HITACHI is ready to spend hundreds of millions of dollars on acquisitions, as it seeks to bolt on new businesses after spending a long period shedding non-core units and strengthening its balance sheet.
The focus will be on green energy and generative artificial intelligence, chief financial officer Tomomi Kato said in an interview on Wednesday, adding that the company will vet any deals carefully. “These are extremely risky investments so we need to minimise the chances of failure,” he said.
Hitachi’s shares have tripled over the past two years, giving it a market capitalisation of 17 trillion yen (S$142 billion). The electronics maker, responsible for making everything from kitchen appliances and air conditioning units to railways and nuclear reactors, acted ahead of Toshiba, Panasonic Holdings and other peers to shed losses and unwind cross-held shares.
Hitachi had about 1 trillion yen in cash and equivalents at the end of March, according to data compiled by Bloomberg.
The conglomerate has a history of investing heavily in software. The goal is to connect its products and systems to sensors and computing power — a software architecture it calls Lumada — so that customers can better monitor and manage hardware that they buy from Hitachi.
In 2021, Hitachi acquired GlobalLogic, a US developer of outsourcing software, in a transaction worth US$9.6 billion. Now, the conglomerate is ready to spend big to meet growing demand for AI, having already formed partnerships with key players such as Nvidia, Microsoft and Alphabet’s Google.
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Concerns over data security and a lack of resources — in staff, software infrastructure and clean energy — remain major hurdles in AI development, Kato said. Hitachi also plans to train more than 50,000 professionals in generative AI; benefits from that effort could begin to emerge as soon as this fiscal year, which ends in March, Kato said.
In May it announced a partnership with Google to form a new business unit to improve AI adoption. Days later in June, it entered a three-year agreement to embed some of Microsoft’s cloud and AI services into its Lumada platform.
On the energy side, Hitachi in recent years bought the power grid unit of Zurich-based ABB Ltd., bolstering its position as a top global provider of equipment for electricity networks.
Hitach is planning to sell its 40 per cent stake in an air-conditioning joint venture with Johnson Controls International Plc, people familiar with the matter said last month. They said the deal could value the joint venture at almost 500 billion yen.
Hitachi is considering various options with its partner, Kato said, declining to elaborate.
“Revising our diverse portfolio is never-ending, so of course we have much left to do,” the CFO said. BLOOMBERG
