service, allowing system solutions to be provided based on the customer's point of view. Regarding those employees who will be transferred to the new company, the terms and conditions of their existing employment contracts will be honored in accordance with the applicable legal requirements. At the point of the corporate split the new company, Renesas Technology Corp. will issue 5 million ordinary shares, out of which Hitachi will be scheduled to receive 2.75 million (55%) and Mitsubishi Electric 2.25 million (45%) shares. Hitachi Ltd. Mitsubishi Electric & Electronics USA Inc.